2 The cost and operation of the current system
5. For twenty years from the inception of the modern legal aid system in 1949, legal aid was mainly provided in criminal cases and in matrimonial and divorce cases. In 1970, its scope was widened to encompass representation for individuals (businesses being specifically excluded) in most court proceedings, other than defamation. The Access to Justice Act 1999 removed most personal injury and boundary disputes from the scope of legal aid; it also established: the Criminal Defence Service (which provides criminal legal aid); the Community Legal Service (which provides legal aid for civil and family cases); and the Legal Services Commission (LSC), which administers the two schemes.
6. Free, non-means-tested, advice and assistance is available for anyone being questioned by the police in connection with a suspected criminal offence and such advice may be provided by the client’s own solicitor, by the Duty Solicitor or by telephone, via Criminal Defence Service Direct. Other services relating to criminal cases — including advice and assistance (which might include a solicitor’s help in writing letters or preparing a case, for example), advocacy assistance, and representation — are provided in the magistrates’ courts, subject to both a means test and an interests of justice test (the latter considers, for example, whether the charge is sufficiently serious that it could result in imprisonment or loss of livelihood, and whether the individual has the capacity to represent themselves). In the Crown Court defendants are automatically deemed to have met the interests of justice test.
7. Means-testing was re-introduced in the magistrates’ courts in 2006 and in the Crown Court in 2010 (having been removed in 2001 following the Access to Justice Act 1999). People under the age of 18, on low incomes, or who are entitled to certain “passport” benefits are deemed to have met the means test. To those not meeting any of those criteria, in the magistrates’ court, free representation is available for those whose income is within prescribed limits; in the Crown Court, free legal aid is provided for those whose disposable income and capital are below a threshold, while those whose income and capital are above the threshold are eligible for legal aid provided they make a contribution.
8. In 2009-10 the Criminal Defence Service facilitated 1,534,000 acts of assistance, which were provided via the 1,700 contacts held with providers.
9. The Community Legal Service offers various levels of legal help and advice (for example, through face-to-face meetings at citizens advice bureaux, law centres or solicitors’ offices, or telephone advice via the Community Legal Advice Helpline) as well as legal representation in courts and, exceptionally, at tribunals. An intermediate level of service – Family Help – is available in private and public family proceedings and can facilitate negotiation or referral to mediation services. The number of acts of assistance provided under the legal aid scheme within each area of civil and family law in the last six years was as follows:
|Table 1: Volumes|
|Actions Against police||5,475||5,483||5,721||5,336||5,799||5,898|
10. Most services provided under the Community Legal Service are means-tested, although “in certain types of proceedings, legal aid is available and free to all, for example, for parents in care or supervision proceedings and in child abduction proceedings, and for certain types of mental health or capacity proceedings where an individual is challenging his or her detention and for the child where they are a party in family proceedings”. Where means tests do apply, those people on passporting benefits are automatically eligible; services are also provided free to those whose disposable income and capital fall below certain thresholds and, for those whose income and capital is between certain thresholds, on a contributory basis. Other than in public family proceedings, various merits tests are applied; for example, in relation to legal help, assistance is provided contingent on sufficient benefit being likely to accrue to the client; in relation to representation, consideration must be given as to whether Conditional Fee Arrangements or other alternative sources of funding are available, and full representation “will be refused if the prospects of success are unclear or if they are borderline (save if there is a wider public interest) or poor. Any potential damages must justify the likely costs of the case. Some cases (for example, representation of parents in a case where their children may be taken into care) are not subject to a merits test, so clients are represented even if they have extremely poor prospects”.
11. The context in which the Government is proposing to reform the legal aid system is one in which dramatic savings have to be found and public expenditure curtailed. Legal aid constitutes approximately 25% of the Ministry of Justice’s budget, and the proposed reforms are intended to make a “substantial contribution” to the MoJ’s target of a real reduction of 23% in its budget—approximately £2 billion—in 2014-15. The Government’s dramatic proposed reform of legal aid is consequent upon the need to make drastic reductions in public expenditure — the Ministry of Justice must cut its spending by almost a quarter, and reductions in legal aid costs will form an important part of that. In that context we accept the necessity of certain changes, and the fact that there are other grounds for making some of them, but we make specific recommendations about how we think the Government’s proposals should be refined.
12. Between 2000 and 2010 expenditure on legal aid rose by almost 3% in real terms. Spending peaked at £2,414 million in 2003-04 but has since stabilised at approximately £2,100 million in each of the last four years. The relative proportions of the budget consumed by criminal and civil legal aid have shifted over the same period. In 2000/01 expenditure was split almost equally between criminal and civil cases, but as the cost of civil legal aid has fallen (by 6%), that of criminal legal aid has risen (by 9%), so the former now accounts for only 44% of the annual spend.
(at 2009-10 prices)
|Total Legal Aid||2,099||2,117||2,282||2,414||2,304||2,253||2,128||2,135||2,146|
Source: AJ 61
13. Expenditure on criminal legal aid peaked at £1,370 million in 2003-04 but has since fallen to approximately £1,200 million per annum. Over the last ten years, there has been a 6% drop in costs for defence services provided at police stations and magistrates’ courts, whereas for those provided at Crown Courts or higher courts costs have risen by 9%. Expenditure on very high cost cases peaked at £125 million in 2007-08 and has since stabilised at approximately £98 million.
Spend on Criminal Legal Aid (CDS) at 2009-10 prices
Source: AJ 61
14. The cost of civil legal aid has also fallen since 2003-04, from a peak of £1,044 million, but costs have been rising since 2006-07 and do not appear to have stabilised. Spending on civil representation has fallen by 9%, whereas that for legal help has risen by 15%, contributing to a 7% fall in overall expenditure over the last decade.
Spend on CLS (at 2009-10 prices)
Table 4: Spending on community legal services between 2004 and 2010
|Actions against police||7||6||6||5||5||5|
Sources: AJ 61 and HC Deb, 19 Jan 2011, col 810W. Figures have been adjusted to 2009-10 prices
Note: Values are net expenditure which is the total amount paid on final bills together with payments on account (POAs) in ongoing cases, less recoupment of POAs together with income from contributions and recovery of costs and damages on behalf of assisted persons. As some payments will relate to cases completed in previous years some categories appear as negative spend.
15. We sought an explanation of the key factors that have contributed to the trends in spending described above from some of our witnesses. Sarah Albon, Director for Civil, Family and Legal Aid Policy at the Ministry of Justice told us that the level of expenditure is primarily dictated by the volume of cases.
16. The Ministry of Justice attributed the shift in the distribution of costs of defence services from lower to higher courts that has characterised spending on criminal legal aid to changes in the volume of cases received at Crown Court relative to the magistrates’ courts since 2006. Over this period, there was a 26% increase in cases received for trial at Crown Court, stemming from 33% more triable either way cases and 14% more indictable only cases, and a 13% reduction in the number of defendants proceeded against in the magistrates’ courts. A 35% increase in Crown Court cases resulting in a guilty plea has further exacerbated the rise in Crown Court costs. Extraneous factors affecting costs per case include advances in digital technology fuelling an increase in the volume of evidence in criminal cases; in Crown Court trials the average page count has increased by 65% in the last six years.
17. Other drivers of the higher cost of criminal cases include the greater complexity of legal work, for example, as a result of changes to criminal justice legislation which have increased the time that cases take to pass through the court system and created additional avenues of appeal. Many new criminal offences have been created in recent years. Furthermore, additional legal mechanisms require more time to be spent on individual cases, for example, those relating to bad character applications and applications for the use of hearsay evidence.
18. The overall reduction in the cost of civil legal aid since 2000 masks shifts in the balance of expenditure between civil representation and legal help and for specific areas of law. For example, within the context of a 10% fall in expenditure on civil representation, a higher volume of public law children cases in the aftermath of the Baby Peter case has, along with a higher cost per case, contributed to an 8% increase in expenditure on civil representation over the last four years. On the other hand, outlay on immigration has been flat over the same period as case volumes have fallen and the nature of legal issues has changed, resulting in fewer asylum cases and more immigration and nationality cases. By contrast, the 19% increase in spending on legal help over the last 10 years can be attributed to increased demand in areas of social welfare law, including debt, housing, employment, and welfare benefits. The Ministry of Justice and Legal Services Commission have found no evidence that the complexity of law has operated as an inflationary pressure for the costs of civil and family legally-aided work.
19. Several attempts have been made to control — and ultimately prevent — the escalation of costs of legal aid in recent years.
20. The Ministry of Justice has implemented a number of initiatives with the aim of reducing the costs of criminal cases, including:
- the introduction in 2001 of graduated fees for Crown Court advocates, which were extended to cracked trials and guilty pleas in 2005, revised in 2007 and further extended to include cases of up to 60 days in July 2010;
- the introduction of individual case contracts for all very high cost cases (VHCCs) from 2004-05;
- the re-introduction of means testing in magistrates’ courts from 2006-07;
- the introduction of civil and family fixed fees and revised magistrates’ courts standard fees in 2007;
- the introduction of Crown Court Litigators’ fees and Police Station Duty Solicitor fees in 2008;
- the re-introduction of means testing in Crown Courts in April to June 2010.
21. Despite a sharp increase in the volume of mental health cases, expenditure in this area fell after the introduction of a new fees scheme in 2008. Nevertheless, as the majority of civil and family work is already funded by fixed fees, the volume of cases is the key cost driver and therefore the obvious focus for efforts to reduce cost. There are limits to what can be done to control extraneous factors affecting volume, such as the recession and the impact of the Baby Peter case. However, the Access to Justice Act 1999 has succeeded in reducing costs by limiting the scope of civil representation, specifically by removing personal injury and other money claims. Expert fees, particularly in family law and child protection cases are an additional driver of cost per case.
22. When announcing the Government’s proposed reforms, the Justice Secretary stated that England and Wales currently has “one of the most expensive legal aid systems in the world”. In seeking explanations for the relatively high costs of the system we discovered that international comparative research on legal aid is surprisingly limited.
23. In October 2009, the Ministry of Justice published a comparative study, commissioned from the University of York, of publicly-funded legal services and justice systems of England and Wales, Australia, Canada, France, Germany, Netherlands, New Zealand and Sweden. The data examined covered the period 2000-01 to 2006-07.
24. The Council of Europe also publishes comparative data on European judicial systems compiled by the European Commission for the Efficiency of Justice (CEPEJ) bi-annually. Table 5, composed from a combination of these data, illustrates that the cost of legal aid per inhabitant in England and Wales is higher than ANZAC countries, continental European jurisdictions and other nations in the United Kingdom and the Republic of Ireland.
Table 5: Comparative costs of legal aid per inhabitant
|Country||Amount per inhabitant in Euro (from 2006 CEPEJ data)|
|Australia||13.05 (Note 1)|
|England and Wales||56.2 (Note 2)|
Note 1: ANZAC costs relate to 2004 data from the University of York study
Note 2: This had fallen to 34.5 Euro by 2008
25. Professor Roger Bowles, one of the co-authors of the University of York study, explained that “on almost all of the components of the [legal aid] expenditure” more was spent in England and Wales than in the comparator countries; he attributed this to a “particularly unusual combination of … high volumes [of cases supported] and high costs per case.” According to the report, other contributory factors are: high income ceiling on eligibility; wide (if narrower than previously) coverage of areas of law; and the adversarial legal tradition of a common law country which necessitates a higher level of representation in court. Professor Bowles considered that there are “lots of reasons” underlying this, including: the intention behind the establishment of the legal aid system; the way in which the system has evolved and grown; and the way in which people are accustomed to resolving disputes.
26. The comparatively high number of legally-aided criminal cases — identified in the report as the most important single driving factor of higher expenditure — was explained by a combination of: higher rates of recorded crime in England and Wales; a high proportion of cases being brought to court; and a higher proportion of defendants in those cases receiving legal aid. The key indicator of differences in levels of demand for legal aid between EU and Commonwealth countries is the ratio of the number of criminal cases being brought to court relative to the crime rate; in continental Europe a higher proportion of cases were resolved without resort to court; this may be a reflection of the way that legal advice is delivered. The authors concluded that there was no evidence of a “common law” effect producing higher spending per capita.
27. Despite the income ceilings at which defendants were eligible for legal aid in criminal cases being high in England and Wales, they were not significantly disproportionate to those of other high income EU countries (with the exception of France) but were much higher than levels in the ANZAC countries; it should be noted that the period of this study coincided with the abolition of means-testing, which has since been reinstated in both Crown and Magistrates’ Courts.
28. The number of civil and family legally aided cases is higher in England and Wales than other countries although the variance is much smaller than for criminal cases. The average spending per case was also 30% higher. The report notes that there were significant changes in the composition of expenditure in England and Wales over the period studied; family matters accounted for less than half of civil legal aid spending in 2001 and more than two-thirds by 2007. Factors driving these changes included: the high number of divorces and the legislation applying to procedure; and eligibility rules. Professor Bowles observed that merits tests are “comparatively standard”; they tend to focus on whether a private individual with moderate means would spend their personal money on the matter in question.
29. Notwithstanding differences in the volume of cases, the cost per case was also relatively high. Ms Albon and Ms Downs agreed that there was no “definite evidence” of the contributory factors to high cost per case. On the other hand, Professor Bowles believed that this was primarily due to the level of “legal inputs into a typical criminal case” including the way in which expenditure on such services is managed, and the amount of legal services used in a particular case, which is determined to some extent by the operation of law and procedural issues — for example, related to the operation of the courts — that dictate the steps that must be followed. He cited, for example, the relative expense of using the Crown Court for those offences that are triable either way, and the level of resources that are inevitably expended prior to a guilty plea being given in Crown Court. The Ministry of Justice noted that almost 60% of defendants in either way cases tried in the Crown Court received a sentence on conviction that a Magistrates’ Court could have imposed and that a guilty plea was entered in 73% either way cases committed for trial at Crown Court.
30. Professor Bowles described difficulties in calculating hourly rates for legal services that could be usefully compared across jurisdictions. He stated that it would be necessary to unpick variances in a range of areas, including, for example: the way in which courts work and the level of the court involved; the way cases are heard; the role that is assigned to the person who is making the decisions relative to what matters have to be discussed by legal representatives; the complexity of legal issues; the kinds of lawyers used; and the involvement of counsel. Ms Albon highlighted further limitations in collating quantitative data of sufficient quality to provide more definitive evidence in terms of the resources required, for example, for data and IT systems and to cover the human cost of monitoring and analysis. We are disappointed in the dearth of evidence on legal aid expenditure at case level to enable the identification of key influences on cost. We note the difficulties in collating quantitative evidence for useful national and international observations to be made, and we believe that a series of small-scale domestic qualitative research studies, examining the drivers of cost per case, would provide the Government with more valuable data to inform its efforts to reduce spending. It may be possible to reduce the amount of legal work required, for example, by reducing the complexity of particular areas of law, and thereafter to adjust the level of fixed fees accordingly.
31. Continental systems tend to have higher judicial and court costs. Council of Europe data on judicial systems across Europe illustrate that when the costs of courts, public prosecution services and legal aid are combined, the budget in England and Wales as a percentage of the GDP per capita is equal to the average. Expenditure on running the courts and on public prosecution in England and Wales was comparatively low, suggesting that the high legal aid costs may be offset by lower budgets elsewhere in the system. The lower expenditure may be attributed to the major role played in England and Wales by the lay magistracy, at much lower cost than the professional judges who deal with all or most cases in other European countries.
32. Professor Bowles told us that “dramatic” changes would be required to bring about significant savings. Indeed his report concluded that: “[a] major overhaul of criminal law in England and Wales, including changes in the role of judges and legal representatives, would be needed before a reduction in the number of court cases (per offence committed or suspect charged) might be anticipated. The investment costs of such reform would be huge.” Nevertheless, several proposals were made in the report for addressing cost issues, including:
- more effective gatekeeping or triage that matched people with legal problems, through a consultation process, to a variety of possible solutions, not just approaches that relied on formal legal process;
- greater use of mediation and other forms of dispute resolution, similar to practices in Sweden, particularly in family law;
- review of cases or firms where the postponement of hearings occurred frequently;
- review of the scope for procedural change to enable reductions in the proportion of matters in which court hearings were required i.e. enabling cases to be assigned to administrative bodies (this had been controlled more effectively for criminal cases in other common law jurisdictions); and
- continuing analysis of legal aid expenditure at case level to identify key correlates of high spending per case and high demand for support.
33. Professor Bowles drew our attention to two more radical approaches with the potential for bringing down the legal aid budget: 1) to find mechanisms to enable disputes to be internalised within a particular sector, comparable to contingency fee arrangements introduced for personal injury and 2) to rely more heavily on legal expenses insurance, as is the case in Germany. For each of these options there is a risk that costs will still fall on the public sector, albeit from a different budget, although this may be partially offset by a greater incentive to operate within the law.
34. Some caution should be exercised in learning lessons — and more importantly in transferring policies — from other jurisdictions on the basis of comparative research. By the co-author’s own admission, the study that the Ministry of Justice commissioned was “relatively small-scale” and did not probe into legal systems and cost drivers in any “great depth”. In the report, the authors explained that “additional analysis of data collection methodologies might have revealed alternative explanations for some of the differences found.” For example, commenting on 2006 data collated by the Council of Europe, Professor Bowles noted that the disproportionately higher level of spend in Scotland, Northern Ireland and England and Wales than other EU countries “prompted the question of whether the British data had been collected in a way that differs in some critical respect from the way data were assembled for other countries. A further analysis of the technicalities of the data collection methodology might be revealing but would take us beyond the study remit.” In addition, no judgments were made about the comparative quality of the legal work delivered. In seeking to learn how best to reduce costs from other jurisdictions, Ms Albon admitted that the Ministry of Justice had found it “difficult to find some other area, look at it and think they are providing a much better and cheaper service than us. Mostly, when they are spending a lot less, it is because they are buying a lot less.”
35. Furthermore, the authors note that significant differences in the methodology and the reporting of data associated with justice systems means that making comparisons is complex and that any conclusions should be treated with caution. They identified two particular issues: “First, particularly in the federal systems such as Australia and Canada, there was sufficient variation even within single countries, at provincial level, to preclude [comparison] from being feasible within the time and space limits. Secondly, as regards the EU countries surveyed, the sources of comparative data were regarded as insufficiently robust to support much in the way of inferences.”
36. In addition, as noted above, legal aid expenditure has stabilised since the period studied. This may suggest that measures that have already been introduced to reduce the inflation of costs, including the extension of fixed fees and the reintroduction of means testing, have had some success. Council of Europe data indicates that in England and Wales costs per inhabitant fell by 23% between 2004 and 2008, in the context of a 23% average rise across Europe.
37. Professor Bowles cautioned against making significant changes to the legal aid system based on practice in other jurisdictions, for example, taking whole areas of law out of scope, without deeper understanding of the wider legal and policy frameworks in which legal aid arrangements are embedded. He explained that although such reforms may be attractive as a means of controlling expenditure, it is difficult to unravel the likely consequences and cost implications as legal aid arrangements develop over long periods of time: “Legal aid as a public resource to settle matters can be a costly option, but there is then also the issue of what the cost would be of not having those arrangements in place. Those can be considerable for people as well.” The Ministry of Justice told us that it had consulted other jurisdictions about their approaches both to legal aid and to court procedures, in particular in relation to family law, including, for example, some US states, Australia and Canada as well as Scotland and Northern Ireland. The Ministry of Justice needs to develop a greater understanding about what is driving demand and the cost of cases in order for there to be confidence in its estimates of the impact of its proposals for reform. Reducing spending on legal aid may have financial implications — and indeed may inflate costs — in other parts of the legal system.
38. The legal aid landscape in England and Wales has changed significantly since the period considered in the University of York study. Nevertheless, we are encouraged that the Ministry of Justice has sought to learn from other jurisdictions to inform its consideration of the potential for reducing legal aid costs. The findings of the study have been valuable in enabling the Ministry of Justice and the Legal Services Commission to gain a better understanding of cost drivers and potential means of controlling them. The research, however exploratory, suggests to us that having critically scrutinised the way our legal procedures have evolved there is potential for the Government to devise longer-term options for reform, rather than concentrating on simple options, such as reducing scope.
39. International comparisons are difficult, because of the many variables between different systems, and there are significant gaps in the research. However, it remains the case that the legal aid system in England and Wales is one of the most expensive in the world and, in the context of the budget savings the Government needs to find, this strengthens the case for examining legal aid costs to see where they can be reduced.
6 The Government’s Consultation Paper, p 23 Back
7 Legal Services Commission, Annual Report and Accounts 2009–10, HC 575, pp 5-6 Back
8 The Government’s Consultation Paper, p 25 Back
9 HC Deb, 19 January 2011, col 809W Back
10 The Government’s Consultation Paper, p 25 Back
11 The Government’s Consultation Paper, pp 25-26 Back
12 Ministry of Justice, Cumulative Legal Aid Reform Proposals, Impact Assessment, p 5 Back
13 The Government’s Consultation Paper, p 5 Back
14 Q 304 Back
15 AJ 61; Please note: Written evidence is referred to throughout this Report by the prefix ‘AJ’, followed by a reference number. The full list of evidence received, and the corresponding AJ reference number, can be found at the back of the Report. Back
16 QQ 305; 306 Back
17 Ministry of Justice press release, Clarke unveils plans for radical reform of justice, 15 November 2010, http://www.justice.gov.uk/news/newsrelease151110b.htm Back
18 Q 261; Q 275 Back
19 Ministry of Justice, International comparison of publicly funded legal services and justice systems, Roger Bowles and Amanda Perry, University of York, p 36 http://www.justice.gov.uk/publications/docs/comparison-public-fund-legal-services-justice-systems.pdf Back
20 Q 261 Back
21 Q 261; Ministry of Justice, International comparison of publicly funded legal services and justice systems, Roger Bowles and Amanda Perry, University of York Back
22 Ministry of Justice, International comparison of publicly funded legal services and justice systems, Roger Bowles and Amanda Perry, University of York, p32 Back
23 Q 277 Back
24 Q 206 Back
25 Q 277 Back
26 Qq 305-306 Back
27 Qq 264-6; Q 301 Back
28 AJ 61 Back
29 AJ 61. For cases committed to Crown Court the average total cost of both litigation and advocacy is over £1,700 (for guilty pleas) and just over £3,200 (for cracked trials), compared to estimatedaverage fees available for all either way cracked trials and guilty pleas in the magistrates’ court of approximately £295 (excluding VAT and disbursements). Back
30 Qq 266, 269, 273 Back
31 Q 340 Back
32 European Commission for the Efficiency of Justice, Efficiency and quality of justice, Edition 2010 (data 2008), Council of Europe Back
33 Q 275 Back
34 Ministry of Justice, International comparison of publicly funded legal services and justice systems, p 32, Roger Bowles and Amanda Perry, University of York, http://www.justice.gov.uk/publications/docs/comparison-public-fund-legal-services-justice-systems.pdf Back
35 Ibid, p 37 Back
36 Ibid Back
37 Q 280 Back
38 Q 272 Back
39 Ministry of Justice, International comparison of publicly funded legal services and justice systems, Roger Bowles and Amanda Perry, University of York, p 36 Back
40 Ibid, p 18 Back
41 Q 339 Back
42 Ministry of Justice, International comparison of publicly funded legal services and justice systems, Roger Bowles and Amanda Perry, University of York, p 1 Back
43 European Commission for the Efficiency of Justice, Efficiency and quality of justice, Edition 2010 (data 2008), Council of Europe, p 34 Back
44 Qq 281, 284 Back
45 Q 281 Back
46 Qq 338-9 Back