Wednesday, 30 June 2010

More immigration advice providers could close

LAG has learnt that only 252 out of over 400 applicants were successful in their bids for immigration and asylum contracts from the Legal Services Commission (LSC). Providers were told the results of the tender exercise this week. Many are also disappointed over the number of new cases, or to use the jargon new matter starts (NMS), they have been allocated. One London firm told LAG that it had been allocated less than half of the immigration cases and only 70 per cent of the asylum cases it had applied for. According to the Legal Aid Practitioners Group (LAPG), which represents both solicitor firms and not for profit legal aid providers, some of them are facing closure due to not being allocated sufficient NMS to make their services viable.

The NMS had been allocated to geographical areas and providers had applied for blocks of them. LAG estimates that between 30-40 per cent of providers have had the number of NMS allocated to them reduced. The situation is particularly severe in London as LAG understands that the LSC, which administers the legal aid system for the government, received applications for over double the number of NMS available.

An LSC spokesman told LAG that the overall number of NMS for immigration and asylum cases had not been reduced, but that in most areas they had been 'oversubscribed' for the ones available. According to the LSC, 47,744 NMS for immigration cases and 48,761 NMS for asylum cases have been awarded in the tender round. It believes that there is no right of appeal against decisions on the number of NMS allocated and providers can only appeal against a decision not to grant them a contract. The LAPG, though, is advising its members to put in appeals if they disagree with the number of NMS allocated.

LAG believes the number of applicants for the available work must have played a part in the government’s decision not to help Refugee and Migrant Justice (RMJ). It represented over 10,000 immigration and asylum clients a year and had been forced to call in the receivers two weeks ago due to cash flow problems caused by the change over to fixed fees for cases. Despite raising over £76,000 in a few days in an effort to save the service, Caroline Slocock, RMJ's chief executive, was forced to admit defeat, saying, 'RMJ has received the most amazing support from supporters and we were overwhelmed and touched by the offers of financial help in response to our campaign. We would like to thank everyone who has tried to save RMJ and very much regret that it has not been possible.' Unfortunately it appears that RMJ will not be the last immigration provider to go under this year.

Thursday, 24 June 2010

Legal aid under threat

As anticipated the government has announced its review of legal aid. The announcement was made in a written ministerial statement to parliament yesterday by Lord Chancellor and Secretary of State for Justice, Kenneth Clarke.

LAG understands that the government is currently studying the previous reviews of legal aid before releasing a consultation paper in the autumn which will outline some options for reforming the system. Kenneth Clarke made it clear in his statement that the priority for the government is to reduce the financial deficit.

Significant cuts in legal aid spending are a very real possibility. In the budget this week the government outlined its policy for reducing the deficit which includes a 25 per cent or more cut to expenditure in departments other than health, education and defence. For the Ministry of Justice (MoJ), a 25 per cent reduction means around £2.25 billion would need to be found from a budget which has already been hit by ten per cent spending cuts over the last three years.

Some savings might be found by closing under-utilised courts and reducing prisoner numbers, but LAG believes that to reach a 25 per cent target significant cutbacks would also have to be made in legal aid. The options are limited. Revisiting the levels of fees paid to lawyers in legal aid cases is not likely to meet with much protest from the public, but there will be increasing complaints if people cannot find help as firms are forced to withdraw from legal aid. Other options include cutting what legal aid will pay for, for example, the government could decide to take help with divorce cases out of scope. The government’s room to manoeuvre is limited due to its obligations under the Human Rights Act 1998.

Finding cash from other sources to off-set the cuts could be a solution. Ideas such as a levy on all criminal clients and using interest on money held by solicitors on behalf of clients have been suggested by some as ways of funding the system. The consultation in the autumn should provide the forum to explore these and other ideas, as some original thinking will be needed if access to justice is to be maintained.

Image: Legal Action Group

Wednesday, 23 June 2010

Mental health firms under threat

Many firms representing patients detained under the Mental Health Act are under threat of closure or drastic cutbacks as the Legal Services Commission (LSC) has offered them reduced contracts in the current bid round.

According to the LSC, firms were invited to bid for a slightly increased number of cases overall, provided they met criteria such as having sufficient qualified staff to undertake the work. The amount of cases allocated, or new matter starts as they are known, is largely determined by the number of firms bidding in an area. This is where the problems seem to have arisen. According to Richard Charlton of the Mental Health Lawyers Association: 'The offers are terrible. Some members have less than a third of what they have now, many have less than a half of what they bid for. Many members are facing redundancies or closure. The established firms that have bid for their existing level of matter starts have been worst hit.'

Figures released by the LSC show that there has been an increase in the number of firms bidding for the work. This has meant that much of the work has been carved-up into smaller contracts. London is the worse affected area as 67 firms have been provisionally successful in bidding for contracts and 34 of these firms are new entrants to the market. LAG is unsure why there have been so many new bidders. They could be firms that have recruited mental health specialists as they saw this as a potential 'recession proof' growth area, as well as solicitors splitting off from existing firms to form new ones.

The LSC says that all the successful firms in each geographical area got a minimum of 30 cases topped up with pro-rata allocation between firms of the remaining cases. The LSC believes that its decisions on case allocation cannot be challenged, though once the contracts are signed firms can apply for permission to start more cases. What might happen is that those firms that can afford to will sit tight and see which firms are unable to take-up the contracts in the hope they can get extra work.

Mental health tribunals undertake a difficult job. They have to balance the freedom of an individual, his/her interests as a patient and the protection of the public in making their decisions. Specialist representation for patients is vital as their liberty and health are at stake. LAG fears the present allocation of cases could lead to many good firms being lost. To a large extent the problems have been caused by the open nature of the tendering process. Without a reliable measure of experience and quality to differentiate between firms the LSC had no other option than to spread the available work in this way, penalising the established firms. The public would have been better served and tax payers’ money saved if this tender system had not been introduced.

Wednesday, 16 June 2010

Refugee charity faces closure

Accountants BDO have taken over as administrators of the charity Refugee and Migrant Justice (RMJ). LAG understands that BDO took over from 4 pm today. RMJ is appealing to the government to make £1.8 million in payments for legal aid work or the charity will be forced to close.

RMJ is in cash flow difficulties due to the change over to fixed fees for legal aid work. Prior to October 2007, not for profit agencies were paid fixed contractual payments for undertaking the work. From April 2009 the government ended the transitional arrangements which had been in place and this has led to the cash crisis at RMJ.

The charity represents clients in around 10,000 cases a year. It estimates that it will cost at least £2m to close the charity, as the government will have to reallocate most of its ongoing cases. RMJ has been running a high-profile campaign to persuade the government to change the rules on payment for legal aid cases. So far, though, the government has stuck to the line that it cannot make an exception for the charity. The government is in a difficult position as legal aid firms might cry foul if the charity receives special treatment.

LAG believes the system needs to be changed so that organisations like RMJ, which represents clients in complex cases, do not lose out. Over half of RMJ's cases are undertaken on behalf of asylum-seekers and these cases can take two or more years to resolve. Legal aid providers do not get paid until the end of the cases. Those providers which run complex cases are penalised under the fixed fee system, while those undertaking many short cases, which they can advise on and close quickly, benefit. LAG suggests that complex cases need staged payments or payments on account. A balance needs to be struck or clients in desperate need of help will lose out.

Wednesday, 9 June 2010

Very High Cost Cases u-turn

After a short consultation the Legal Services Commission (LSC) announced at the end of last month that the system for accrediting firms to undertake Very High Cost Criminal Cases (VHCCs) is to be abandoned.

VHCCs number only a few hundred each year. They usually concern complex fraud or other serious crimes such as terrorism-related offences in which the trial is scheduled to last 25-40 days or more. Two years ago the LSC established a panel system in which firms experienced in such cases had to apply to be included if they wanted to take on VHCCs. This was to ensure quality but the Law Society argued that the system led to the exclusion of many firms capable of working on VHCCs. The rumour is that some firms were not being honest about their breadth of experience in VHCCs at the expense of others who were.

Though it seems a combination of accepting the criticisms of the panel system and insufficient resources to run a new bidding process, the LSC has now decided to revert to individual contracting arrangements for VHCCs from 14 July. The Law Society has welcomed the move, but solicitors have rightly protested at the wasted time and money which both they and the LSC have lost in running the panel system. LAG has learnt that the LSC is secretly consulting with practitioners over revised arrangements for allocating VHCCs. The results of this consultation will be made public next month.

The total costs of the abandoned panel system could run into millions. Lawyers are annoyed at what they see as another unnecessary LSC initiative taken-up and then abandoned, but these are lucrative cases for them. With fees of up to £1000 a day, there will be plenty of firms keen to join the new system. Last year just under 400 VHCCs cost £125m, or 25 per cent of the entire budget for Crown and other higher court work. The remaining budget of £700m went on just under 125,000 cases. Much of the cost of VHCCs is caused by factors external to the legal aid system such as court delays,but with government budgets under such pressure and the fees paid to lawyers in VHCCs being disproportionately higher than the bulk of legal aid work, this is likely to come under scrutiny in the coming months.