Flesh on the bones of reform

Legal aid work will be devolved to fundholding solicitors. Stephen Ward explains how

The Lord Chancellor and his department have never claimed that their plans to reform legal aid to franchising-only were more than principles which still needed to be fleshed out with detail.

This was never one of those pieces of legislation where the Government knows exactly what it will do but puts out consultation documents for form's sake.

In principle, first outlined early last year in a speech to the right- wing Social Market Foundation, which first conceived fundholding, the changes would devolve legal aid allocation to regions, and legal aid work to fundholding solicitors, like fundholding GPs. There would be a cap on overall budgets, the Cabinet's price for supporting the reforms.

But the debate could never become constructive because there was no detail. The answer to critics has always been that "you can't say it can't be done because you don't know how we are proposing it will work. Even we don't know how we are proposing it will work." To which critics replied that no matter how it was structured it would be impossible to achieve all the objectives.

The hope from critics - which include the Bar and the Law Society - and from the Lord Chancellor's department alike were that the team working under the Legal Aid Board's chief executive, Steve Orchard, would come up with the answers, the mechanics.

Last week the board, belatedly because it had been asked to come back with more detail still after completing an initial submission, filed its detailed answers with the Lord Chancellor, running to 90 pages.

The Lord Chancellor won't necessarily adopt them, but they are the nearest we have yet seen to an answer to the questions his Green Paper posed.

The following are the board's answers to the key questions:

How would the number and size of franchise contracts for solicitors (and others such as mediators to whom legal aid will be offered now) be determined?

The contracts would be with the Legal Aid Board. The needs for each area of provision, matrimonial etc, would be decided by regional legal services committees, on the model of the one already working in the north-west of England, based in Manchester and covering five counties. A board member would chair the committee, which would be advisory rather than decision- making. Others on the "small" committee would be appointed for "experience and local knowledge".

How long would a contract be for?

Initially, it could be for three years but reviewed after two years for the coming two years. At each review the contract would either be confirmed, revised or ended. If not renewed, the supplier would have at least a year's notice. In addition, there should be provision for short-term contracts providing flexibility for new suppliers to work towards achieving the franchise quality standard and longer-term contracts.

How would contract compliance - quality - be monitored without producing a bureacratic nightmare for solicitors?

The aim would be "to keep to a minimum the amount of data which suppliers would be required to report to the board and to use our own case file audit procedure to gather as much information as possible.

"Contracts should be for a specified minimum amount of work in particular categories. We will need to monitor work under the contracts to ensure the supplier is providing services in line with contract terms."

All results, whether cases were settled early or late, disbursement, refusals of clients and reasons for refusal would be recorded by solicitors and checked by the board, monitoring patterns over time.

How is contracting supposed to save money?

Cases will take less time, and save letters and phone calls, because the solicitor does not need to refer to the board for decisions. Counsel will not be used unless a solicitor thinks they are necessary.

Will solicitors still use barristers for advice?

The board says so, and sees the importance of this, but is not sure how it would be enforced: "It would be important to ensure that counsel is used when it is in the client's interest to do so and we would want to monitor the use of counsel to ensure appropriate use," the board says. Solicitors might enter into service contracts with chambers.

How can the overall budgets be capped without the risk of money running out for cases which deserve it?

The board can't think of a way for criminal work, because volume is so unpredictable. For civil work it would be capped in the way it is in effect capped now, by awarding contracts only up to the amount the Government wants to spend each year, to a means test which matches volume of business to cash available. It is hoped the greater efficiencies in the new mechanism would have the effect of making the means test more generous than now for the same given allocation of money.

Will there not then be shortages in civil budgets and rationing at the end of the year?

The board thinks not, because the proposed planning system is so sophisticated. There would be a contingency fund for big public interest and test cases.

Would a firm of solicitors that wins a franchise be able to take on every kind of work?

No, it might get the contract for divorce but not for medical negligence. Each area is a separate contract.

How does the board decide who wins the contract? Is it the cheapest firm?

No, there must be "an appropriate balance" between quality, access to service and cost. But the detail of this balance would have to evolve over time as the reforms took hold.

Would solicitors still be paid by the hour?

No, they would be contracted to do a fixed number of cases in a particular area, at a fixed unit cost based on the average of cases in the past. There would be no extra cash for disbursements.

Wouldn't that mean solicitors cherry pick (ie, take the cheapest, easiest cases)?

The board would have to find a way to stop that. It would make sure solicitors keep the same balance of cases between long and short, easy and difficult, certain winners and more speculative business. The implied threat is that if they cherry pick they lose the contract next time round.

Won't solicitors just take cases, then settle quickly and pocket the fixed fee?

They will be monitored to make sure they only settle when it is in the client's best interests. But the incentive to settle early is seen as a desirable, cost saving one.

What happens to a client who can get a case accepted for legal aid?

Solicitors would be the arbiters of the merits test, but there would be a right of appeal to the board.

Who pockets costs when they are recovered from the other side?

The solicitor. A fixed legal aid fee (see above) would be much smaller than the "real rates", so this would give a huge incentive to win cases.

Would there be regional variations in the merits test itself, or in the type of case funded?

No, except that the contracts will be awarded to take account of volumes of each type of work in each region.

Would the merits test change?

In theory no, but in practice yes. The solicitor would be expected not to take legal aid as a licence to stick it out to the end, but to abandon the case if at any stage a privately funded person would have decided it was a waste of money to continue.

How would solicitors be paid?

Payments would be staged through the year rather than on completion of cases.

How would the transition to a fully franchised system be achieved?

It would take five years at least, and would be a slow process, with the exact route unclear. Defining a scheme from scratch and setting up in one go would be too difficult, and shouldn't be tried, the board believes. Instead the small number of solicitors already franchised should be used as a base, to be expanded, giving them more business, and franchising other firms. "The role of pilots would be key in this approach. There might be many models which could be effective and we would want the opportunity to explore alternatives."

Copies of the response are available from the Legal Aid Board, 0171- 813 1000, Ext 8560.

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