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The transatlantic gold rush
James Dean
Wednesday, 1 September 2010

A spate of US/UK law firm mergers marks a scramble for position in a changing international legal market.
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Alan Hodgart, respected market commentator and consultant at Huron Consulting, believes that the largest corporate law firms are morphing into two different beasts. ‘Global elite’ firms advise on only the biggest deals and pay the most lucrative partner salaries (he cites Slaughter and May and Sullivan & Cromwell as examples), while ‘business law’ firms (like DLA Piper) provide a comprehensive array of legal services to major corporates. Hodgart predicted that eight to 10 firms will comprise the global elite, with around 30 making up the business law contingent. ‘Small- to mid-cap’ firms and ‘specialist’ firms sit below these bigger firms.

When City firm Lovells and US firm Hogan & Hartson announced their merger at the end of last year, Hodgart categorised the resulting firm – comprising 2,500 lawyers and combined revenues of £1.1bn – as a business law firm, rather than a global elite firm.

Then came the merger of City firm Denton Wilde Sapte and US firm Sonnenschein Nath & Rosenthal, which by 30 September will create a 1,400-lawyer, £500m practice. As of last week, the latest candidates for a transatlantic tie-up are City firm Hammonds and US firm Squire Sanders & Dempsey. They are discussing a merger that would create a 1,300-lawyer practice with combined revenues of more than £400m.

It appears that these mergers mark the scrabble for positioning predicted by Hodgart, although the agreed DWS and proposed Hammonds tie-ups will not propel the firms into the global elite. But if there is room for only 30 firms in the business law tier, it is unlikely, looking at the work these firms do now and comparing it to their peers, that they would be classed as such.

However, this may well change. The mergers might be the first step in comprehensive internal transformation over the coming years, or the firms might make subsequent major acquisitions so they have the tools to offer the comprehensive service required of a business law firm. If they are attempting to position themselves as such, rather than as small- to mid-cap firms, then DWS, Hammonds and their merger partners are giving themselves a head start by teaming up. According to Hodgart, business law firms will need to cluster around the headquarters of all major global corporations in order to compete.

If his predictions are correct, then the spate of transatlantic mergers – which many commentators predict will continue – appears to be one trait of a wider gold rush to secure a spot in the two most lucrative law firm groupings.

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Could acting for both sides change the nature of the conveyancer’s role?
Rachel Rothwell
Friday, 27 August 2010

The Gazette reported recently that the Legal Services Consumer Panel, which is the body set up by the Legal Services Board to advise it on what is in the best interests of consumers, is generally in favour of letting one solicitor act for both buyer and seller in a conveyancing transaction.
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The Solicitors Regulation Authority is proposing that this should be allowed, provided there is not a ‘substantive’ conflict of interest. It is consulting on the issue at the moment.

From the client’s perspective, the potential benefits are obvious. How much time is spent passing correspondence between the two lawyers? That would be eliminated in one fell swoop and would surely lead to speedier transactions.

Is there any danger to the consumer? Given that a solicitor conducting a conveyance is a highly qualified member of a regulated profession, there shouldn’t be. And, after all, licensed conveyancers are already allowed to act for both sides, without any apparent problems.

But that is not to say that a solicitor acting for both parties will necessarily find the experience plain sailing. It will involve a change of mindset.

At the moment, a solicitor’s primary objective, within their professional rules of course, is to push forward the interests of their client. If, taking an example from my own recent conveyance, a search indicates that chancel repair insurance is needed on a property being purchased, the first thing the purchaser’s lawyer will do is to try and press the vendor to pay the premium. But what if the vendor is also a client? The lawyer will need to take on a new role of assisting the two parties to reach a sensible solution.

When tricky issues arise, instead of approaching the problem from their usual purchaser or vendor perspective, solicitors may find themselves acting as something of a mediator between the two sides. But they will have to tread a very careful line between the two sides.

Precisely how the new rule would operate is still uncertain. Which party would instruct the lawyer, for example? I imagine that the recommendation of an estate agent, who is already in a sense acting for both parties, would be likely to play an important role – and, of course, a bigger fee at stake for the lawyer is bound to drive up the cost of the referral.

Potentially, a solicitor acting for two sides could also be instructed on the related sales or purchases of both sides, leading to a bonanza of fees.

Acting for both parties will be a significant gain for firms that win that work, but looking at the bigger picture, there might be a downside for the profession. If using just one solicitor per transaction becomes a popular trend, it could contribute to a reduction in the overall number of conveyancing solicitors that the market needs, in a section of the profession that is already shrinking due to the poor housing market.

Competition for the prize of acting for both parties will be strong, but the fees gained will inevitably be less than the sum of what would have been charged by a separate lawyer for vendor and purchaser. The consumer will be the real winner.

And of course there is one more, slightly tongue in cheek, reason why acting for both sides could prove to be a bad move. Conveyancers are more than used to taking flak from disgruntled clients. But if they act for both parties, they will no longer be able to blame any delays on the other side’s solicitor.

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Social mobility and exclusion in the legal profession
Eduardo Reyes
Wednesday, 25 August 2010

Last summer, when arch-Blairite Alan Milburn produced a report for the Cabinet Office on social mobility and the professions, it got limited publicity.
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The assumption was that this would not be a political priority for an incoming Conservative government; and while many corporate clients ask law firms about their progress on diversity, almost none push their providers on their record in promoting social mobility.

With Milburn’s appointment as social mobility tsar, the issue is back on the agenda. But what are Milburn’s intentions towards the legal profession?

It’s likely there will be plenty of continuity between his approach now, and the one he took in last summer’s report. In the report’s original call for evidence, it was made quite clear that the committee writing the report didn’t want to hear about economic inequality as a cause of worsening social mobility – throwing the spotlight firmly on the professions themselves.

That analysis chimes well with the coalition’s worldview. As chancellor George Osborne has made clear in interviews, when the government talks about its commitment to equality, it primarily means equality of opportunity, not income.

Going by the report’s conclusions, Milburn will now focus most closely on the parts of the legal profession where the financial rewards are greatest. Recommendations he made – around work experience programmes, outreach work in schools, extra financial support for internships, and mentoring schemes – all fit with the resources larger firms can deploy. And when he references geographic ‘deserts’, where the professions he has in mind are badly represented, he is referring to areas of the country that lack, not a high street practice, but larger firms.

It’s the super-City gent-type professionals he seems to believe are getting away from the working and lower-middle classes – and as they do so, successfully erecting discreet barriers to entry.

He’s likely to carry on looking closely at entry routes to a career in the law as well. If firms decide that actively supporting social mobility is a reputation issue, they will want to look at how a lawyer would join the firm later in life, how they might qualify while in a non-lawyer role, and whether their firm’s policies on qualifications required allow for a variety of routes to be taken by an aspiring lawyer. He’ll stick hard by the income bands he used to measure a decline in social mobility – put simply, is the proportion of lawyers who grew up in households with a below-average income rising or falling?

Another thing Milburn won’t do is open up the pressing issue of how the organisation of publicly funded work affects some of the country’s more ‘accessible’ and diverse legal practices. He won’t look at higher education funding or student debt.

That may make the tsar a frustrating figure to engage with. But with or without Milburn, social exclusion and social mobility are likely to grow in importance as issues for the legal profession.

Elite universities have been under pressure and close scrutiny on this point for a generation now. It’s worth noting that the HE institutions that have made some progress here aren’t merely criticized less; they also seem to gain a competitive advantage. It’s early days, but the few managing partners whose firms have started to make deliberate changes in this area report intakes that they believe have raised standards.

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The age of criminal responsibility is much too low
Catherine Baksi
Friday, 20 August 2010

Following the sentencing of two 11-year-old boys at the Old Bailey for the attempted rape of an eight-year-old girl, the Law Society has called for the age of criminal responsibility to be increased.
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Since 1998, children in England, Wales and Northern Ireland can have been held legally responsible for criminal actions from the age of 10. Previously, there was a rebuttable presumption that those aged 10 to 14 could not form the necessary criminal intent and could not, therefore, be held criminally responsible for their actions.

England has one of the lowest age thresholds for criminal responsibility in Europe. On the continent, the threshold ranges from seven in Switzerland to 18 in Belgium. Some states in the US have no age criterion.

The justification for an age threshold is to prevent the prosecution of children who are too young to understand the nature or seriousness of their acts, even if, to an adult mind, the acts are very wrong and clearly criminal. That has to be right – young children cannot be held to the same standards of understanding and behaviour as adults.

But where the acts are very serious, such as murder or rape, this principle can be severely tested, on the basis that it is incredible that the perpetrator could not have known the enormity of their actions.

I would argue that it is in these very difficult cases, where it is most important, that there is an age threshold. As Law Society chief executive Des Hudson said: ‘The hallmark of a civilised society is the way in which it deals with hard and difficult cases – and not least how it deals with children who come into conflict with the law. While it’s important that the justice system can deal with older children it would be wrong to criminalise the very young,’ he said.

But where does one draw the line? I’m no expert on child development, but there seems to be a level of agreement among those who are that 14 is about right, and that is what Chancery Lane is calling for.

As children develop differently, perhaps turning the clock back to the pre-1998 position would allow for a certain amount of flexibility.

This leads on to another issue. Where young children are to be tried, is it ever appropriate or necessary for their trials to take place in an adult court like the Old Bailey, when there are more suitable facilities available at the youth court?

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Why some lawyers are turning away from the goal of equity partnership
Jonathan Rayner
Wednesday, 18 August 2010

Pity those poor equity partners. They may pocket an eye-watering wedge of the profits and dictate how the firm is run, but there can be a heavy price to pay.
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Equity partners have unlimited personal responsibility for the debts, liabilities and losses of the firm, which certainly must concentrate the mind during these difficult economic times. They have fewer statutory rights than mere employees and, once they have left the partnership, are frequently bound by restrictive covenants regarding future work.

They are also constantly under scrutiny and feel insecure and threatened when the partnership introduces intensified monitoring, formal appraisals and sanctions for failure to meet performance targets.

In fact, being an equity partner is a tough call, which could explain why recent research, according to Mike Jones, managing director of business development consultancy Intrinsic Values, has revealed that only 37% of today’s associates aspire to what used to be the ultimate career goal.

Some associates turning their back on partnership cite the poor work/life balance that characterises law firms generally and law firm partners particularly. They are not prepared to sacrifice quality of life in pursuit of a career that can be cut off when the market dips or when they are obliged to retire to make room for younger lawyers coming through.

The money is not necessarily all that it’s made out to be, either. On average, even the best rainmaker partners only pocket one-third of the revenue they generate for their firm. Is it really worth all those long hours of management meetings, networking events and away days?

Absolutely not, reply two former partners who have reverted to fee-earning.

One says: ‘A law firm partnership is worse than a dysfunctional family. There's in-fighting, back stabbing, empire building and plain petty nastiness. You’re tied in with people you would cross the road to avoid in normal circumstances.’

The other says: ‘You are bogged down with administration rather than doing what you are trained and qualified to do. All the business about departmental budgets and key performance indicators just gets in the way of your relationship with clients. It was a relief to get back to fee-earning, being given a task and allowed to practise your profession.’

So, is there a looming shortage of new equity partners? No – or not yet. Many firms have reacted to the economic downturn by cutting equity partner numbers so as to reduce overheads and maintain profitability for the partners that remain. Many other firms have reduced partner promotions as a precaution against what the future might hold. Others have introduced non-equity appointments as an alternative to partnership.

The writing is undoubtedly on the wall for the traditional partnership model, but then law firms are set to change anyway with alternative business structures and other changes ushered in by the Legal Services Act. Interesting times lie ahead for the profession.

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How cost-cutting has yielded results at Baker & McKenzie
James Dean
Friday, 13 August 2010

How do you conjure up £78,000 more pay for each of your equity partners without generating any more income than you did previously? Well, for a start, try asking the guys in Baker & McKenzie’s London office for a lesson in cost-cutting.
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The firm, founded in Chicago but now with a strong presence in all major world business centres, is currently deemed the biggest law firm in the world by revenues. But there lies a more interesting story closer to home.

The firm’s London office released its financial results yesterday. For the sake of quick comparison:

  • Turnover: £120m (2008); £115m (2009); £120m (2010)
  • Average profits per equity partner (PEP): £572,000 (2008); £418,000 (2009); £650,000 (2010)
  • Net profit: £34m (2008); £25m (2009); £39m (2010)

According to these figures, the firm has returned to pre-recession levels of revenue generation, and has bettered its pre-recession profitability (for simplicity’s sake, we can perhaps assume that the collapse of Lehman Brothers in mid-September 2008 is where the recession began).

This brings about two interesting points.

Firstly, the firm’s London performance is very good when compared with its City peers (those firms with revenues around the £120m mark). Baker & McKenzie’s PEP compares favourably with much bigger City firms hovering just outside the magic circle.

Secondly, and perhaps most remarkably, the firm has generated £78,000 more in equity partner profits in 2010 than it did in 2008, despite revenues being identical.

This must presumably be down to cost-cutting. Commenting on the firm’s global results, executive committee chair John Conroy acknowledged that Bakers has employed legal and business process outsourcing over the past year to flatten costs, and will do so again over the coming year.

But the firm has benefited from outsourcing to its own offshore unit in Manila for some years. What has also served to reduce the firm’s costs has been the redundancies made in the firm’s City office after the Lehman Brothers collapse. In January 2009, 20 associates lost their jobs, and in March 2009, the firm announced that further cuts would be made, froze pay, and scrapped its all-staff bonus. London managing partner Gary Senior blamed the ‘exceptionally challenging’ economic climate when informing staff of the measures.

This sort of action was by no means uncommon among firms at the time, and those that did cut have tended to fare better with their financials this year (if, by fare better, we mean protect partner profits). The Bakers magicians in London seem to have fared better than most.

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Why civil partnerships for heterosexual couples could be a good idea
Rachel Rothwell
Wednesday, 11 August 2010

The Gazette reported last week that there has been a surge in cohabitiation cases as a result of the recession.
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Reaching a fair arrangement in terms of custody of children and financial provision is tough enough when a couple is married, but it is all the more complex and difficult when they do not have a marriage certificate. The lack of legal certainty means more scope for disagreement between the parties, and that is both bad for their own state of mind, and that of any kids.

So surely anything that gives more legal certainty to the rules governing assets and children when a couple splits up deserves some consideration?

In our news story, Caroline Falkus, partner and collaborative lawyer at London firm Bross Bennett, called for civil partnerships to be available for heterosexual couples. That prompted immediate remarks in the comment box that heterosexuals do already have this option; it’s called marriage. Indeed, as civil partnerships are (as I understand it) intended to convey all the same rights and rules as marriage, then this does seem a sensible point. But the reality is that there is much more to marriage than simply legal rights.

There are plenty of cohabiting couples out there who would welcome the degree of legal protection and certainty that marriage, as opposed to cohabitation, brings. They want their arrangements to be on a firm legal footing.

But they don’t want to get married.

Getting married is not just about signing a document. I have plenty of friends who have talked about just popping down to the registry office with no big fuss. But somehow it never works out like that.

Every friend I know who has got married, has ended up having the full traditional setup. Not necessarily that fancy, and not always in a church, but there is always a white dress, numerous guests, a big meal, speeches, a honeymoon of some kind, and a hen or stag do beforehand. It is a wonderful occasion of course, but it costs money, and not everyone has the readies to pay for it.

Even friends who were adamant that they weren’t having a big wedding have always somehow ended up being sucked in. You start off small, then it snowballs. You don’t want a big do, but if you don’t invite this uncle or that cousin you might cause offence to that side of the family. Such-and-such won’t know anyone else, so you’d better invite her boyfriend whom you’ve never met. And it seems mean to tell people they can’t bring their kids. Then before you know it you have 60 guests where you only really wanted 10. You weren’t going to bother with flowers on the table, but your mum thinks it will look funny if you don’t. And so on. The average wedding these days is said to cost £20,000, though this must surely be an exaggeration. I hope.

Of course it is not just the money that puts people off being ‘married’ as opposed to entering a civil arrangement. Some people have been married before unhappily, and don’t want to do it again. Some even mark the moment they got married to their previous partner as the point at which it all started to go wrong.

It is true that couples can already help themselves by entering into contractual agreements. I met a mum-of-two last weekend who mentioned that she and her new partner had drawn up a cohabitation agreement. She had previously been through a highly acrimonious divorce, which saw her former husband trying to claim maintenance payments from her as she had been the higher earner, although they did not have any children. As she had been married for less than 10 years he didn’t get very far, but the experience has put her off marriage for life.

But while cohabitation agreements are a sensible option, they are little known. Any introduction of civil partnerships for heterosexual couples, on the other hand, would be accompanied by a wave of publicity – both good and bad – that would mean everyone was aware of it as an option. It would also be seen by many couples as a positive step to take together, rather than drawing up a cohabitation agreement that essentially outlines how things will be handled if and when the relationship turns sour.

One big concern over heterosexual civil partnerships is the fear that they could undermine marriage. Would this be the case? It would almost certainly reduce the number of marriages. But in a sense, I think it could heighten the status of marriage itself. As people could obtain the same tax and financial benefits through a civil partnership, those who chose marriage would be taking an extra step. And that would be making a statement that their union was about more than just practical matters.

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Act fast to avoid PII misery
James Dean
Friday, 6 August 2010

It’s not a sexy subject, and it’s not particularly fun to write a stream of gloomy reports on it, but solicitors’ professional indemnity insurance (PII) is a hot topic for the profession. We are exactly eight weeks from the 1 October renewals deadline and there is already plenty to ponder.
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Two of the top three PII insurers – Chartis (formerly AIG) and Zurich – have already said they will shy away from taking on any extra small firms and sole practitioners this year. This is no help to the 3,000 firms likely to be left in limbo by the expected departures of Quinn and Hiscox from the market.

Unfortunately, according to rumblings among brokers, it looks like more insurers will follow Chartis and Zurich.

Bur rather than dwell on the negatives, it’s probably better to take action. Some years ago, I remember seeing a Greenpeace T-shirt with the slogan: ‘The optimism of the action is better than the pessimism of the thought.’ I am no philosopher, but ‘action’ sounds like the right option if our eco-warrior friends are correct.

So in more positive news, the Law Society said today that it will open its PII helpline on 16 August. The helpline advised lots of worried solicitors last year on how to get cover.

Still, a call to the helpline isn’t meant to be the first step in the renewal process. I’m sure that most will have read the Law Society’s PII practice note on this, but if not, or if all is forgotten, perhaps a little refresher: Chancery Lane advises that firms begin collating information for their proposal forms in May (especially as insurers are beginning to ask for more detail); start researching the indemnity market in June; and submit proposal forms to brokers or insurers in mid-July.

If you’re behind on this schedule, probably best to put some time aside asap to catch up. The practice note warns: ‘In a soft market some firms have found it advantageous to submit their proposals just before the renewal deadline. This approach is much riskier in the current market. Furthermore, some qualifying insurers limit the amount of business they will accept. Once this limit is reached, they will stop offering cover to the market.’

  • Updated advice from the Society, including the latest issue of its Insurance Matters newsletter, is available here
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Do concerns over rule of law in the Maldives signal trouble in paradise?
Jonathan Rayner
Thursday, 5 August 2010

A crisis is brewing in the paradise islands of the Maldives.
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The government, led by the nation’s first ever democratically elected president, is said to be undermining the freshly minted constitution, while there are fears that Muslim extremists might insinuate themselves into power. The judiciary is said to be under pressure from the government.

The country also faces dangers of a different nature, most notably global warming and the rising sea levels that threaten, literally, to drown this nation of 350,000 people. There are more than 1,000 islands, of which just 200 have people living on them, and none of them rises higher than 2.3 metres above sea level at its highest point. That is lower than the men’s world high jump record of 2.45 metres.

On a happier note, the people of the Maldives pay no income tax; the government generates revenue by selling fish and leasing land to the tourist industry instead. And the language, unique to the islands, has no word for ‘hello’, ‘goodbye’ and ‘please’ – everybody knows everybody else, so there is no need for formality.

So what has precipitated the current political situation, which some say is threatening the rule of law in the country?

The country’s president, Mohamed Nasheed, has been in office since 2008, the year that a new constitution was ratified separating the legislative, judicial and executive branches of government. Nasheed, dubbed by some the ‘Mandela of the Maldives’, was a prisoner of conscience under his predecessor, president Gayoom, and was widely expected to be a model defender of the new spirit of democracy.

Critics of his regime, however, suggest that his government has deprived parliament of information, ordered the arrests of opposition MPs, and connived in attacks on the judiciary.

Dr Hassan Saeed visited the Law Society to draw all this to my attention. Saeed was the attorney general when Gayoom was president and when the current president, Nasheed, was repeatedly jailed for political dissent. Saeed was also an unsuccessful presidential candidate in the 2008 elections, and is the leader of a political party opposed to president Nasheed’s Maldivian Democratic Party.

Saeed would like an independent delegation of UK lawyers to visit his country and report on what is happening there. British and Commonwealth lawyers and academics helped draft the Maldives’ 2008 constitution. They should share his indignation, he says, at what he claims is the government’s wilful undermining of that constitution.

So far, so convincing – except what does the present attorney general of the Maldives, Husnu Suood, have to say about this? He was in London last week and I was able to speak to him at the Maldives High Commission.

Suood’s version of events was very different from that told to me by his predecessor. Suood told me president Nasheed is frustrated at every turn by the opposition parties in parliament, who are in the majority and block his every policy. ‘They want the government to fail to deliver what it has promised. It’s only through president Nasheed’s failure that the opposition will ever regain the presidency,’ Suood said.

Muslim fundamentalists are exerting an increasing influence, with the result that parliament is bringing a vote of no confidence against those ministers of state who have made Muslim studies at school optional (rather than compulsory), and who have normalised relationships with Israel. They are also angered by the privatisation of the airport because, they reason, Israel would now be able to use it to launch bombing raids against their Muslim neighbours. ‘Some of us are better at geography than that,’ Suood said.

Suood said there were ‘teething problems in the new democracy, but he was ‘optimistic that the rule of law will win through in the end.’

My final question was to ask Suood what the international legal community could do to help the Maldives. ‘We would like a delegation of lawyers, led by the Law Society of England and Wales, to visit the Maldives and report on the situation there,’ he said.

So it seems that Suood and his predecessor at least agree on one thing. Perhaps international lawyers should take them up on their offer and find out the facts behind what appears to be trouble in paradise.

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Interview with LSC chief executive Carolyn Downs
Catherine Baksi
Wednesday, 4 August 2010

Carolyn Downs, who took over as chief executive of the Legal Services Commission in March, gave an interview to the Gazette this week. It was her first media interview since taking over her role at the LSC. Here is what I asked her, and her full responses.
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How do you think the legal aid tender process went, and did it achieve the LSC’s aims?
The LSC wanted to provide a quality and sustainable provider base, and the timescales the LSC were given to do that were for contracts starting in October 2010. So will we have achieved that by October 2010? I think the answer is yes.

Have issues arisen through the process that have provided concern to providers? Yes, there’s no denying that. Have there been some administrative issues and difficulties around the duty solicitor rotas? Yes.

What I’m aware of as a newcomer, and as someone who has come to this process late, is that all the different criteria that have been used in the various types of contract tenders were subject to consultation. My view is that the LSC bent quite considerably from its own original stated criteria to reflect the views of the provider profession. Some of the issues about which people are now expressing concerns came about as a result of the LSC bending to that pressure from the provider market in the first instance.

One of the criticisms I’ve heard is that there was not much consistency in the way the different tenders have been dealt with. That is because different approaches were taken to the individual tenders, partly because different provider markets are different, but also because we bent to pressure from the provider market.

For example, the mental health tender was not run as a competitive tender. If you enter into a process where anyone who meets the criteria is awarded a contract, and you have more people who meet the criteria than previously had contracts, then you are going to end up with a situation where there are more providers – it is the logical conclusion.

Clearly what nobody envisaged at the time – including the provider market and the Law Society, which pushed the idea in the first instance – was that providers would be prepared to diversify to the extent that they did.

Was the outcome of the family tender, where 46% of firms failed to get contracts, intended by the LSC and is it a desirable result?
In many of the meetings I’ve been having with providers over the last few months, they have really been pushing the issue of quality. They’ve said the LSC needs to be injecting a higher level of quality criteria into the award of contracts.

Now the one set of contracts that did have a higher level of quality criteria in the tender process was family, and the outcome of that has been to reduce the provider base. I do not believe that was the stated intention of the LSC in going into the tender process, but that is the outcome of applying that criteria. And actually I absolutely agree with providers when they say we should be strengthening quality criteria.

When people ask the LSC to tender in a particular way, they need to be aware of the potential outcomes. What I would say is that we will have a provider market post-October 2010 that is well aware of the consequences of the criteria that have been applied this time round. And we and the Ministry of Justice will be well aware of the consequences of the different criteria that have been applied, and will be able to use that in the future.

You need to be very careful about becoming anti-competitive, and we need to abide absolutely by procurement law. Many of the things I’ve heard people say to me in the last couple of months have verged on the anti-competitive. So I would like us to really think carefully about the quality criteria we might apply in the future and the scoring we give to experience.

I understand that providers who have not got contracts will feel the result is undesirable. Any provider who feels that the criteria have not been applied properly can make an appeal. It’s very difficult for me to comment until we’ve gone through an appropriate appeals process.

What about the impact on clients – will it make it harder for some to access a solicitor?
If we are assuring a higher level of quality, which is what the criteria applied sought to do; if we are assuring coverage in all areas geographically; and if we are assuring people have access to justice, then the logical answer to that is no.

We have said there must be a minimum of five providers in any procurement area, but just because there are only five providers it does not mean that there are only five people providing legal advice, or that they are doing it out of just five locations.

In family cases the telephone advice service we provide, which is available in both rural and urban communities, is as good if not better than the face-to-face advice that is given. Obviously some people will always need face-to-face advice, but the telephone advice service is very good indeed.

I’ve worked for 10 years in the most sparsely populated and most rural county in the country – Shropshire. I think we need to recognise that people in rural communities, just as they do in urban communities, largely have to travel to receive services. They travel to go to school; they travel to go to hospital; to the doctors and to court; and indeed they probably have to travel to go to see a solicitor too.

The new contracts are scheduled to start in October. Is that realistic given the reorganisation that some firms need to do before then, or will the timetable have to slip?
It will be for the firms to tell you whether their timetables will slip. We have awarded contracts on the basis that people will have the staffing levels in place in time. If speculative bidders come forward, and through the verification process we do not feel they can recruit in time for the contracts to start, then we will have to deal with that accordingly. If we choose not to award a contract to them we will disperse those new matter starts.

Will the new contracts run for the full three years, or will they be terminated early following the government’s spending review?
That is entirely a matter for the MoJ. We are putting contracts in place that enable amendments and for them to be terminated with six months notice, and everybody has tendered knowing that is the case.

The MoJ is doing a policy assessment of legal aid and ministers will make decisions on which they will consult. That will happen in the autumn, and for us to speculate in advance of the outcome of the consultation would be inappropriate.

What was the cost of the tender process?
I don’t know accurately, but we’re assessing it and we will have to review it. It hasn’t cost resources over and above that which exists in the LSC. Our job is to undertake tender processes.

The amount incurred in undertaking such a large round of bids will not be inconsiderable. But one of the things that is very clear to me is that the LSC is actually a small organisation which administers a huge budget and it does not undertake that exercise in an extravagant fashion.

What happened with the duty solicitor rotas and what assurances can you give practitioners that it will not happen again?
We were responsible for that being an entirely less than perfect piece of work. Quite frankly we are really sorry if we have caused disruption, upset and confusion for providers.

The timescale which we had for the crime tenders was extremely tight, and some of the checking and testing that we might have wished to do in advance of the rotas going out was condensed – so that’s our responsibility.

The information we were given by providers was not always correct. When we put the draft rotas together we realised the information was not correct. So we circulated it to providers on a completely open and transparent basis to try to get the right information.

For providers who have been adversely impacted by the amount of duty rota coverage in the first half of the new rota, we have committed to try to resolve that in the second half.
For all the disruption and difficulties we’ve caused people we really are sorry.

We’re working on it now to make sure we are in a different place in advance of issuing the next rotas. Neither I nor anyone else here wants to go through that process again – it was not our finest hour.

It should be remembered that providers, the Law Society and the LSC worked together to resolve the issues, and most importantly clients were not adversely impacted.

What has it been like for you coming into this post at such a challenging time and how have you found the relationship between providers and the LSC?
This job is without a doubt the most challenging job I’ve had, and I’ve done some very big jobs in the past. It’s nothing like anything I’ve ever experienced in my life. I’ve worked in local authorities dealing with the public and dealing with private sector providers on a daily basis. So I am used to challenge, I am used to criticism and I’m used to press coverage that is usually based on things that you don’t do well rather than the things that you have done well.

I have never quite experienced anything like I experienced coming here, where it would appear to be acceptable for people to talk to each other in a really rather adversarial, aggressive and inappropriate fashion. I make no comment as to whether this is coming from one side or the other – I think it is coming a bit from both. My own view is that if that’s the basis of a relationship then neither side will benefit.

So I see the need for providers and the LSC to engage more constructively and more openly. But it is very difficult to have open and engaged discussions with people who are constantly threatening to sue you.

I think we all need to reflect on that. Providers are saying to me ‘we want open and full involvement and engagement’, with which I agree. But if at the same time as making that statement they are threatening to sue you, it makes the very thing that they’re asking for almost impossible.

I’ve never found being rude to people helpful. I’ve never got what I wanted by being rude. And, quite frankly, people won’t get what they want from me by being rude.

Practitioners feel there is a lack of understanding within the LSC about how they operate. What is your view?
A lot of the passion for legal aid that many providers feel is experienced by a lot of staff at the LSC. Many of the staff here are just as passionate about helping vulnerable people and championing the needs and requirements of the vulnerable. So we have a community of providers and a community within the LSC who have the interests of the same group of people at heart.

The sadness, therefore, is that we have an adversarial relationship. It is the adversarial part of that relationship which is reported on and talked about, as opposed to the many positive relationships that also exist.

Many practitioners feel they are not listened to by the LSC. What assurance can you give that they are listened to?
I do get that, but I’ll give you a couple of examples of how I operate. Where people have raised issues in meetings with me about the specifics of how many new matter starts they’ve been allocated or not allocated and why, I’ve personally gone back into the organisation and found out, and tried to communicate back to them.

I think the only way we can change that perception is by being responsive to people’s concerns. Listening doesn’t always mean saying yes, but showing a responsiveness to concerns that are raised is important. There is nothing more disempowering to an individual than if they feel they have not been listened to.

I started off my working life in the most junior position at the lowest level of a local authority – at the counter of a library. I know exactly what it feels like to think that you have got good ideas and views that might make a difference, but management doesn’t listen. So I feel I have a real empathy with people who feel they’re not heard.

Providers frequently question whether the LSC is fit for purpose – is it?
My view is that there has been a lack of investment in the infrastructure of the LSC, particularly around its investment in IT. The day-to-day dealings that many of the providers have with us are based around their use and assessment of those applications.

It would be unfortunate for anyone to have the view that this organisation does not have people working for it who are committed and capable. Like any other organisation some people are more committed and more capable than others.

The real issue is a lack of investment in our infrastructure in the past. It’s going to be challenging to find any quick fix while we are having to make overhead budget cuts.

But throwing money at a problem isn’t always the best solution, and out of challenging management situations you can sometimes end up with better results. One of the things I’m keen for us to do, as an organisation, is prioritise the things that matter to clients and providers, and to cut out some of the unnecessary, overly bureaucratic, and overly ambitious projects that we have had.

My task and the task of other senior managers is to simplify and de-bureaucratise some of our systems and be realistic about what we can deliver in terms of any new IT, processing and financial systems that we need going forward. And that is about ruthless prioritisation.

What is the future of the LSC?
The previous and current governments want the LSC to be an executive agency of the MoJ, so that is the way we anticipate things will happen. As an executive agency you have your own management board with non-executives on it, but the chief executive’s line management accountability is within the MoJ. My line management accountability at the moment is the chair of the LSC. The real difference is purely related to the governance structure around commissioners or ministers. Policy will rest with the MoJ and policy officials there.

Does the fact that the LSC has been stripped of any policy-making function indicate how badly it has failed?
I think it’s an artificial divide to say where policy begins and ends, because we really should be operating in a system where policy is informed by delivery, and delivery is informed by policy. To make a completely artificial divide is unhelpful. Where the two issues cross over on a daily basis is not always as clear as some people would like it to be.

In relation to the current policy assessment – for policy officials to undertake it without involving colleagues who are involved in the delivery of legal aid would not be a good idea. So there is a complete overlap between the two.

I think it would be wrong to talk about the failure of the LSC. When a relationship doesn’t work, there are always two different views why that has happened. What is important is not picking over it, but moving forward, and we’re now in a really good place where we’re working tremendously constructively with the MoJ. And that’s really positive for the LSC, the MoJ and for legal aid provision. So we’re in a good place.

Biography
Carolyn Downs was appointed LSC chief executive in March 2010 following the resignation of the former chief executive, Carolyn Regan, in light of Sir Ian Magee’s highly critical review of the organisation and Jack Straw’s decision to make the LSC an executive agency of the MoJ. Before that, Downs was deputy permanent secretary and director general of corporate performance at the MoJ. For the five years from 1999, Downs was chief executive for Shropshire County Council. During her tenure it became the highest performing county council in the UK.

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