Lawyers warned this week that civil legal aid services could be devastated by government plans that would see the total annual income of legal aid providers slashed by up to £154m.
The proposed reforms would cut state help to all but the very poorest, the Law Society warned.
Nearly 550,000 cases a year – including 265,000 family cases – will no longer be eligible for legal aid, and fees in civil and family cases will be cut by 10% across the board, the Ministry of Justice proposed in its consultation paper published on Monday.
Small legal aid providers will be ‘disproportionately affected’ by the reforms compared with other legal aid providers, accompanying documents revealed. Legal aid firms as a whole stand to earn between £144m and £154m less annually, the papers said.
The plans are intended to save £350m from the MoJ’s £2.1bn legal aid budget by 2014/15.
Justice secretary Ken Clarke told parliament that legal aid ‘will still routinely be available in civil and family cases where people’s life or liberty is at stake, or where there is risk of serious physical harm or the immediate loss of their home’.
But he added: ‘At more than £2bn each year, we currently have one of the most expensive legal aid systems in the world. This cannot continue.’
The categories proposed to be cut from the legal aid scheme are: private law children and family cases where domestic violence is not present; education; immigration where the individual is not detained; clinical negligence; ancillary relief cases where domestic violence is not present; employment; welfare benefits; debt matters where the client’s home is not at immediate risk; consumer and general contract; Upper Tribunal appeals; tort claims; legal help for Criminal Injuries Compensation Authority applications; and some housing matters.
The MoJ said the budget reductions should be offset in part by increased use of alternative dispute resolution, especially for private family law cases. It also mooted two alternative sources of funding: the interest generated from solicitors’ client accounts; and a supplementary legal aid scheme, where a cut is taken from general damages won by successful claimants in receipt of legal aid.
The MoJ confirmed that price competitive tendering for criminal legal aid is set to be introduced in 2011/12, and later, for civil and family legal aid.
The announcement of legal aid cuts came after the Law Society published the results of its in-depth review of access to justice. The report offered new solutions to finance legal aid, including an increased tax on alcohol to supplement the legal aid budget in recognition of the extent to which criminal behaviour stems from alcohol abuse, and a levy on the financial services industry to meet the cost of City fraud cases.
Law Society chief executive Desmond Hudson responded to the government’s green paper by warning that ‘only the poorest of the poor’ will be eligible for legal aid should the proposals be fully implemented.
Legal Action Group director Steve Hynes said: ‘The government is walking away from ordinary members of the public. At the heart of this is a complete lack of strategy. It’s about quick savings that will cause the least political damage. The plans will devastate civil legal aid services.’
Legal management consultant Andrew Otterburn said: ‘The cuts will put some firms under huge pressure. A 10% cut in fees could result in a 50% cut in profits. For many firms this will have a significant impact, and a number are already struggling following the upheaval of the family tender.’
Along with its plans for legal aid cuts, the MoJ simultaneously launched a consultation setting out its intentions to implement Lord Justice Jackson’s proposals for reforming the funding of civil litigation. It will adopt Jackson’s recommendations of abolishing the recoverability of success fees and after-the-event insurance premiums from the losing party; permitting contingency fee agreements whereby legal fees can be paid from a winning party’s damages; and increasing general damages by 10% for personal injury. However, the government said it will wait until the Legal Services Board completes its review of referral fees before choosing whether or not to follow Jackson’s recommendation to abolish the fees in personal injury cases.