A different way of doing things - that is the promise this new government has staked its politics on. Less power hoarded in Whitehall, more control in the hands of the communities that public services exist to serve, and a politics that prevents crises rather than paying endlessly to clean up after them. Those themes will now be tested against the contents of the government’s intray and somewhere within it, attracting far less attention than it deserves, is a file offering an early and inexpensive chance to prove the promise means something.
Earlier this year, the Ministry of Justice consulted on an Interest on Lawyers’ Client Accounts (ILCA) scheme. The consultation closed in March; no decision was announced before the change of government. Parts of the profession has urged ministers to drop the idea but I want to make a different argument: this is a policy the new government should revisit, redesign and make its own. Done properly, it would turn a promise made on the steps of Downing Street into something a family facing eviction could actually feel.
That family is not a figure of speech. Every day, people walk through the doors of our 43 Law Centres facing exactly that, alongside workers dismissed without reason, and people living with a disability wrongly stripped of the benefits they depend on. Yet, in the same situations, they have nowhere to turn because legal aid has been cut to the bone. Fifteen years of austerity left a weakened advice sector just as the pandemic and the cost-of-living crisis pushed more people to the edge. This is not a looming threat but an established reality, playing out in courts, advice centres and at kitchen tables every single day.
The evidence is overwhelming. In January, Parliament’s Public Accounts Committee described a legal aid system in severe decline, with whole areas of the country lacking meaningful face-to-face advice on housing and debt. Its chair warned that the reforms of a decade ago risk becoming an “extinction event” for the entitlement to legal advice.
The Justice Select Committee has since concluded there is substantial evidence the Lord Chancellor is failing in the statutory duty to secure that legal aid. Furthermore, it found a growing justice gap, in which millions of people are ineligible for legal aid yet cannot afford advice privately: on the evidence it heard, 76% of single parents with one child in primary school fall into that gap.
The people in that gap are, by definition, beyond the reach of both legal aid and the market; free legal advice is the only door still open to them. As the committee put it, a system people cannot qualify for or access, and providers cannot sustainably deliver, “is no system at all.” The evidence has been gathered. Only the response is missing.
The premise of ILCA is simple. As Professor Linda Mulcahy explained in her submission to the recent Justice Select Committee inquiry into access to justice, there is value in gathering together the many small amounts of interest on client accounts held by lawyers which it is not economical to return to clients individually. Those funds are currently retained by firms and, when rates are high, form a significant income source. An ILCA scheme would pool them to attract a higher rate and invests them to fund access to justice. Some have interpreted this as a tax on solicitors, but the ethical foundation of such schemes worldwide is that the interest was never the firm’s to keep - a principle established at least as far back as Brown v Inland Revenue Commissioners [1964].
Individual designated accounts are a different matter. Here the interest is readily attributable to the named client, and although in most established schemes the client is entitled to claim it, in practice many do not, which is precisely why the question of ownership must be settled openly rather than assumed. A British scheme should look to how other jurisdictions have resolved this and follow the most robust of those models. What it should not do is treat this interest as a straightforward source of funds; doing so hands critics their strongest argument.
Globally, ILCA schemes are not novel. Many countries have run them successfully for over 60 years. A University of Oxford project, funded by the Nuffield Foundation, has studied 78 ILCA-style schemes across the globe, many in common law jurisdictions. Still, the UK is absent from this set, despite there being nothing in the legal, regulatory or financial landscape of England and Wales that makes an ILCA scheme impossible here. In pursuing it, we have, as one speaker put it, the extraordinary advantage of coming to this 60 years after everyone else, so we can build on what has worked.
The ILCA proposal consulted on by the previous government does not meet this international standard. Every functioning scheme that the Oxford researchers examined dedicates its funds to access to justice, managed independently of government. Despite this, MoJ has proposed that ILCA funds flow into its general budget with no access to justice ringfencing. The moment that ILCA income becomes a line in a departmental budget, it ceases to be a structural solution.
A British ILCA scheme must, then, be framed by three essential principles:
- · The fund must be independently managed - at arm’s length from government, with a statutory mandate focused on access to justice;
- · It must be transparent and accountable, with meaningful input from civil society, the profession, and the communities it serves;
- · It must be ring-fenced, protected and insulated from political pressure.
Importantly, too, legal aid providers, who already operate on the narrowest of margins, should also be exempted entirely from paying in. No one expanding access to justice should be adversely affected by an access-to-justice scheme.
A new government inherits this proposal unencumbered. It made none of the design choices that provoked opposition, and it is free to fix them. Redesigned along international standards, ILCA could become one of its finest achievements - a durable settlement for access to justice that costs the Exchequer nothing.
LCN stands ready to work with the incoming government, the Solicitors Regulation Authority, the Law Society, the Access to Justice Foundation and every part of the legal community to design a scheme that commands broad confidence. The international evidence is clear and the need is undeniable. The only question is whether the new government has the will to address this properly. We hope it will.
Julie Bishop, Director, Law Centres Network
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