The Law Society’s legal aid conference last week was full to capacity. This hardly comes as a surprise as members try to cope with, and prepare for, the traumatic market changes to criminal legal aid and continuing upheaval to the civil legal aid landscape.
The first 8.75% of a 17.5% fee reduction for solicitors’ criminal work was implemented last Thursday – and this direct hit on revenue follows a continued decline in volumes of work, ongoing cost pressures, the need to invest for the future digital working requirements, and ongoing changes to the way criminal legal aid is procured and remunerated.
There will be further severe challenges for those firms who chose to bid in transitioning to a business structure under the government’s new duty solicitor contracts, whether that new structure is an expanded independent firm through merger or recruitment, or a joint venture, or a looser joint working arrangement, within the challenging tender timelines.
The Law Society conference provided firms with essential information about the forthcoming changes, reviewed the lessons learned from a year under LASPO and provided firms with practical guidance to help them make decisions and choices for their own businesses.
We know our advice and guidance is proving popular. The guidance on our website has had thousands of hits. This will help criminal legal aid solicitors cope with the cuts, consider options for suitable business models and adapt to the Legal Aid Agency’s (LAA) new requirements. It is not surprising firms across the country want to explore every avenue to understand whether, and if so how, they can survive.
The cumulative effect of multiple sources of market disruption has created a ‘tipping point’, whereby many existing business models and ways of working may no longer be sustainable after a 17.5% cut. But the in-depth analysis of the Ministry of Justice’s policy that we are including in our guidance cannot be completed until the MoJ has addressed many further issues about how it intends its policy to work in the real world.
The MoJ commissioned KPMG to undertake financial modelling to see how many duty solicitor contracts should be let to create a ‘sustainable market’ at the reduced rates. There remain many unanswered questions that KPMG unearthed. In particular, it concluded that the proposals posed very serious challenges in nine rural areas, with another 21 areas requiring further analysis.
We are now firmly pressing the LAA for further analysis of these vulnerable areas and pressing for their proposals. We know that many solicitors’ firms, particularly smaller firms and those in rural areas, are questioning whether they can continue at the new rates. We will be visiting firms in these areas to seek their help in putting an evidence-based case to the MoJ on how they need to develop responses in these areas, so that the service will be sustainable.
We want to understand what the challenges identified by KPMG actually mean on the ground. Where the areas are not close to events on our roadshow programme, or firms are unable to meet up, I would ask firms and local law societies to submit their evidence to email@example.com, so together with our members we can gather this evidence.
We want to be able to show the MoJ the scale of the problems posed in these areas and we will be holding the ministry and the LAA to account to come up with practical proposals to overcome them.
We have not regarded these cuts as sustainable and we are sceptical about the current bidding timetable for criminal legal aid contracts, which is challenging. There will be further challenges for independent firms – not helped by the presence of more expensive Public Defender Service ‘contracts’ – transitioning through mergers and acquisitions, or to joint ventures within the tender timelines. There is still much to be resolved. We will continue to pursue answers to these questions.
Desmond Hudson is chief executive of the Law Society