What competition can offer Legal Aid

Does the introduction of competition under the Legal Service Act 2007 have anything to offer the legal aid sector? It has been six months since the ‘Big Bang’ start-date (October 6th 2011) under the legislation that allowed for the licensing of alternative business structures or ABSs. It introduced a new regime enabling both the external ownership of law firms and the floating of legal practices on the stock exchange.

This is the first in a series of articles looking at ‘access to justice’ in the context of the deregulation of legal and the biggest ever retrenchment of the legal aid since it was introduced. So far the Solicitors Regulation Authority has received more than 150 ABS applications and, meanwhile, peers contemplate the Legal Aid, Sentencing and Punishment of Offenders Bill which plans to take £350 million from a £2.1 billion scheme by removing social welfare law and large parts of the family scheme (except where there is domestic violence). Over the last two weeks, the government has suffered seven defeats on its legal aid proposals in the House of Lords, and made a series of concessions (allowing areas of law to be added to the legal aid scheme in future, adopting a wider definition of domestic violence and withdrawing the threat of means-testing police station advice).

The legal not-for-profit sector, without private practice income to lessen the impact of the reforms, is most exposed. The reforms would have ‘a devastating impact’ on the network of almost 400 Citizens Advice Bureaux across the country, predicted chief executive Gillian Guy this month. ‘Specialist advice has become a core part of the CAB service,’ she commented. ‘Our frontline caseworkers and managers have told us that the impact of the proposed changes to legal aid on specialist services will be devastating. The overwhelming majority say that it will be impossible to provide a specialist service, whilst over half say that it may be impossible to continue providing any advice service at all.’ The Law Centres Federation last year predicted that as many as 18 of its 56 law centres could shut their doors.

Whilst the legal press works itself into a froth of excitement about ABSs, lawyers in the small and troubled publicly funded sector of the legal profession are unlikely to be over-excited about its transformative powers. Legal aid lawyers have long feared that big business would indulge in an asset-stripping spree snatching lucrative work from high street practices and jettisoning legal aided. Lord Phillips of Sudbury, the solicitor and Lib Dem peer, once wished the Legal Services Bill to be ‘thrown into the deepest hole in hell’. ‘If this wretched Bill goes through,’ he told fellow peers in 2006, ‘you may get the likes of Tesco, Barclays and the Wal-Marts deciding that there is money to be made but they’ll only be interested in the profitable bits such as property, Wills and employment,’ he said.

The Law Society tried to argue that, through the ABS licensing regime, conditions could be imposed upon new market entrants compelling them to offer welfare law services or else provide financial supporters to assist legal aid firms ‘imperilled’ by the new entrants (similar to section 106 ‘planning gain’ arrangements).

I once asked Jonathan Gulliford, operations director of Co-Operative Legal Services, what he thought of the Chancery Lane’s proposal. ‘It’s trying to put the problems of legal aid funded work into the courts of ABSs. Nobody is asking Silverbeck Rymer or Clifford Chance to subsidise legal aid work? To say that the Co-op isn’t allowed a financial model to compete with the likes of Silverbeck Rymer in the personal injury sector because it has to fund social welfare and immigration work is completely ridiculous.’ If there was not enough money in legal aid to make a profit then that ‘needs to be addressed in a different forum than the Legal Services Act’, he argued.

The big retailers haven’t shown much enthusiasm at the prospect of moving into legal services – notably, Tesco whose name became shorthand for deregulation. There is one exception: the Co-Op. Eddie Ryan, managing director of the Co-operative Legal Services, has acknowledged that legal aid is a good fit with the store’s brand. He talked of the Co-op ‘wrapping our arms about people who need our help’. ‘Legal services are a distress purchase or a purchase of necessity,’ he says. ‘We are there when people need us or in times of distress.’

At the end of last year the Co-Op launched a family law service spearheaded by lawyers from leading London legal aid firm TV Edwards (managing partner Jenny Beck, head of business development, Chris May, and partner Christina Blacklaws). It will offer a full range of fixed-price family legal services and has indicated an intention to bid for a legal aid contract in the next tender round. Beck, who is co-chair of the Legal Aid Practitioners Group, has denied her decision was motivated by money. What swung it was the potential for the new venture to increase access to justice, she says. ‘If you were a legal aid lawyer 10 years ago you would have been helping infinitely more people than now.’