Law Society and MoJ consultant criticise legal aid proposals as Chris Grayling is questioned by the House of Lords

The House of Lords is questioning whether Chris Grayling’s position in government as the justice secretary is causing a conflict of interests with his commitment to uphold the rule of law.

The Lord Chancellor appeared before the House of Lords constitution committee as it holds an inquiry into the role of Lord Chancellor. Grayling, the first non-lawyer to hold the post in 440 years, faced a grilling by peers on the constitutional role of the Lord Chancellor.

Responding to the questioning, Grayling said: “I don’t think that the person holding my job suffers from not being a lawyer. We don’t need a health secretary who is a doctor. I don’t believe you need to be a practising lawyer and understand the minutiae of the court to protect the values of our justice system.”

He also rejected the proposition that a lawyer Lord Chancellor would have chosen to retain legal aid as it was before the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

Pointing to the cuts made by his predecessor, Kenneth Clarke QC, Grayling said: “Perhaps there’s a belief that a separate Lord Chancellor would take different decisions on legal aid. That’s simply not the case.”

Grayling added he was “satisfied” with the legal advice provided to support his role, despite three recent and high-profile defeats in the High Court on judicial reviews. “Sometime we are right and sometimes we are wrong – we are only human,” he said.

Legal aid

The government’s last-ditch three-week consultation, Transforming Legal Aid: Crime Duty Contracts, closed this week following a High Court ruling in September which concluded the introduction of reforms to criminal legal aid by the Ministry of Justice (MoJ) was “so unfair as to result in illegality”.

Mr Justice Burnett ruled in favour of the London Criminal Courts Solicitors’ Association (LCCSA) and the Criminal Law Solicitors’ Association (CLSA) after the MoJ failed to disclose two independent expert reports, by accountants KPMG and Otterburn, which the Lord Chancellor had relied on.

In response to the ruling, the MoJ published a further consultation, inviting comments from the profession on the undisclosed reports, albeit for the brief period of just three weeks. Law Society president, Andrew Caplen, said the proposed scheme fails to meet the ministry’s own objectives of ensuring any future criminal legal aid scheme must be sustainable with sufficient numbers of solicitors doing criminal duty work.

“The scheme could bankrupt solicitors’ businesses,” he said, “leaving areas of the country with no legal representation for anyone accused of a crime and depriving vulnerable members of the public from access to justice.”

Consultant criticism

While the MoJ will by now be used to strong words coming from the office of the Law Society president, it is debatable as to whether the Lord Chancellor is in the mood to listen. However, it is unlikely that Grayling’s ears failed to prick up when one of the MoJ’s own consultants criticised the way its report was interpreted by the government when it was used to push through the controversial cuts to legal aid.

Andrew Otterburn and Vicky Ling of Otterburn Legal Consulting categorically rejected the way in which the government calculated the impact of the proposed cuts in their response to the latest consultation. They also expressed concerns about the number of duty contracts on offer.

The MoJ’s proposals to legal aid include a reference to an alleged finding from Otterburn that law firms bidding for legal aid contracts would ’employ at least one full-time fee-earner for every £83,000 of the contract value’. Now, however, Otterburn refute this finding and argue the MoJ’s figures are far too low.

“We would like to make it clear that this was not a finding of the Otterburn report but a calculation made by the MoJ based on certain figures included in it. The £83,000 requirement is going to make it extremely difficult for good firms to create viable businesses.”

Commenting on the subsequent analysis of its report by KPMG, Otterburn wrote: ‘We do not believe that it is safe to assume work levels will remain constant for the purposes of modelling future contract sizes and numbers while at the same time acknowledging that volumes can fluctuate. That does not appear to be logical.’

Furthermore, Otterburn are concerned the numbers of contracts to be awarded in urban areas would result in a significant number of medium and large firms failing to secure duty contracts, leaving resources in rural areas sparse.

“The analysis undertaken by KPMG indicated the market in rural areas was already highly consolidated. Our research indicated a very fragile supplier base in these areas and we remain concerned that additional reductions would weaken this supplier base further and could have un-intended consequences.”

Otterburn continued: “The supplier base would be weakened and this would lead to difficulties when re-tendering four years on. The problems of over-supply are in London and some urban areas, rather than in rural areas.”

Caplen argued the MoJ’s decision has been based on assumptions that the Law Society found to be inaccurate and inadequately tested.

“Many warnings in both Otterburn and KPMG [reports commissioned by the department] do not appear to have been taken by the MoJ, with the result that they have reached some very concerning conclusions.

“There is a high risk that solicitors undertaking this essential work will struggle to stay afloat under the proposals, which may lead to the failure of the government to meet its legal obligations to provide duty solicitor services to all who ask for them,” he said.

Unpublished report

If that was not enough for the Lord Chancellor to contend with, the Law Society has called on the MoJ to consult on another previously unpublished draft report by PA Consulting which also came to light during the judicial review.

The PA Consulting report, which was made available to the MoJ more than a year ago, argues the evidence that economies of scale would be available in the current market was doubtful. The report concluded large firms will be less able than small firms to absorb the fee cuts, and that only a quarter of existing firms would remain profitable after the cuts. Despite this conclusion, the economies of scale argument went on to form the primary rationale for the MoJ’s proposals.

Commenting on the PA report, Caplen said: “Given the relevance of the report by PA Consulting to any consideration of the viability of the proposed model, we believe it is essential that this report should also be consulted on. In our opinion, no duty solicitor provider scheme can be implemented unless and until the MoJ can demonstrate reliably that it meets the MoJ’s own criteria: that any scheme will be sustainable. If it presses ahead as planned, the MoJ could be in danger of breaching its duty to ensure that all those accused of a crime will have access to a duty solicitor.”

Caplen also commented on the wealth of evidence that shows the cuts pose serious challenges for the sustainability of access to justice across England and Wales: “Given the negative conclusions reached in both the KPMG financial modelling report and the PA Consulting report, together with the failure to date to address the numerous problems identified with the model for criminal legal aid contracts, the Society believes that the proposals are severely flawed.”

He added: “The scope of the current consultation is extremely narrow, seeking views only on the two previously published reports and on the number of duty contracts to be allocated.”

The Law Society has also called on the MoJ to release a number of further ‘key documents’, the disclosure of which the Society considers is essential to a meaningful response to the latest consultation.

Caplen added: “We hope the MoJ will provide this information and we will make additional submissions once a response is forthcoming. The Law Society is extremely concerned about the scale of risk to the future availability of criminal defence services and access to justice – including for vulnerable people – if the government proceeds with the current scheme.”

This article was first published in the Solicitors Journal on 16 October 2014 and is reproduced with kind permission.