Overshadowed by rows over sentencing policy, the Government is rushing towards a huge withdrawal of legal aid. Friederike Heine and Alex Novarese report

The statement issued on 21 June by the Ministry of Justice (MoJ) was headed: 'Clarke: Plans outlined to reduce reoffending'. Those who read the opening paragraphs of the press notice, and indeed followed through to the middle section, would have understood that his announcement related to what the Government billed as a "radical plan to reduce reoffending".

What would have been far less obvious was that this announcement heralded the launch of the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO), a sweeping justice bill encompassing a controversial shake-up of legal aid and fundamental reform of civil litigation costs that will have a huge impact on the availability of legal services.

As the announcement suggests, the details of such a complex reform of legal aid, the most radical shake-up of the scheme since its creation 62 years ago, had been utterly overshadowed by tabloid-fuelled headlines regarding attempts by Justice Secretary Kenneth Clarke to push through reform of criminal sentencing. As it happens, the embattled Clarke, who the previous month had been drawn into a manufactured hysteria after some badly-phrased comments regarding rape, had backed away from attempts to increase sentencing discounts in return for early guilty pleas. A major plank in Clarke's plan to usher in the deep savings imposed on the MoJ's £8.3bn budget had been removed.

That leaves the Government pressing on with plans to cut £350m from the £2.1bn annual legal aid budget, with £280m of the proposed cuts falling on civil legal aid. The package, largely following November's Green Paper, will lead to a huge withdrawal of civil legal aid in areas like family law, welfare benefits and clinical negligence and introduce tougher means-testing (see box, page 9). Providers will also see a drop in rates and the extension of fixed fees and competitive tendering. The package is expected to cut around £150m annually from the earnings of publicly funded advisers.

With the Government paying scant regard to most of the 5,000 responses it received during the consultation running up to the Bill's publication, the MoJ is set to press on with LASPO, despite concerns regarding the proposals and the speed at which such wide-ranging reform is being implemented.

It now appears that the Bill will have cleared the Commons by October, after which it will face scrutiny in the Lords.

"We should ask ourselves why the Government is trying to get this Bill through with such unhealthy haste," says Bar Council chairman Peter Lodder QC (pictured). "There has been a huge newspaper backlash against proposals to shorten sentences for guilty pleas that has also obscured the extent to which this Bill will affect average Britons."

As such, there has been little attention paid to the vulnerable groups that will be disproportionately hit by the changes. "I have never in my entire career witnessed the Government being so blatant about the fact that this Bill will put women, children and ethnic minorities at a disadvantage," argues Legal Action Group director Steve Hynes.

Drastic but necessary?

The stated reasons for pushing ahead with the most drastic withdrawal of legal aid since its inception are twofold: the state of the public finances at a time when the UK is running a budget deficit of well over £100bn annually and the relatively high cost of legal aid domestically. It is also undeniable that the cost of legal aid spiralled rapidly during the 1990s, rising in real terms from £1.108bn in 1990-91 to £2.06bn in 1998-99, according to figures from the Legal Services Commission (LSC).

While the first point is inarguable, there is considerably less consensus regarding the Government's oft-stated claims about the relative expense of legal aid in the UK. For one, comparing the costs of different countries' legal systems is notoriously difficult, not least because the UK's 'adversarial' system focuses legal costs on the lawyers rather than the courts.

An additional factor is that the UK jails a far higher proportion of its population than many other countries, which greatly hikes the cost of criminal legal aid.

"It is impossible to draw a meaningful comparison because of the UK's propensity to prosecute and imprison far more people than the countries it is being compared to," says Andy Slaughter, MP and Labour's shadow justice minister. "The Government is simply trying to justify financial savings which will tip the scales in favour of those that already have power and against those with no power."

It should also be remembered in relation to the 'spiralling' costs of legal aid that the previous Labour Government had considerable success at containing the legal aid budget in the wake of the Access to Justice Act 1999 and a subsequent series of cost-cutting measures, pushed through even during a period of rapidly rising public spending ahead of the banking crisis of 2008.

Though views vary widely on the relative expense of the UK's legal aid regime, with broad adjustment for structural differences it appears to be reasonably comprehensive by international standards, though to a far less bloated extent than suggested by the Government's language and use of statistics. But as to whether the reforms are workable or will deliver, there is considerable cause for concern and huge anger among most sections of the profession dealing with publicly-funded work.

While there is broad agreement that legal aid could not escape the cuts facing the public sector, many campaigners argue that a crass withdrawal of legal aid will ultimately cost the public purse more in other areas, particularly welfare spending.

Figures provided by the Citizens Advice Bureau argue that legal aid spending saves public money in the long run, with every £1 of legal aid expenditure on initial housing, debt, benefits and employment advice saving £2.34, £2.98, £8.80 and £7.13 respectively in future costs (the MoJ disputes this assessment). It is also widely anticipated that the reforms will lead to an influx in poorly informed litigants clogging up the courts and thereby incurring further costs.

In this context, there is particular concern about removing welfare benefits and housing advice from the scope of legal aid, areas which are relatively modest in terms of cost but aid the poorest members of society. Concerns have also been widely raised in the immigration sector – underlined by the recent administration of the Immigration Advisory Service, the largest remaining charity providing legal advice in the area after Refugee and Migrant Justice closed last year. (The LSC has argued, however, that law firms can fill the gap left by the not-for-profit sector withdrawing from immigration work.)

By the same token, there is considerable unease about the removal of clinical negligence from legal aid, given the nature of the cases that can be taken on. An additional concern is that the Government is pressing ahead with the implementation of Lord Justice Jackson's reforms of civil litigation costs at the same time as pushing through a huge shake-up of legal aid. The Law Society has credibly argued that the Government should split out civil cost reform from legal aid, claiming that the combination of the two was not envisaged by Jackson and that it will inevitably increase the risk of unforeseen consequences.

"Removing legal aid and simultaneously ending incentives for lawyers to take on more than just the easiest cases on a no-win, no-fee basis is dangerous," says Law Society chief executive Des Hudson. "Jackson envisaged his proposals as a package, not as something you could cherry-pick from – he also did it on the assumption that a workable legal aid system remained."

One compromise that has been floated includes retaining legal aid for the investigatory phase of clinical cases to help weed out weak claims, allowing stronger cases to proceed under reformed conditional fee arrangements (CFAs), preferably with incentives to settle quickly.

In contrast, there is broader support for taking the bulk of family law cases outside of legal aid on the basis that publicly funding such disputes can string out painful separations. Cutting funding on family cases – providing there is workable provision to encourage mediation and support for victims of abusive behaviour – would also potentially generate substantial cost savings, with the Government expecting to save as much as £170m in the area.

A further reason for scepticism regarding the MoJ proposals is that the reforms largely fail to address the small number of complex criminal cases that soak up large amounts of public funding. The reason is thought to be partly due to human rights obligations to maintain a right to a fair trial, but it leaves the Government seeking cost savings by pressing down further on the long tail of low-cost matters that have already faced substantial pressure over the last 10 years.

Concerns about whether legal aid reforms will actually deliver, both in achieving a reasonable balance in terms of access to justice and cost savings, have been heightened by the speed with which the Government has pressed on with the reforms. This has seen the MoJ brush aside the vast majority of objections to the Bill and reject alternative proposals to save money (admittedly some proposals, such as calls for employers to contribute towards compulsory legal insurance or 'polluter pays' models whereby public bodies that generate successful legal challenges would contribute towards legal aid, look logistically and politically unrealistic).

Likewise, the Law Society had little success with its proposals to cut £384m from public spending. Comments Hudson: "We found the reasons put forward by the Government for not accepting [the Law Society's proposals] to be unpersuasive. We were very disappointed. The MoJ will save money in the short term, but as to whether the Government as a whole will ultimately save money, I have my doubts."

Cardiff Law School's Richard Moorhead (pictured) also argues that the speed of the MoJ's actions is undermining confidence in the Bill.

"Given the fact that the Government needs to cut public spending, we have got to expect a fair share of cuts to fall on legal aid. [But] my impression is that there has been a tendency by the Coalition to cut the areas that do the most good and are the cheapest, which is counter-intuitive and will inevitably affect the most vulnerable," says Moorhead.

"There are clear indications that the Coalition has not made a fair assessment of the impact of the cuts. The reason for fast-tracking this Bill is that they want to get the main body of cuts through so the political pain can subside before the next general election."

For its part, the MoJ disputes how viable many of the proposals put to it were, with Jonathan Djanogly, the minister responsible for legal aid, commenting: "We considered these proposals as part of the consultation, but concluded, on the whole, they did not represent a realistic alternative to our programme of reform."

A hard target

One political reality for legal aid is that it has proved an easy option for a Government looking for cuts, while opposing reform in this area has proved a hard target for campaigners to hit. The extent to which rows about prison sentencing have overshadowed the legal aid reforms illustrates the way in which highly complex public policy reform struggles to get the attention of the media or the general public. It also seems apparent that Sound Off For Justice, a group set up to oppose the legal aid cuts, has struggled to find a narrative or a series of clear points on which to oppose the Bill.

Some see the tone of the campaign as an attempt by the Law Society to avoid replaying the confrontation with the Labour Government that resulted from its robust lobbying over the Access to Justice Act (a series of prominent newspaper campaigns provoked the anger of then Lord Chancellor Lord Irvine).

Attempts to campaign on the reforms have also been hampered by the difficulty of the Law Society and Bar Council adopting a common position. In particular, the Law Society's call for moves to cap the fees paid to senior lawyers, a move that would directly impact on the earnings of senior barristers, made it hard to form a united front.

In this context, it is easy to see how the law and order aspects of the Bill, in particular Clarke's controversial aim of reducing the prison population, has dominated the agenda. The row also underlines the political pressure on MoJ and Clarke personally. Never one of the most influential Whitehall departments, it has already seen a 23% budget cut imposed on it under last year's Comprehensive Spending Review, deeper than the 19% departmental average. Likewise, Clarke's liberal and Europhile credentials have made him a target for the right wing of the Conservative Party, further dwindling hopes of a more constructive long-term stance on reforming legal aid.

"Clarke's position and credibility was weakened by the furore over reducing prison sentences," comments Young Barristers' Committee chair Nichola Higgins (pictured). "We cannot allow legal aid to become a victim of political infighting." The clear feeling among campaigners is that the U-turn on criminal sentencing, which is expected to cost the Government in the region of £100m, has damaged the chances of securing concessions on legal aid. And only the politically naive would imagine that the MoJ is unaware of the difficulty of capturing public attention for complex reform that can so easily be portrayed as taking on the self interest of lawyers.

This lack of effective oversight also explains a more fundamental criticism of the Bill: that it represents a lack of imagination in rethinking legal aid in favour of a simplistic and rushed hacking of the current model.

So while there is support for some of the constructive proposals in the Bill to promote mediation, these are seen as exceptions in what remains a crude agenda. Certainly, many lawyers concede that there is need for a genuine debate about the role of legal aid in modern society and how that should be provided.

Jon Robins, a journalist and writer with years of experience covering legal aid, comments: "There is a massively stark contrast with the Access to Justice Act in comparison to the current legal aid Bill, which is relentlessly negative. At the time there were many claims that [the 1999 Act] would destroy civil legal aid, but in retrospect you can see that Lord Irvine was actually engaging with the principles behind access to justice and thinking about ways in which there could be better provision.

"With this legal aid Bill, it's all about saving money. There's no thinking about the architecture of publicly-funded law. Ken Clarke says that access to justice is the hallmark of a civilised society – I think his Bill renders that statement meaningless. Scrapping legal aid for social welfare law is an attack on the poor and vulnerable."

Hudson also agrees that LASPO is a missed opportunity to enter a genuine discussion about what the role of legal aid should be and how it should be delivered. "There is certainly a case to say we need to look at legal aid as a blank slate.

"[But] when you look at what the Government is doing, it is very much about just delivering £350m in cuts. With perhaps only one exception – the concept of encouraging mediation – there is very little evidence of an alternative vision for legal aid."

Risking system failure

Underpinning the debate about legal aid has been a claim that this latest stream of cuts will lead to a form of system failure in the provision of publicly-funded legal services, whereby providers in the sector will be forced to abandon the work entirely. This has been amplified by the unease on the high street that the Legal Services Act will hit the profitable retail services that were used to cross-subsidise publicly-funded work.

While legal aid work can still offer considerable sums for experienced criminal barristers, there is a widespread agreement that law firms and the junior Bar handling such work are being pushed near breaking point. And such pressures will certainly rise in future for the junior Bar, as the current shake-up of university funding will hugely increase the debt that young advocates will be carrying. If previous howls from the profession regarding advice deserts and mass exoduses from legal aid work had a pronounced streak of melodrama and self-interest to them, even hard-nosed observers believe we are rapidly approaching just such a tipping point.

Notably, LSC chair Sir Bill Callaghan wrote to ministers earlier this year warning that the scope and speed of the reform process risked substantial problems, including increasing the chance of successful judicial review proceedings or even "market failure" as providers vacate the market.

In addition, a broadly supportive Parliamentary report on the Government's proposals earlier this year expressed unease about both the rigour of the MoJ's research and the impact on legal aid providers. "Criminal fees have already been slashed by 13.5%, which will inevitably lead to a brain drain from legal aid work," says Higgins. "Barristers work long hours in emotionally-charged and stressful situations – this deserves reasonable remuneration."

Neither do such forecasts seem fanciful. Junior lawyers focused on legal aid with several years of practising experience earn around £25,000 annually, an income that will come under further pressure and one that is increasingly falling behind other professions.

But in essence it seems that this is the path the Government is committed to. Current expectations are that there will be only minimal further concessions on the Bill – though it looks likely to receive some tough scrutiny in its passage through the Lords. (The clause 12 provision allowing means-testing of advice upon arrest and provisions allowing the MoJ to extend the withdrawal of civil legal aid with secondary legislation look set to gain particular opposition.)

Whatever the merits for legal aid reforms – and despite the anguished cries of some in the legal aid lobby, they are clearly considerable – there is a strong sense that a Government department under pressure is pushing on regardless of the arguments against, good and bad.

Legal aid has, as the Government has argued, expanded considerably beyond its original post-war remit, though that is true of the provision of most public services. What is certainly missing is a wider rethink of a justice system to which growing numbers of lower and middle earners already have little access. There could be room for a different kind of court or lower cost tribunal systems that provide some form of civil justice without need for expensive lawyers.

In this context, it is the speed and single-mindedness with which the Government is pushing ahead with reform on multiple fronts that makes it hard to sustain much confidence in the outcome, either in moral or economic terms. The Government's stance looks like a gamble, plain and simple. Unfortunately, those who will pay for it if it goes wrong won't ultimately be from the legal profession – lawyers will move further from public work into more lucrative areas – it will be some of the most vulnerable members of society.

By Friederike Heine and Alex Novarese

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Legal aid reform – major proposals

The Government confirmed, with the launch in June of the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO), what everyone already knew: that it was largely sticking to the package of deep cuts to legal aid that it had unveiled the previous November. The Bill has 119 clauses with parts one and two dealing respectively with legal aid and litigation costs.

The main thrust of the reforms, which are intended to save £350m a year by 2015 from the £2.1bn legal aid budget, is a major withdrawal of civil legal aid. It will also lead to the replacement of the Legal Services Commission by an agency of the Ministry of Justice (MoJ) and the creation of a new civil service post of 'director of legal aid casework', which critics have argued could lead to political interference.

As such, legal aid will no longer be available in debt and housing matters unless there is risk of homelessness; education; employment; immigration, except where an individual is detained; family law cases where domestic violence is not present; welfare benefits; clinical negligence; tort and other general claims; and assistance with the Criminal Injuries Compensation Authority. The Bill also, in clause 8, section 2, includes a provision allowing the removal of civil legal aid in other areas using secondary legislation. Another controversial clause covering 'choice of provider services' states that in cases where there is a duty to make legal aid available, it can be delivered by telephone or email.

In one of the few concessions since the publication of the Green Paper the previous autumn, the Government has agreed to extend the definition of domestic violence to include mental and sexual abuse, allowing more people to qualify for legal aid in family cases. In addition, legal aid will be retained in cases involving special educational needs and in family cases in which there is a risk that a child could be taken abroad.

This redrawing leaves legal aid available in a number of areas including: asylum; community care; mental health; judicial review; discrimination proceedings; and claims against public bodies involving abuse of power and/or significant human rights breaches. Funding for judicial review will be limited to directly affected parties, making it harder for campaign groups to fund legal challenges. Collectively, the cuts are projected to save around £280m from the roughly £900m spent annually on civil legal aid.

Separately, the Government is also proposing to introduce a single telephone gateway to help provide initial legal advice, though details remain sketchy on this point. Lawyers undertaking civil legal aid work will see a 10% reduction in rates across the board, while competitive tendering will be introduced so that contracts are awarded to bidding firms that offer the cheapest quote.

Changes to eligibility for legal aid

LASPO will also substantially toughen the means-testing regime for legal aid, with only individuals with less than £1,000 in disposable capital remaining eligible for full legal assistance, down from £3,000 currently. Those with between £1,000 and £3,100 in disposable capital will be required to contribute a minimum of £100 towards their legal costs. Those with disposable monthly incomes of between £315 and £733 will also have to pay up to a maximum of 30% of their disposable capital, against 20% currently.

Additional changes include ending benefit 'passporting', which sees those on benefits such as the Jobseeker's Allowance automatically eligible to receive legal aid. Pensioners on low incomes will also lose a more generous eligibility threshold that allows those with savings of up to £100,000 to receive legal aid.

Changes to criminal legal aid

Though the changes to criminal legal aid are far less drastic, the Government is set to expand the use of fixed fees and introduce competitive tendering. There has also been considerable concern regarding clause 12 of the Bill, which includes a provision that could allow for means-testing of legal representation for individuals following an arrest. Clause 52 also removes the right for privately funded defendants to recover 'reasonable' legal costs if acquitted. This would likely peg many payments for successful defences in magistrates costs to legal aid rates.

Civil costs reform

Controversially, the Government is pressing ahead with major cuts to legal aid at the same time as implementing the reform programme of civil litigation costs put forward by Lord Justice Jackson in his January 2010 report. This will end the 'loser pays' model for success fees and related insurance costs, meaning additional costs for cases taken under a conditional fee agreements will be met by a successful claimant. While there is considerable support for this measure in heading off abuse in the personal injury market as it will give claimants an incentive to control litigation costs, there is more unease about its application in other areas like general claims and clinical negligence. Either way, the move is expected to drastically lower the level of success fees charged and trigger substantial consolidation among volume litigation firms.

Cost reform also includes the introduction of a new model of 'no win, no fee' dubbed 'damages-based agreements', which will allow lawyers to take a proportion of damages as a success fee. But while this has attracted the attention of City law firms, who believe the model could be used to take on complex disputes, it is not yet clear how widespread its use will be for volume claims. The Government is still consulting on proposals to increase general damage payouts by 10% to compensate for the changes to success fees and an expected cap of 25% for damage-based awards.

Impact of the Bill

Under the Government's own assessment, the changes will reduce the number of civil cases handled annually by 547,000, while legal aid providers will see their incomes fall by £144m-£154m a year. The MoJ's impact assessment of the Bill also concedes that there is a risk of increased criminality and a negative impact on social cohesion. Critics, of course, have a far harsher view of the Bill, arguing it will fail to deliver the promised cost savings and damage access to justice.

Source: Ministry of Justice; Unequal before the law? The future of legal aid

For further analysis, see United fronts – the legal profession needs a more unified voice.

For more, see:

• From fourth pillar to 'gravy train' – legal aid since '49
• Legal aid reform – opinion and reaction from the profession and parliament