Finding a place in the new legal market

Negotiations with the legal services commission (LSC) have left many legal aid practices wounded and wondering whether they can still truly claim to call themselves lawyers, having signed a contract that they would not ever advise a client to sign and asking themselves what on earth they should do next.

To compound this sense of unease, the legal press is packed with a bewildering array of articles about the Legal Services Act hailing a brave new world occupied by 'alternative business structures' (ABS) and brands bringing different service delivery methods into the market.

Legal aid challenges

These are challenging times and there are few things more challenging for a legal aid firm than making a decision about its future strategy.

In fact the coalescence of the Carter report and the Legal Services Act, amount to a once in a lifetime opportunity to start afresh, if not with a green field site '“ more a battleground '“ then almost, so as to create combinations of services, investors, funders and individuals to address those clusters of legal, social, financial, medical problems that clients tend to have, all in one place like within one entity (defined as an ABS) if not under one roof.

In short the vision of a properly funded and supported 'one stop shop' inhabited by multi-talented people from different disciplines catering for complex client needs.

Most legal aid lawyers will tell you that clients rarely present with just one neatly packaged legal problem for them to solve and those lawyers who have been around a while, will tell you that before life became so packed with rules for everything, they could and would cater for an array of client requirements themselves. It is just is not possible any more.

Clients' needs

The world is complicated and the consequence is that one individual can no longer deal 'holistically' with client needs, with the result that a problem is carved up and bits of it are referred on to other organisations in the unlikely hope that the client will experience a 'seamless' service.

There is thus an imperative to look at client needs in a wholly new way and to integrate legal with complementary advisory/therapeutic services and disciplines and those who fund them. No one profession or organisation has the time, the brief or the funding to spend time learning about what it is that individual clients struggle with, let alone the skills to deal with issues once identified, thus a formal 'triage' assessment at whatever point the client comes to the attention of legal, health or social services would help to identify issues and a plan to address them in a way which could be monitored and reviewed.

One of Lord Carter's solutions to stem the rising cost of publicly funded services was to recommend fewer contracts with bigger outfits '“ communtyand legal advice centres (CLANs), commuity and legal advice networks (CLACs), Consortia, plcs, merged firms, and ABSs are all possible responses. Moreover Lord Carter made it clear he thought some 'strategic thinking' and 'greater imagination' was required.

All of the models outlined above represent a move towards a consolidation in the market place and instead of being the final death knell of legal aid, the CLAN could well prove to be a means of survival for small law firms providing niche publicly funded services; for example a specialist mental heath provider in one area, could link with a criminal law practice in another and a welfare benefits adviser in another so as to create a virtual supermarket of legal services which could be accessed by clients and advisers using office- to-office (or office-to-home) Skype-type technology with a video link, allowing for a face- to-face service. This would also provide an opportunity to include and mainstream complementary support services for example counselling, therapy, mediation and ADR generally as a means of finding all encompassing solutions to client problems.

From competition to co-operation

CLANs will not form by themselves. As Lord Carter identified, firms doing legal aid work tend to be the small-to-medium sized firms. They are dispersed, fiercely independent and in competition with each other, which of course, goes a long way to explaining why, when push came to shove, most firms signed the new unified contract.

Ironically it is this very fragmentation and competition which, without some sort of co-ordinating/facilitative mechanism, is likely to make it difficult for firms to see, let alone manage, their way to survival. This is as much a problem for the LSC as it is for the firms themselves.

If firms decide to close their doors to legal aid then the skill base upon which the whole system is founded would soon be lost. This is one of those moments in time where the law of unintended consequences could well apply.

The commissioning arrangements for a CLAN are not especially clear but it is anticipated that there will be one contract per CLAN (which would provide a range of services) and since a CLAN is nothing if not an ABS, multiple funders, investors and disciplines will be possible under the new legislative framework, with management responsibility, including accountability for cost and quality being delegated to a hub organisation: not necessarily a law firm.

Whether this is something which will appeal to Tesco or any other household brand remains to be seen, but for those legal aid firms left standing there is an imperative to get bigger somehow, either by merging, 'consorting', becoming a spoke to someone else's hub or by becoming a hub and creating a CLAN.

There are management implications for each of the options but the issues for hubs and spokes are tricky and repay some careful thought.

LSC proposals

The expectation is that the LSC will delegate responsibility for the management of the contract (including cost, quality and access) to the hub organisations who will be accountable to the LSC, by means of an annual report; this sounds as if it is intended to be a bit like a company report, detailing key financial and other statistics, (presumably) about such things as numbers of individuals assisted, average costs and outcomes of cases.

This is a neat way of the LSC shaving its own budget, and perhaps also creating employment for ex-account managers, but it is abundantly clear that the hubs will have a pivotal role and that the responsibility they carry will be high.

It follows that the entry criteria for spokes will be tough, hence the peer review process, which amounts to a 'raising of the bar' (and the moving of a goalpost) in terms of the quality of advice and service given.

This is intended to weed out those firms whose standards fall short of what is considered acceptable.

The perceived wisdom is that firms with a peer review score of one or two will be less likely to generate claims and complaints and can therefore be trusted to (continue to) deliver a 'quality' service with 'light touch' supervision. The delivery of the right (error-free) services, by the right mix of advisers/professionals, in an efficient and cost effective way, along with risk and people management, will become significant issues if a CLAN, as an ABS in its own right, is required to arrange its own indemnity insurance cover.

Join the clan

It is not difficult to see that the option of being part of a CLAN and of being managed remotely by a hub organisation, via a central case management, time recording and reporting facility, could well be an attractive proposition for some.

Freedom to practise the law (or other complementary service), liberated from all but a tiny bit of 'admin', in return for a subscription to a comprehensive management system is very seductive. For those who might aspire to be hub organisations though, there is the development, opportunity and ongoing management cost to consider.

Forming a CLAN is going to take imagination (vision), time, will, energy, commitment, persuasion, determination, management expertise, facilitation and money '“ in that order. Legal aid lawyers tend to be light on time and money, even if all the other necessary ingredients exist, because time is money and money is tight. This could well be fatal as it makes them vulnerable to new, well resourced, entrants to the legal services market.

Although Carter is driving legal aid firms towards 'supersizing', by co-ordination of resources with other agencies and consolidation with other firms, the outcome may well be exactly the opposite.

Further fragmentation in the market is possible as committed legal aid practitioners set up new firms, (having perhaps left existing firms who want to give up the fight) and/or the closure of firms altogether, for want of the time, assistance and resources to identify and develop new models of working. That said, legal aid firms can prosper in this brave new world, if they wise up to the opportunities it creates and open up to the possibilities it generates.