Practice trends: criminal law

Legal aid reform drives inexorably onwards rather like the heavy load in Thunderbirds moving towards the bridge that can never bear its weight, and still no sign of International Rescue ( and do not even mention Brains!). However, the prospect of going out of business is a serious subject and must always be taken seriously.

Lord Carter's report Legal Aid Reform: The Way Ahead, published last year, has now been partly implemented by a first tranche of changes, with the introduction of Revised Magistrates Standard and Non- standard Fees, together with the Revised Advocate Graduated Fee Scheme, both of which came into effect in April of this year.

The next key changes are happening alongside the new General Criminal Contract in January of next year. These include the introduction of Police Station Fixed Fees plus the new Litigator Graduated Fee Scheme (LGFS).

One of the major problems faced by anyone attempting to decipher the deluge of information that is being produced by the Legal Services Commission (LSC) is in understanding the figures and working out how they stack up. A classic example of this can be found in the document published by the LSC in February of this year in relation to police station reforms. In that document the LSC said that it has to save £8m per annum on police station claims. In order to achieve this they have introduced a whole raft of changes to the way that police station and related attendance payments are made. Just one of these changes involves the abolition of standby payments. In the same document they state that standby payments in 2005/06 cost just over £9m. If that is the case then the abolition of standby payments achieves greater savings than the total amount required. It still however maintains that, to make this £8m saving, suppliers in major urban areas can look to a reduction of 9.5 per cent in its claims with the introduction of fixed fees, while new fees in the rest of the country will be cost neutral. These statements are simply incompatible, because if the figures are accurate, then the abolition of standby payments will free up an extra £1m to distribute across the new fixed fees. This should mean that individual claims would increase on average (albeit by a very small amount).

Graduated Fee Scheme

Another area of confusion relates to the new Graduated Fee Scheme for litigators in the crown court. In June 2007 providers were consulted on two options with regard to the payment of these fees.

Option one involved a basic fee with the possibility of an uplift to that fee for vulnerable clients and non-English speaking clients. Option two offered a higher basic fee with no uplifts at all. This was the option preferred by the LSC and, not surprisingly this was the preferred option for suppliers. At the beginning of October the LSC published the response to that consultation and option two was indeed decided upon. However it does not end there, because the figures in option two were then amended, in some cases drastically. For example the base fee in option one (with uplifts) for a guilty plea to an offence of burglary was £514. The base fee in option two increased that amount by 12.5 per cent to £578.30. Although the LSC propose to adopt option two the revised base fee is now £257, and yet they still say: 'We propose to adopt a revised option two. Option two was the LGFS as proposed in The Way Ahead with increased base fees of 12.5 per cent.'

Unless something fairly fundamental has been missed, by the authors, these new documents (some of them do make for fairly tortuous reading) it would seem that far from increasing the base fees by 12.5 per cent, these fees have actually been reduced by up to 50 per cent. Out of a total of 27 basic fees published in the Carter report only one, the basic trial fee for a class D offence has been increased. Of the remaining 26, seven are exactly the same, while 19 have been reduced. The 12.5 per cent increase in base fees which made option two attractive, as of this month, simply does not exist. This results in a version of option one (but much worse) with no uplifts.

Also in the document published by the LSC this month is the following observation: 'The LSC and Ministry of Justice view has been that a graduated fee does not pay for individual cases but for a type of case, providing an average payment for that case. For example, any murder case that lasts eight days at trial and with a prosecution bundle of evidence of some 2,000 pages will obtain the fee of £35,091.60. This will be commensurate with the average payment for such cases but not those at the top or bottom end of the historic payments.'

The word 'average' is used on two occasions in the paragraph above. A busy practitioner skimming through this document could easily be forgiven for reading this paragraph and assuming that the figure of £35,000 plus is the average figure for an eight day murder trial. Wrong. According to the tables published by the LSC the average eight day murder trial comes with pages of prosecution evidence numbering 716, and generates a fee for preparation of £14,324.52 (including VAT), net figure £12,191.08. The fee for the eight day murder trial quoted by the LSC is way above 'average'.

Whilst on that subject, the word 'average' when used in connection with the LGFS is extremely important because it goes to the very heart of the way graduated fees are calculated.

Out of a dataset of some 273,000 claims dating from 2001 to 2004/5, information was extracted to show the average complexity of every type of case (complexity being determined by the number of pages of prosecution evidence relating to that case). The average complexity was then used to determine the number of pages of prosecution evidence (PPE) cut off point in the tables. If for example a non-trial case is of average or less than average complexity in terms of PPE then the base fee is the total fee. In the case of a trial then the base fee is added to the daily trial length uplift fee and the total fee is arrived at that way. In any case where the pages of prosecution evidence number more than the cut off point, then the fee is calculated simply on the number of pages of prosecution evidence relating to that case. This is where the graduation of the fee comes in. As the number of pages of prosecution evidence increases the incremental fee per page decreases.

The document issued in the last week, however does, on the face of it contain some good news. Major concerns were expressed over the ever increasing number of confiscation hearings. The original proposal by the LSC was to add an extra day to the trial length for each day of a confiscation hearing (worthless in complex cases because the number of days at trial ceases to be a factor in the calculation of the fee. For instance in its own example of the eight day murder trial, the trial could last for up to 20 days without one single penny increase in the fee). Good sense has, however, prevailed, at least temporarily, with regard to these hearings. The LSC feel there is a need to introduce an interim approach (for how long they do not say) and now propose that the preparation element and any subsequent confiscation hearing will be remunerated by ex post facto determination. They do however at some future undefined point expect to extend the LGFS to cover this work.

Future choices

With regard to the future, all of the changes currently being introduced are simply interim measures designed in some mysterious way to prepare legal aid providers for best value tendering and this, the profession are told, is going to happen by next October.

There is also a presumption that the effect of best value tendering will be to drive costs down, and this point was addressed by the House of Commons constitutional affairs committee in its report: 'It is absolutely fundamental to Lord Carter's proposals for best value tendering that the market sets the price. It is crucial to the correct pricing of legal aid work and the sustainability of the system. The Lord Chancellor and the LSC indicated a strong belief that competitive tendering would not lead to an increase in fee levels. Where that is not the case there will be one or both of two responses:

• The market price will be treated as a cartel price and dealt with accordingly; and
• The market price will be accepted but cuts made elsewhere in legal services to offset the increase in the budget.

The first response betrays a lack of confidence in the LSC's ability to set up a system of tendering that is genuinely competitive. The second shows that a market system that delivers any increases in price might not be sustainable. Either way, neither the LSC nor the Department of Constitutional Affairs appear to have confidence in the central premise upon which the reforms are based'.

The assumption that best value tendering will reduce prices (or else!) completely disregards considerable evidence as to the fragility of the supplier base, which is becoming more fragile by the day. This condition is highlighted, both in the LECG study on the Carter proposals and the two studies commissioned by the LSC from Otterburn Legal Consulting.

The Otterburn study in 2005 indicated that the elite group of the 100 top criminal law firms had profit margins for criminal legal aid work of 4.5 per cent, while the LECG study indicated profit margins ranging from minus 6 per cent to 2.3 per cent. Which begs the question: how do you build a profit margin of minus 6 per cent into a tender price and why on earth would you want to?

However, if one accepts the figures will work, and all the proposals are sound, it is still worth taking note of the concerns of Richard Miller, of the Legal Aid Practitioners Group, on 4 March 2007: 'I am paid full time to keep on top of the LSC's initiatives, and I can barely cope with this blizzard of publications. How on earth can any practitioner who is trying to conduct a substantial caseload to a high standard be expected to do so? The sheer volume, speed and extent of the changes is liable to destroy the legal aid system even if the substance does not.'