R (on the application of London Criminal Courts Solicitors Association and another) v Lord Chancellor: Queen's Bench Division, Administrative Court (London): 19 September 2014

Legal aid - Criminal cases - Duty provider work contracts - Defendant lord chancellor announcing decisions only 525 contracts available to solicitors for advisory work in police stations and reduction of 8.75% in criminal legal aid fees - Claimants seeking judicial review of decisions

In February 2014, as part of a series of decisions relating to criminal legal aid, the defendant lord chancellor announced that, under the new arrangements, there would be 525 contracts available to solicitors for advisory work in police stations and associated work (duty provider work contracts).

An average immediate reduction of 8.75% in criminal legal aid fees was also announced and was subsequently implemented in the Criminal Legal Aid (Remuneration) (Amendment) Regulations 2014, SI 2014/415. In arriving at the figure of 525 duty provider work contracts, the lord chancellor made a number of assumptions, not identified in a consultation paper, relating to the likely behaviour of firms of solicitors when adapting to the proposed new legal aid arrangements.

Those assumptions were developed by the Ministry of Justice, following receipt of: (i) a report of a legal consulting company in discussion with officials of the Law Society, which provided, among other things, that a 5% profit margin was the minimum needed for a firm's financial viability (the Otterburn report); and (ii) KPMG's report produced following financial modelling based on those assumptions to inform the question of how many duty provider work contracts should be made available from a range between 432 and 525 (the KPMG report).

The claimants issued judicial review proceedings, seeking an order quashing the decision on the number of duty provider work contracts, to enable consultation on the two reports to take place. They further sought an order quashing the reduction in rates of remuneration introduced in the Regulations, on the ground that the two decisions had been inextricably linked.

The claimants contended that, in the context of a long-running consultation exercise, the outcome of which would transform the criminal legal aid landscape and have an impact on access to justice, it had been incumbent upon the lord chancellor to consult on the assumptions underlying the financial modelling undertaken by KPMG.

They had a discrete argument that the lord chancellor, in terms, had promised to follow recommendations of the Otterburn report at a meeting subject to Chatham House rules and affirmed in evidence for the lord chancellor, but had failed to do so. The claimants contended that this promise had given rise to a procedural legitimate expectation, at least, that the lord chancellor should consult if he had contemplated changing his mind.

The application would be allowed in part.

(1) The failure to consult had been unfair. In the context, in particular, of a decision which would so profoundly affect the way in which the market in criminal legal aid operated and posed a threat to the continued existence of many practices, it had been unfair to refuse to allow those engaged in the consultation process to comment upon the two reports, which had included the assumptions applied by KPMG and which, in turn, had determined the number of duty provider work contracts.

The consultation paper had not identified the assumptions or even the nature of the assumptions that would lead to the decision on numbers. The broad indications given in the consultation paper of the considerations which would determine the outcome had not enabled consultees meaningfully to respond. Something had clearly gone wrong. The failure had been so unfair as to result in illegality.

However, with respect to the 8.75% reduction in fees, it was unrealistic to suppose that the question over the contract numbers, if consulted upon in the way that it should have been, would have led to a different decision on the phased reduction in criminal legal aid fees (see [50], [55] of the judgment).

R v North and East Devon Health Authority, ex p Coughlan (Secretary of State for Health and another intervening) [2000] 3 All ER 850 applied; R (on the application of Baird) v Environment Agency [2011] All ER (D) 225 (Mar) considered.

(2) Had the legitimate expectation argument been a free-standing one, it would fail. It was difficult to accept that that an observation made under Chatham House rules could be relied upon as the basis of a legitimate expectation argument. Further, the lord chancellor had followed the overall recommendation in the Otterburn report and had chosen the figure at the top end of the range produced by KPMG.

However, the lord chancellor's observations at the meeting were not entirely irrelevant. The remarks formed part of the factual background. There was one particular conclusion of the Otterburn report which had not found its way into the assumptions applied by KPMG which resonated in the fairness argument. The Otterburn report considered that a 5% margin should be taken as the minimum necessary to sustain the business.

Having heard the lord chancellor say that he would follow the recommendations of the Otterburn report and then to discover that, on that important aspect, the Otterburn report had been superseded by the KPMG report, the claimants and their members would have felt that the general unfairness had been compounded (see [51], [52] of the judgment).

The decision to let 525 duty provider work contracts would be quashed, but there was no need for an additional mandatory order requiring the lord chancellor to consult on the two reports because that followed from the terms of the present judgment. However, the Regulations, so far as they implemented the 8.75% reduction would not be quashed, as there was not a sufficient connection between the flaws identified in the consultation process and the decision to reduce fees (see [54], [55] of the judgment).

Jason Coppel QC and Joanne Clement (instructed by Kingsley Napley LLP) for the claimants; James Eadie QC, Richard O'Brien and Fraser Campbell (instructed by the Treasury Solicitor) for the lord chancellor.

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