The recent announcement by the MoJ about the postponement of the introduction of competitive tendering for legally-aid criminal defence work and, by association, civil family work has seen jubilation in many barristers? chambers and we hear, from them, that the reforms have been ?kicked into the long grass?.
Whilst there may be those at the Bar who are pleased the overwhelming emotion should, possibly, be one of a missed opportunity. Competitive tendering would have given the Bar the chance to strike collaborative and cooperative deals with solicitors jointly to bid for contracts and prove the worth of their advocacy skills. That opportunity has been lost until at least 2015 and, given the MoJ?s serial inability to get competitive tendering off the ground, maybe forever.
In fact, it's the worst thing that could have happened for the long term viability of the Bar. Price competition would have clearly reduced the number of directly contracted legal aid providers, and, if properly managed, it offered the opportunity for making the provider base a healthier place and, crucially, it would have allowed the Bar to enter. The supplier base could have been refined to a smaller group of more efficient, modern and innovative practitioners. Good and proficient suppliers now won't have a chance to show what they're worth through the means of a structured competition.
There will be those who now take the view the pressure is off, relax, and just put their head back in the sand (or wherever). This complacency will be ill-advised as the whole of the legal landscape is rapidly changing and competitive tendering for legal aid contracts is only a small part of it. Snooze and you lose.
It is worth considering how and why we got where we are in the first place.
The LSC identified in 2002 that if nothing was done to support the growth of larger providers then the supplier base would perish by attrition in a market populated by too many providers with work spread too thinly, and with no prospect of rate rises. What followed, therefore, was a series of failed attempts, over a period of 10 years, all aimed at creating a healthier market. In 2002 those commercially minded solicitor practitioners who welcomed proposals for fewer firms and bigger contracts invested in the first of many aborted LSC schemes as ?preferred suppliers?. Since that time we have seen the LSC?s cancelled BVT pilot for Greater Manchester and the West Country in 2009, the farce of the 2010 family bid round, and now the last minute decision of the MoJ to cancel the long promised consultation on price competition.
Although the LSC predictions as to what would happen to the supplier base are certainly coming to pass, both the LSC and MoJ now seem to conveniently overlook their justification for embarking on this failed process of change, or perhaps no one now knows, remembers, or most unpalatably ,cares why all this was done in the first place.
Some may see an irony in this short history of ?change?. Those providers whom the LSC would doubtless once have claimed to value the most, those that invested and planned for the future the LSC has mapped out, have been consistently disappointed. Those that have simply ignored every word that has been said in the last 10 years are still here. That analysis would, however, be an over simplification. Things have undoubtedly become tougher for all practitioners, harder than the LSC ever predicted and, as a result of static (and in some cases reducing) rates, profit margins have become ever slimmer. The core of firms who have changed are better suited to resist the current climate, and, as foreseen, some of those who have not have changed have, sadly, withered on the vine. Even sadder, some excellent providers (both solicitors and counsel) have simply lost faith and given up on publicly funded work. However, we have yet to see if the MoJ will decouple the reduction of the supplier base from competitive tendering and find another way to do it.
So where does this leave the Bar? If the MoJ still pursues its long term target of ?350-400m saving a year, and there?s no sign that they?ve been excused that by the Treasury, it's the worst thing for a go-ahead chambers as the continuing cuts in legal aid will only make it harder for them as smaller/less proficient competitors will keep doing the work and taking away volume (the only way to make up for poor rates) just to survive. So, it'll be death by a million cuts in what will seem like a never-ending reduction in legal aid rates.
There will still be a new round of legal aid contracts for both family/crime early in 2013 and the recent ministerial statement was mute about that. Whilst BVT has been postponed it didn?t say anywhere that OCOF has.
The MoJ decision to do nothing coincides neatly with the somewhat delayed acquisition by the SRA of its power to licence ABS. It would be wrong to expect that those firms that have been quietly preparing for competition will simply accept that their share of the crime market will now stay static, and equally, do nothing. Such business will doubtless look for other opportunities for expanding the volume of work they carry out, which inevitably means reduction in the overall volumes of work flowing to the Bar. Chambers with a real eye on the future will seek out such opportunities as well - and there are lots out there.
There is a paradox in that whilst the Bar and the Law Society have focussed for almost six years on resisting price competition in legal aid, it has been quietly accepted in many other areas, seemingly, without demur. A number of local authorities and others are currently running price competitions for all manner of work, and more are sure to follow. Local authorities have, of course, previously invited competitive bids in discreet areas of law; and they are now inviting bids to cover the entirety of their advocacy requirement. Some chambers will participate in these competitions with more success than others. In such markets size, capacity and commercial awareness will always carry inherent advantages and new business models will doubtless arise to meet this demand.
The genie of competition is out of the bottle, and even Ken Clarke is never going to get it back in.
So, far from whooping with unrestrained joy, barristers might be well advised, to redesign their chambers operating system, come up with some iconoclastic ideas for growth and design/implement some fresh strategies based on new contract/commercial business models. It might mean some very hard thinking/talking to move away from the traditional but, in the opinion of many, old-fashioned management structures, decision by committee, universal democracy and lack of corporate endeavour. However, better that than joining the legal aid reforms in the long grass.
This article was written by Ian Dodd and John Binks and was published on CrimeLine. It has been reproduced with the kind permission of Andrew Keogh.