The war on legal aid: are lawyers starting to win the battle?

Has the balance of power shifted in the legal aid war? Until now, the legal profession has seemed up against it in the fight to resist damaging cuts in the ?2 billion legal aid scheme.

But the National Audit Office (NAO) last week reported that the sustainability of the scheme was at risk because of mismanagement that has led to overpayments to the tune of ?25 million.

As a result it is not giving the taxpayer value for money, the public spending watchdog said.

Lord Bach, the minister for legal aid, moved swiftly to say that he had set in train steps to recoup the money and other efficiency measures. But if the legal aid scheme is being mismanaged it becomes harder to argue for further cuts from lawyers.

Nicholas Green, QC, the Bar chairman-elect, who takes over on January 1, says that there is not a ?scintilla of hard evidence? to show that by slashing legal aid rates it will not cause unintended consequences and cost increases elsewhere.

Both the Bar and the Law Society have warned that lawyers will walk away. To date, ministers and officials have poured scorn on such threats. But as Baroness Kennedy of the Shaws put it at the recent Bar conference, you can always find someone to do the work ? it?s a question of quality and experience.

The NAO report painted a dispiriting picture. It showed that 16 per cent of solicitors? firms providing legal aid criminal defence services make 0 per cent profit and 14 per cent make 1 to 5 per cent profit.

Those figures represent the position before the partners receive a single penny ? 0 per cent profit means partners did not earn any income for their work, the Law Society points out. In effect, they are being cross-subsidised by more profitable work that the firm does.

More worryingly, the NAO also found that 28 per cent of firms said that they were unlikely to be conducting legal aid in five years? time because of unprofitability, the prospect of tendering or retirement.

Richard Miller, the society?s legal aid manager, said: ?This report goes a long way in dispelling the belief that legal aid lawyers are profiteering from the system. Many are not earning any income from the work they do. This is a picture of a supplier base on the point of crumbling into insolvency.?

And, of course, it is people needing access to justice, he says, who will lose out in the long run if there are not enough solicitors to provide criminal defence services on legal aid.

The NAO report, he adds, provides a ?catastrophic? picture of the ?economically precarious position? of most of the solicitors doing criminal legal aid work. A ?major overhaul? is needed, he says, to simplify the contracts so that they are easier and less expensive for solicitors and the Legal Services Commission (LSC) to administer.

Meanwhile, consultations continue. Today the LSC issued proposals for the fees to be paid in the most expensive trials ? so-called very high cost cases. The proposals come after original proposals last year led to a widespread boycott by barristers of serious trials.

The same savings made would have to be the same, the LSC says. It puts forward three options: maintain the panel system of advocates; scrap the panel and bring in a version of hourly rates but combined with individual contracts for each case; or extend the fixed-fees scheme (known as graduated fees) from cases that last up to 40 days to those that last up to 60 days.

Whatever is picked, the LSC and Ministry of Justice are determined to exact a price and in future, the quality of advocates will be assessed under a quality assurance scheme.

Any new high-cost cases scheme, which would affect 120,000 Crown Court cases and take 10 per cent of the criminal legal aid budget or ?112 million, will come into force in July next year. So there is time to get it right.

Before then there will be a general election. A Conservative Government would not necessarily give lawyers a better ride. Public spending constraints will be the same, Green says, and the Bar?s case will still have to be made. It may tempting, as he puts it, to ?wallop? lawyers before an election. But bad decisions have a high price ? an ?adverse ripple effect? through the justice system. It is now for ministers, Green argues, to show that their plans will not cost more money than they save.