Legal Aid – barristers versus the Government, who will prevail?

What happens when a monopoly buyer (a monopsony) meets a monopoly seller or a well-organised cartel? It’s a bit like the irresistible force meeting the immovable object - hard to predict exactly what will happen, but almost certainly messy.

So 2014 may see an interesting example of this playing out in the UK public sector.  The Legal Aid Agency (LAA),  which is the successor organisation to the Legal Services Commission, (for whom I was a Commissioner from 2006-10) is responsible for managing the UK government’s £2 billion a year spend on Legal Aid in England and Wales.

Now the government has calculated, I’m sure, that there isn’t much sympathy for lawyers amongst the population at large, nor indeed for many recipients of Legal Aid – for instance, ‘refugees’ challenging asylum decisions, or prisoners complaining about their human rights.  So whilst some key elements of the welfare state have been protected even during the current pressure on public finances, Legal Aid is under pressure and that £2 Billion is being squeezed.

There have been a number of failed attempts at introducing genuine market ‘procurement’ mechanisms, some of which I was somewhat involved with, and it has proved to be an incredibly difficult ‘market’ to address though usual commercial means. So the LAA is now simply imposing fee reductions on the legal profession, including a 30% reduction in fees for Very High Cost Cases (VHCCs).

But the lawyers – and barristers – are fighting back. The barristers professional body, the Bar Standards Board,  has clarified to its members that they do not have to accept work at these new lower rates and that their guidance rules “permits barristers to treat their instructions as withdrawn in circumstances where the basis of remuneration is altered”.  So they could even withdraw from current cases because the fees are reduced.

And whilst a few barristers do well out of Legal Aid, we’re now talking about fees a of around £300 a day, out of which barristers have to pay their travelling fees and office costs – most barristers are self-employed and pay something around 20-30% of their fees to their chambers. More than half the Legal Aid barristers make less than £30K a year, and we’re talking about professionals making net something like £200-250 a day – when they’re working, of course. Anyone who engages consultants or even skilled interims will know how that compares with, say, management consultants or even a decent project manager.

Nigel Lithman QC, chair of the Criminal Bar Association, says:

“The criminal bar is being squeezed out of existence. People are leaving in droves. The 30% cuts in many cases come on top of a 40% cut in fees since 1997. The most able barristers are not going to go into crime … Where are we going to find judges of any ability in years to come?”  

I suspect this isn’t just negotiation positioning – which young barrister in their right minds would go into Legal Aid work now? And just before Christmas, we saw the first signs of what may be to come as the  two forces come into conflict.

The Times reported that Southwark Crown Court in London will be asked to throw out a £4.5 million complex fraud trial in January because the eight defendants cannot find barristers to represent them. The defence lawyer said that he had approached 17 sets of barristers’ chambers without success. “We are now going to apply to have the case thrown out. In ten years of having taken these cases, I have never had a case in which counsel would not sign up”.

And this morning, lawyers and barristers refused to work in many courts, protesting outside instead. So we’ll keep an eye on this developing situation in 2014, both from a general public interest perspective, and as an example of those monopoly / monopsony issues we mentioned initially.

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