A report commissioned by the Law Society and published this morning predicts that over 800 legal aid firms could be forced out of business if the reform proposed by Lord Carter goes through as it is. This is twice as many firms as anticipated by Lord Carter.I am keeping my fingers crossed that I do not work for one of those 800 firms mentioned in the report! The reality is that the firm I work for is unlikely in the short term to stop doing legally aided criminal defence work, but in the long term who knows what is going to happen? Oh, I forgot, Lord Carter knows what will happen, perhaps I should ask him if I will still have a job in 10 years time?
The report, prepared by LECG, an offshoot of the University of California at Berkeley, warns that typical profits, allowing for all costs, would range from only 2 per cent down to about -6 per cent. By contrast, 'comparative industries' such as financial advisor services, typically expect a ten to 15 per cent profit.
The Law Society states that without higher fees and a rethink of the Carter implementation timetable, the consequences for legal aid will be “disastrous”.
“The Government is trying to make efficiency savings too soon, firms must be allowed to restructure first,” said Law Society Chief Executive Desmond Hudson. “The over-hasty imposition of this change programme on a very fragile supplier base could prove to be disastrous.”
One of the Law Society's biggest fears, backed up by the LECG research, is that no new solicitors will want to practice legal aid work, leading to the reversing of the ageing supplier base. The research highlights a recent survey which found that whilst 60 per cent of student solicitors said they would like to do publicly-funded work, only 21 per cent actually do, due to “perceived low salaries, limited career prospects and poor working conditions.”
Andrew Holroyd, Law Society Vice President, said: “There has been an alarming reduction in the number of law firms doing legal aid work in recent years and there are few incentives for the legal aid lawyers of tomorrow. We will be pressing the government for increases in rates that allow viable businesses to develop and the entire sector to return to health.”
The Law Society is pointing to the recent increase in pay rates for the junior criminal bar and Scottish legal aid practitioners, as evidence there are funds available. It also highlights that the administrative costs for the Legal Services Commission has risen from £62.4m in 1999/2000 to £96.4m in 2004/2005 – including a spend of £605,000 on stationary alone last year.
“The Government’s pledge to provide a ten million pound transition fund to help firms adapt to the new environment is a step in the right direction but given the scale of the change much more support will be needed,” said Holroyd.
The Legal Aid Practitioners Group welcomed the LECG research. Chairman Richard Miller said: ”The legal aid supplier base is very fragile, and needs support if clients are not to lose the services they need. It is in danger of being significantly damaged by the Carter reforms: even treatment aimed at saving the patient may kill if the patient is not strong enough.”
Tuesday, September 26, 2006
More Doom and Gloom
The Law Society has published a report on the impact that the Carter reforms are going to have on criminal defence work. The Solicitors Journal has published a good article on the bad news that this report delivers: