It is estimated that the legal aid cuts in the Legal Aid, Sentencing and Punishment of Offenders Bill will achieve cost savings of £350 million. However, as I shall argue in this article, the projected cost savings represent a false economy. In my view, the provisions in the Bill are likely to spell the end of neighbourhood Law Centres and will result in legal aid practitioners moving out of legal aid work, if not leaving the profession altogether.

The role of law centres in deprived communities

There are at present 56 Law Centres across England, Wales and Northern Ireland. These are not-for-profit organisations which provide free legal advice and representation to local communities, predominantly in relation to housing, debt, employment and welfare benefits. Law Centres receive payments from the Legal Services Commission on a case by case basis, under a standard legal aid contract. Figures released by the Law Centres Federation show that one in three Law Centres rely on legal aid contracts to provide at least 60 per cent of their annual funding. A number of Law Centres receive annual local authority grants in addition to legal aid funding, but such arrangements are becoming increasingly rare and in any event are generally quite modest in value.   

On 13 May 2010 I was working as a Legal Adviser at Saltley and Nechells Law Centre in Birmingham, in the heart of Liam Byrne MP’s Hodge Hill constituency. The reality of there being “no money” was becoming horribly clear.

Saltley and Nechells Law Centre was sited in one of the most deprived areas of the country. The Hodge Hill Constituency recorded the second highest rate of unemployment benefit claims in the UK in May 2010, according to figures published by the House of Commons on 16 June 2010, in Research Paper 10/43. Hirsch and Beckhelling, on behalf of the Campaign to End Child Poverty, estimated that 45 per cent of the children in the Hodge Hill Constituency were living below the poverty line in 2010. 

Over a twenty year period the Law Centre played a key role in facilitating access to justice in the community, by providing publicly funded housing, debt and welfare benefits advice and representation to local citizens. Within a mere six weeks of my appointment, I was offering legal advice to some of the most vulnerable members of society, including victims of political torture, domestic violence victims, people with substance abuse issues as well as those detained under the Mental Health Act.

The Law Centre was involved in a number of ground-breaking cases and performed its role with a high degree of success. In particular, it represented the Appellant in a landmark decision against Walsall Council, in which the First-tier Tribunal (Social Entitlement Chamber) held that the Local Housing Allowance Regulations discriminate against people who require an extra bedroom for a live-in carer, thereby contravening the European Convention on Human Rights.

The plight of law centres under the current Legal Aid Scheme

However, the Law Centre was experiencing financial pressures on an unprecedented scale. The overheads involved in running even a modest community Law Centre are high. These include the rent of premises, the salaries of solicitors, fee earners and administrative staff, fuel bills, telephone bills, stationary, postage, professional indemnity insurance premiums, photocopier hire fees and subscriptions to practitioners’ texts.
Save for the modest proceeds of its fundraising efforts, Saltley and Nechells Law Centre was dependent on legal aid to fund its service. In respect of each welfare rights case, it received a standard fixed fee of £167.00 excluding VAT. The fixed fee was the equivalent of three hours’ work on the case at an hourly rate of £55.60. The Law Centre was paid on closure of the case, notwithstanding the fact that many cases take several months or even years to close. This was particularly true of cases being appealed to the Upper Tribunal or the Tax Adjudicator.

The Law Centre received no additional remuneration if it spent more than three hours on a case, except where a fee earner spent over nine hours on it. Under these circumstances, it received remuneration for the actual amount of time spent on the case, at the rate of £55.60 per hour.

The difficulties with the system

The difficulties with this system are threefold:

Firstly it creates an incentive for organisations to cherry-pick those cases which can be closed with the minimum amount of time and effort. The Law Centre refused to cherry-pick cases and as a result, found it difficult to make publicly funded work financially viable. However the deployment of a cherry-picking strategy defeats the concept of access to justice – the very raison d’etre of a legal aid scheme.   

Secondly, the system creates an anomalous situation, where a case that falls just short of the three times limit is only paid at a fraction of its true value. Under these circumstances, legal aid practitioners might be tempted to generate unnecessary costs purely to tip the case into the “exceptional category”, thereby generating a fee which befits the actual level of time and effort invested in the case.

Thirdly, and perhaps most fundamentally, the overwhelming majority of cases fall between these two extremes. These cases result in a net loss to the organisation, since the value of the work conducted on the case exceeds the standard fixed fee payable. From a purely financial perspective, these are the least desirable cases to open.

Closure of the law centre

The upshot was that the level of remuneration available for legal aid work was simply insufficient to meet the Law Centre’s overheads. The poor rate of remuneration created severe cash flow problems, resulting in the deferral of staff salaries. On 13 October 2010, having assisted thousands of clients over a twenty year period, the Law Centre went into administration. 

It is likely that the closure of the Law Centre has had the following impact on the local community:

Tenants are now less likely to oppose applications for possession orders, which may lead to an increase in evictions and homelessness in the constituency. According to a report by the New Economics Foundation each eviction will cost the taxpayer £34,000, compared to the £174 cost of 9.5 hours of legal advice.

Employees who are unfairly dismissed by their employers are now less likely to seek legal advice, with the result that valid claims are less likely to be identified and brought within the limitation period.

Figures published by the Ministry of Justice on 1 December 2011 reveal that 40% of First-Tier Tribunals (Social Entitlement Chamber) find in favour of appellants appealing against decisions not to award them incapacity benefit. Unfavourable welfare benefit decisions are now less likely to be appealed, leading to lower household incomes, increased child poverty and increased social exclusion.

Local citizens facing debt are now less likely to seek advice, resulting in an increase in bankruptcy orders and mental illness in the area. 

Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO)

In the current economic climate, the need for neighbourhood Law Centres has never been greater. However, far from investing in them, the Government is doing the opposite.

The new LASPO Bill proposes to abolish entitlement to legal aid altogether in respect of employment law, welfare benefits and debt which does not threaten homelessness. Housing law will face a 40 per cent reduction in scope. The proposals will therefore remove the bulk of legal aid funding from Law Centres’ main practice areas, leaving them without the financial means to continue their work. Furthermore, the Law Centres that currently receive local authority funding will face a 53 per cent cut in their annual funding over the coming year.

The cumulative effect of cuts in legal aid and local authority funding will be to starve Law Centres of much needed funds and force them to close. It is therefore likely that the experience of Saltley and Nechells Law Centre will become a more regular occurrence.

The opinions expressed in this piece are strictly those of the author. 

Emily Johnson LLB, Member of Middle Temple