Late payment

The LSC’s remit, to channel payments to defence barristers from the £2 billion legal aid budget, was extended in April 2011 to cover not just the Family and Civil Bar but also the Criminal Bar. Before that, explains Max Hill QC, Chairman of the Criminal Bar Association, counsel got paid within two weeks by submitting their graduated fees claims at court. The reform – “part of the reorganization and restructuring of the Ministry of Justice” which “we didn’t ask for – we regret the fact that this administrative decision was taken by the executive,” - has replaced that nifty two-week turnaround. “Formerly … there would be a 14-day turnaround. That’s now been replaced with the aspiration of a turnaround in eight weeks,” Hill said. “It’s causing enormous hardship.”

As banks close down credit lines and call in mortgages, he says, the change is driving many to the brink of bankruptcy.

“There are members of the Bar who have been waiting since April for payment. This is not just anecdotal: members of the Bar who have never previously been in difficulties with mortgages and other payments are now in a financial hole because they haven’t been paid what they’ve earned.”

It’s not just these long waits that alarm barristers, both in crime and family (where, officially, a claim should take six weeks).
It’s also the complex multi-page forms required for each hearing, with elaborate back-up evidence - “a very high hurdle for necessary paperwork,” Hill says. “When challenged, they claim that the National Audit Office requires this paperwork, and that explains both the quantity of paperwork and the delay. I don’t accept that. They make it unnecessarily difficult for people to claim money for completed work, on which payment is due. There’s no sense of urgency to alleviate debt.”

Rejection of claims

Then there’s the LSC’s frequent rejection of claims, with what Stephen Cobb QC, Chairman of the Family Law Bar Association, calls “quite a high degree of pettiness” - a corner of a seal or stamp off the edge of a page, for instance, may disqualify a claim - forcing barristers to start again, sometimes several times. Chris McWatters at Garden Court chambers had a £4000 claim rejected seven times, for seven different reasons, in the year between late 2010 and 2011. One London family clerk, who requested anonymity, says a fifth of the claims he puts in are rejected - and 70% of returns are LSC mistakes.

“I receive relatively regular complaints about what people see as being spurious or flawed grounds for rejecting claims,” Cobb says. His members, he says, believe excuses have been used by the LSC as a means of delaying actually paying.

Claw back and the “March Black Hole”

Even when a claim is paid, will the money stay in a barrister’s account? Gary Crawley, of 1 Garden Court, is one of many who has seen payments come in, only to vanish again. He is still campaigning forlornly to get back £12,658.78 he was “paid” for work done between 1994-98 - which was clawed back in 2002, for reconsideration, long after he’d paid VAT and 40% tax. “I’ve done the work, declared it to the Revenue, paid the tax and waited a decade - there’s plenty of paperwork to support that. It would be easy enough for the LSC to tick the box and give me the money. I’ve earned it. I feel I should be paid.”

Finally, there’s what some barristers label the “March Black Hole” - the weeks at the end of the financial year when payments barely seem to be made at all. In the words of a clerk at a major London chambers, “you have to get all your claims in by the end of December, after which you can expect a quiet few months till April, because you certainly won’t be getting paid.”

“Anecdotally, it feels that many payments do slow up at the end of the financial year,” confirms Cobb.

The LSC Position

The LSC says there is no truth in this last accusation, yet many barristers find it easy to believe that payment delays are not just the accidental by-product of an overstretched bureaucracy, but something more sinister - that money supposedly earmarked for them might not be there, or that late payments might be part of a grand plan to drive defence barristers, especially expensive senior ones, out of the publicly funded sector altogether, as the Government’s stated policy of cutting £350m from the legal aid budget bites.

As Hill puts it, “the LSC is a creature of the Government, and the government is without doubt hostile to the publicly funded Bar.”

Cobb stresses, however, that, for two years, great efforts have been made by the LSC, under chief executive Carolyn Downs, to be more responsive to the Bar.

The LSC has, for instance, assigned two liaison officers to the top 30 legal aid chambers, and set up a Bar bulletin showing barristers how to claim correctly (last August’s fraud case against solicitor Reuben Ewujowoh, 44, principal of London firm Rae & Co, who tried to defraud the commission of £430,000, helps explain why LSC caseworkers want full paperwork). It also offers an emergency payment service to barristers at financial risk.

While fielding barristers’ complaints about late pay, the LSC also gets it in the neck from the National Audit Office, which last October criticised the LSC for overpaying legal aid lawyers by over £50m.

The LSC’s response to barristers’ complaints is that it is “committed to a positive relationship with the Bar.”

But, it says, the volume and complexity of the legal aid cases it processes has grown - from 110,000 a year in 2005-06 to 122,000 in 2009-10, and this growth can cause overloading.

The LSC has taken on additional staff to cope with the extra work. It adds, however, that some barristers’ complaints are not backed up by evidence, so LSC staff cannot address those complaints. Ditto criminal barristers’ nostalgia for the good old days of 14-day payment. An LSC spokesman said: “We have no recollection of there ever being a condition for payments to be made within 14 days.”

He added: “We receive 2,800 claims per week. Currently, the LSC has 23,000 claims awaiting processing (600 above target) with most processed in 8 weeks and 2 days. We plan to reduce this volume during January to March so as to process in 6 weeks and pay in 8. The LSC paid out £24.2m in November on AGFS, the highest since we took over processing the bills, so we are making progress.”

Barristers, however, still mutter about the LSC taking calls from chambers for just four hours a day while it grapples with the backlog, and claim that it offers them only grudging help solving Kafkaesque problems of its own creation.

To qualify for the LSC’s Concessionary Hardship facility, for instance, barristers must prove nail-biting levels of financial insecurity: (1) three months’ bank statements “demonstrating no/insufficient funds in your account”; (2) a letter from the bank refusing further credit; or (3) “a demand from HMRC for assets due to a failure to keep to a payment plan etc.”

Even if, as a barrister, you have somehow made it to court for three months without money in your account (Emma Hudson of 1 Garden Court was once reduced to changing a 20-euro note, left over from the holidays, to buy the necessary train ticket); even if you’ve put off the Revenue’s bailiffs by pleading that it’s actually the Government that owes you money, and no, you’ve no idea when it’s coming, so can’t possibly keep to a payment plan; even if you have the iron sang-froid to email the required proofs of hardship to the LSC, there are no guarantees of a quick payout. “Expediting claims in cases of hardship does take a significant amount of time,” the website says, dourly. Moreover, if processing such desperate-sounding applications starts taking too much time - “prejudicing ‘ordinary’ claims” – the LSC threatens that the concessionary procedure itself will be “reviewed.”

Moreover, the admired Carolyn Downs left the LSC in December. No permanent replacement has been named, though Owen Mapley of the MoJ is standing in on an interim basis. And, once the Legal Aid Bill is enacted - originally envisaged for 2012, though that date has slipped - the LSC will become part of the Ministry of Justice. How that will work, and barristers be paid, remain unclear - adding to the fear stalking the Inns.

Financial consequences

The unpredictability of pay especially frightens young barristers, who don’t have fat past years to cover current lean ones. They are the likeliest to recall, with foreboding, the demise in 2010 of the UK’s largest immigration advice adviser, Refugee and Migrant Justice, which went into receivership owed £1.8m by the LSC. But, with average earnings at the legal aid Family Bar a relatively modest £44,000 in 2009, a misplaced £4,000 here or £12,658.78 there makes a difference to most - not just beginners.

Cobb says one family practitioner has gone bankrupt after non-payment by the LSC. Most muddle along somehow, borrowing from the bank, legal loan-sharks, spouses or parents in Billy-Bunter-waiting-for-a-postal-order fashion, paying off bailiffs with credit cards and binning mortgage-company letters.

All complain, regularly and bitterly, that they are small businesses and should be treated as such, and allowed to sue deadbeat clients (including the LSC) if unpaid after 30 days. Hill even says that the slow payouts to criminal barristers breach the Government’s pledge to pay small businesses within 30 days.

Yet, as so often with the ancient and magnificent muddle of anomalies, traditions and horsehair wigs that is the Bar, reality isn’t quite that simple.

Barristers don’t count as small businesses, at present, because their agreements to work are not considered contracts.

In the past, being paid, as they are, by a casual, gentlemanly “honorarium” protected barristers from negligence suits. No longer. Today, barristers have the worst of both worlds, being both sue-able by clients, and having little recourse if paid late.

Yet private family law is already moving towards straightforward contracts. From this year, a private family practitioner will be able to charge interest on late payments or sue to recover payment (under rules replacing Annexes G1 and G2 to the current Code of Conduct). Is it time the publicly funded bar started campaigning for something similar?

Vanora Bennett is a freelance writer and novelist