REGAINING THE Legal INITIATIVE

REGAINING THE INITIATIVE
The Consultation Paper – London Compulsory Competitive Tendering.


1. FOREWORD

The London Consultation is a blessing in disguise. Criminal Defence Solicitors are carrying ever increasing costs, with real cuts in remuneration. Effectively, the Criminal Defence Service is moribund, because rates of pay have dropped to a point where it can no longer adequately recruit young entrants. Consequently morale is low, and many solicitors see no long term future in relying on criminal legal aid.


Importantly, Criminal Defence Lawyers of the UK have seen their future prospects decline in direct proportion to the loss of their negotiating strength in their dealings with the CDS from the point when, with the recommendation of the Law Society, they signed up to the present contractual structure. Would they have signed the present contract if they had known that there were in train proposals for compulsory competitive tendering which could arbitrarily snatch away the same contract?

The period of stability and consolidation Solicitors had hoped for has proved illusory. To defeat the London experiment by the CDS is a necessary but not 1 sufficient condition for achieving a stable, efficient, and sustainable defence system in the interests of preserving and advancing justice in this country. This paper argues that no progress can be made by tinkering with the present system. Criminal Defence Solicitors must find a way of regaining the initiative in proposing the future VIP Charter form of their profession. At this moment, this paper argues the initiative has been handed over to the Government. The initiative must be regained and a new deal must be struck, to achieve which the defeat of the London Consultation proposals will be a first step only. Above all, Defence Solicitors must have a clear view of the future they seek, the ideas which underpin it, and the means by which it will be achieved. 2. BASIC ASSUMPTIONS FOR DEFENCE SOLICITORS PLANNING THEIR FUTURE Firms offering a Criminal Defence Service combine Police Station work with Magistrates Court and Crown Court work. Each function is antipathetic to the others. A Solicitor, up all night in a Police Station, hardly does justice, in any sense, to a trial next morning in the Magistrates Court. A Solicitor practising largely in the Magistrates Court may find the time available for Crown Court preparation determined often by the problems and inefficiencies of the Magistrates Court. 2 All this suggests that there is a minimum size below which a Firm will not be able to deliver legal services in a manner likely to satisfy the helicopter charter market i.e. the clients. What that size is, this Paper argues, should be found by evolution in the market, not by a series of Government inspired “innovations” based on, as appears below, inconclusive evidence interpreted by those who have never darkened the threshold of a Court or a Police Station, other than as “fact finders” clutching their clipboards. The choice of Solicitor and Firm should be that of the Client based on their view of what is offered to them. That system is the Client’s best protection, not least for the ethnic and cultural minorities whose provision otherwise would have to be determined by a Government Body employing artificial and frankly discriminatory devices. Defence Solicitors above all, must regain the initiative in bargaining to achieve their objectives. 3. THE CONSULTATION PAPER AND PROCESS In May 2003, the Department for Constitutional Affairs (DCA) and the Legal Services Commission (LSC) jointly commissioned Frontier Economics to produce a report (FER) on the supply of legally aided services. Their remit was to consider whether the current pay for legal aid services was too high or too low, and how better value for money could be achieved. Compulsory competitive tendering was the name of the game. 3 The Consultation Paper (CP) issued by the LSC bases itself on the findings of the FER and adds nothing to the justification for change, except exhortation and its own spin. The main arguments for change can, therefore, be dealt with once, with appropriate cross references to both documents where necessary. A health warning is needed. All Consultation Papers have a deceit at their heart. The decision to change has been made; the consultation is about the new model. The merits as well as the disadvantages of the rejected model, are, therefore, not set out.

The merits of the new model, of course, are set out, but without its disadvantages. The equation we have is – the disadvantages, actual or implied, of the old, compared to the advantages only of the new. In formal terms, it is one of the five common fallacies in reasoning. The present system, of course, has real merits. It actually works despite serious financial and bureaucratic pressures (although its future, as is suggested elsewhere, is heavily clouded). It is undergoing evolutionary change and adapting to a changing market. Many of the charges levelled against it are trivial and can be immediately rectified without the system being stood on its head. There is little point in dwelling on the FER (December 2003). The FER follows one of the present fashionable lines of analysis. Only the results 4 perhaps many years down the line may or may not justify its conclusions. The uncertainties in key areas, however, are interesting. The FER’s conclusions are based on a just under 10% return of questionnaires by Firms undertaking legally aided work of all types. Of the 10%, 16% said they would take on more work at current rates, a further 24% would need to hire more staff and/or expand their premises to do so. It is a miracle that the figure was so low. Faced with an initial enquiry, which hard pressed Solicitors could interpret as a test of their “commitment” and without any definite date tied to making good their responses, how many, one wonders, played safe and said “Yes”? Nevertheless, 44% said “No”. The special pleading in the report at that point is interesting.

The “common reasons” given for declining were “not interested” and a lack of either staff or physical capacity. The FER adds “That legally aided work is not profitable, or that remuneration rates are too low, were given by fewer Firms”. All the reasons, in fact, naturally group under one obvious heading – the money is not enough for the effort. Nevertheless, the whole cargo Charter case for “surplus supply” on which the case for competitive tendering is built, is essentially provided on the back of those responses. It is hoped that those responding to the present consultation bear that in mind. The report is frank about its lack of relevant data (FER 1.1.4) “to undertake an analysis of the supply of any product or services, one would ideally 5 wish to have information over a period of time relating to the quantity of the service supplied, the price of the service, the price of other services that could alternatively be supplied, and of the cost of supplying this service. For most services this data is typically not available and legal services are no exception”. (underlining added) This Paper suggests that thereafter a series of assumptions drawn from inadequate evidence follow. However, there is an interesting finding (FER 3.3) – “A finding of this work is that – in the short term – genuine spare capacity in the market as a whole is likely to be limited, implying that the extent of any excess supply is also likely to be limited. To achieve a significant increase in the supply of legally aided work would require Firms to substitute away from private Client work and/or to hire and potentially expand their offices”. Linked to that is a further finding vital in considering the specifics of Criminal Law Practices (FER 2.1.1 p17) – “Switching between providing advice on criminal and civil cases is considered to be very difficult – 80% of Firms stated that it is difficult or relatively difficult to switch”. Criminal law has become a specialism. It may be helpful to state the obvious about the difficulty of switching Solicitors between criminal and civil law. A glance at history will afford a clue. Historically, the practice of criminal law was seen as less intellectually challenging than its civil counterpart. Its procedures were simple in contrast 6 to the detailed and demanding civil proceedings, interlocutory proceedings and eventual trial before a legally qualified judge. The criminal body of law was relatively static. There was no real equivalent of the Green Book. The practitioner needed the knack of influencing a Lay Bench in a trial short on law and sometimes short on facts. The picture has been transformed in the last 10, even 15 years. There has been a flood of detailed regulatory law and statutes creating new criminal offences.

The process continues with the Criminal Justice Act 2003. A criminal practitioner, who had taken time off to be with his family for five years, would find the current scene before the Magistrates and Crown Courts hard to recognise. Rights of silence are changed; burdens of proof and changed rules of character evidence complicate most trials. As this process continues apace, the notion that expenditure on criminal defence services will not also rise, is as intellectually untenable as the claim that defence Solicitors have brought about the changed scenario. To accept this basic premise of the consultation document is to opt out of a rational discussion of the future of any criminal defence system. Alas, many of those who claim to support and represent defence Solicitors seem to have no trouble in swallowing the shallow Government line. Southampton Solicitors note that the Local Guideline rate for a private Civil Grade B Fee Earner is £155 per hour. Can a criminal rate of £54. per hour for the equivalent Fee Earner really be set in stone? 7 Another statement in the FER is of the greatest importance (page 76 onwards) where it is made clear that the FER does not have data of the entry of Solicitors to the profession which of course vitally bears on criminal legal aid practices. At page 78, one finds the feeble assertion “The extent to which this (decline and supply of new lawyers) impacts on Firms seeking Solicitors for legally aided work requires further exploration”.

This exploration will not of course take place before the wholesale changes the CP proposes have been pushed through. A summary of the FER therefore could be – there is no evidence of an adequate supply of entrants into criminal practices, and Solicitors from other branches cannot be switched into it to fill the gaps in manning a system, the quality of which we cannot measure. A last comment on the FER is called for. Sadly, one notes the Law Society co-operated at least to some extent, in the preparation of the questionnaire referred to above. Surely, it would have been far more appropriate for the Law Society, in examining the future of legal aid generally, to have commissioned its own report into the supply of these services, and not fallen into a rather obvious trap of co-operating in a process, the full purpose of which was clearly not known to them. The Law Society could have pointed out that the issues and factors involved in the FER and CP are complex, difficult, and in many cases probably 8 unknowable.

They are not susceptible, in other than the most superficial way, to a scientific analysis. The CP following and making the best of the FER at 1.8. concludes that “There may be some spare capacity in the legal services market”. If the basic premise of the CP has to be put so tentatively, what can be the real justification for change? There is only one certainty. In considering variations of State funded services delivered by independent contactors, there has not been found one solution the merits of which have been demonstrated to outweigh those of its rivals.

The assertion (CP page 1) “In other sectors, competitive tendering is a well established method of delivering quality public services” taken out of any specific context is virtually meaningless. There is no attempt to argue by analogy with any other specific supplier of public services, including most obviously medical services. The National Health Service (with a rival in the large private sector) faces solutions to its problems strikingly different to those directed to the Criminal Defence Service. A number of issues raised in the FER and CP are now addressed. 1. The Criminal Budget is out of control (CP 1.12). The claim is that, although the CDS “has already taken steps to bring expenditure under control” (CP 1.13) managed competition is being introduced within the context of a fixed 9 legal aid budget, because the growth of CDS work is reducing the money available to fund civil legal aid work”. Put simply, there is a fixed sum available which, if exceeded, impliedly amounts to “expenditure being out of control”. In the context of discussing fixed fees (CP page 37 option 3) the position is made clear. “This option therefore runs a significant risk of failing to support the reduction of costs of criminal lower legal aid in London which is one of the key objectives of the proposal”. 2. There are inefficiencies within the current arrangements (CP 3.9) This is a restatement of 1 in different terms. All systems contain inefficiencies.

The problem is identifying the criteria by which “inefficiency” is identified. The LSC cannot identify “quality” in the delivery of the Criminal Defence Service. 3. Fixed rates do not “necessarily” encourage innovation (CP 3.9). The Consultation Paper itself, of course, encourages fixed rates i.e. costs averaged out by case, and if this argument is valid, it applies to its own proposals as well as to the existing system. Given that, say, the standard fee for a guilty plea is X, the Solicitors who minimise travel and waiting (amongst other aspects of their service) will be more “profitable”. The more corners are cut however, the harder it is for the CDS to argue that “quality” is at the heart of their proposals. The problem of excessive waiting or travel could be 10 addressed by fixing maxima for both. Waiting however presents special problems, and is usually outside Defence Solicitors control. 4.

The current National Remuneration structure is unlikely to deliver best value for money. The point made is that the actual cost of the delivery of legal services varies across the country. That problem can, of course, be addressed simply by having local criminal defence rates, linked, for example, to the Guideline Rates for Summary Assessment agreed at County Court Centres across the country. These local rates have long been accepted as valid. 5. The “customer/client” cannot adequately judge the quality of the service he gets This is a far reaching question discussed under the next heading. 4. THE BIG IDEAS AT PLAY IN DELIVERING A CRIMINAL DEFENCE SERVICE Defence Solicitors find themselves caught up in what is the most contentious of political questions, namely by what means are goods and services best supplied within a society? For present purposes, the question is limited to a society in which, in general terms, a free market prevails, but where the State 11 intervenes by funding the market services it deems to be in the interests of the public. The question is encountered in the National Health Service, Local Government Services generally, Rail System, the Crown Prosecution Service, the Legal Services Commission etc. etc. In modern times, the question has been resolved in one of two ways.

The first solution is based on the notion that the customer/client of services and goods, by his/her choice over a period of time, will tend to buy the better and reject the worse. The supplier of the best will tend to flourish, of the worse will wither. The process is evolutionary, not revolutionary,. The second is based on the notion that the customer/client cannot see the bigger picture, has no expertise in other than the most simple of goods and services, and his/her choice, therefore, is haphazard and leads to no useful outcome for society (or himself/herself). Therefore, a Government Body is best placed to, and will, decide the customer/client’s “needs”. This second solution will be recognised as the utterly discredited system which collapsed in 1989 in Eastern Europe and beyond.

The principle in the first solution is not changed where the money to be expended is placed in the hands of the customer/client by the State (often 12 recycling the customer/client’s own money). But at that point, politics (including party politics) enters the picture. What is the Government’s position on the big question? The Consultation Paper has the answer (CP 1.9) “An essential component in achieving value for money – a statutory obligation for the Commission – is the quality of the service provided by the supplier. However, users of legal services are not always best placed to assess the quality of service received. It is, therefore, the responsibility of the Commission to ensure that the services that it purchases on behalf of clients are of the highest quality within the limits of affordabilities”. It is vital that we must re-establish the position where the acceptable quality of services must be determined by the client, subject to professional minimum standards.

The Consultation Paper’s argument could, of course, be used indiscriminately across the entire range of goods and services in a free market economy. We buy a TV set, although 99% of us know nothing of its works or technology, and are not in a position to compare it with other competing sets. However, we speak to other TV users, read comments in the press, size up advertisements and make a choice. Do we nationalise the production of TV sets because “we are not always best placed to assess the quality”? Consider cars, dentists, plumbers etc. Where does this argument lead us – to 13 pre 1989 Soviet Union policies which of course did believe that State Agencies knew what customers wanted. If the arguments of the Consultation Paper hold water, why are Firms not invited to bid for contracts to deliver the Criminal Prosecution Service? How does it justify the establishment of a Public Defender System which has already been evaluated, predictably, as more expensive than the present Criminal Defence Service, and, therefore, quite unable to bid for the new contracts? The emptiness of the argument is revealed at option 2 (CP page 37). “The Commission does not believe that the current quality assessment tools or the data we hold on our CDS suppliers would allow us to distinguish between suppliers to this degree in a fair and robust way”. In other words, nor is the CDS “best placed to assess the quality etc.”.

The CDS may have lost the argument, but if we allow them their present level of control
in the General Criminal Contract, no imagination will be needed to spot the
next move of the CDS in undertaking a futile expensive and wide ranging
search for some “objective” measure of quality, other than by the aggregated
choice of clients, for which we must fight or be lost. Then our costs would rise
again, the illusory gain of competitive tendering would be lost, and the
bureaucracy on our backs would simply re-direct its resources to a new goal
the never ending search for “objectively” measurable criteria of “quality”.
That is the nature of bureaucracy. Any doubt is dispelled at CP page 38 “one
of the advantages of moving to a lighter touch auditing system is that it
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will allow us to concentrate auditing resources on the quality of advice
given” (underlining added).
5. A REALISTIC SOLUTION TO THE PRESENT PROBLEMS
Last year the LSC suffered a reverse at the hands not of the Law Society or
Bar Council but of senior Barristers regularly defending in High Cost fraud and
other cases, who simply refused to accept a new contract, cutting hourly rates
of payment across the board and imposing artificially limited hours of
preparation etc. The only price for the LSC backing down on its proposals
was silence on the part of the Bar. A Criminal Defence Service can only be
supplied by Criminal Defence Solicitors. The Lord Chancellor’s Department
cannot step in to supply the deficiency if Criminal Defence Solicitors finally
draw a line in the sand and say enough.
Criminal Defence Solicitors are members of The Law Society which is a body
which formulates its policies through its Council and resolutions proposed by
its membership. This paper does not propose to rake over the past. To many
Solicitors the Law Society’s policy on delivery legal aid services seems to be
that it supports doing good and opposes the contrary. It has now, however,
established one firm policy, which is opposing competitive tendering in the
supply of Criminal Defence Services. This Paper argues strongly against any
“industrial action”, “strike action”, or any action other wise than through its
own professional body. This Paper however argues for the establishment of
a clear policy by the Law Society. The bye-laws of the Law Society provide
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for a special meeting being requisitioned by four hundred or more members
by requisition sent to The Chief Executive requiring the Council to call a
Special General Meeting to consider a motion set out in the requisition (byelaws
19(1). The Council must then call a meeting not earlier than forty two
clear days or later than seventy clear days from the date the requisition is
received. This requisition may be accompanied by a statement of not more
than one thousand words on the motion. A possible motion is set out below.
It is of crucial importance, and no doubt its final form will evolve after much
careful deliberation.
THAT this Society, noting that its members who are signatories to the General
Criminal Contract, are carrying increasing costs, with cuts in remuneration in
real terms, and are now threatened with compulsory competitive tendering
contrary to the policy of its Council RESOLVES to advise and recommend all
such signatories to give notice by not later than seven clear days after the
passing of this Resolution terminating the General Criminal Contract (in
accordance with clause 20 thereof) in order that this Society may negotiate
new terms for the supply of Criminal Defence Services which :
(i) give pre-eminence to the choice by its Members’ clients of
those firms which they may wish to instruct (ii) remunerate those firms by a formula linked to the Guideline
Rates for summary assessment locally negotiated and
(iii) give to its signatories a basic length of term of agreement of
not less than five years, in order that investment, recruitment
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and training may be properly introduced and planned to
secure the future of a Defence Service
The period of notice is three months. The collection of such notices could be
organised through the Law Society (or other representative body) and served
by the date to be specified in the Motion. In the following three months, a new
basis of agreement can be negotiated. If it takes longer, we will make it clear
we are willing to provide the service. The statutory duty to provide the service
rests on the Lord Chancellor. The improvement in our bargaining position will
be very obvious.

In the meantime, things have moved on. The CLSA and other bodies, called
a London Meeting on 15th April 2005 and exerted much pressure on the Law
Society. In early May, the Law Society endorsed a resolution cautioning
solicitors against entering the bidding process, but said the ultimate decision
was for Law Firms.


What will Law Firms do?
Solicitors are neither fools nor cowards, and will finally decide whether or not
to bid on what facts are known to them on two vital dates which are set out in
the time table of the Consultation Document (p51).
The LSC hold all the tactical advantages in the process of competitive
tendering.
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Firstly, they alone will know, not guess, how many firms have or have not
expressed an interest in the first stage.
Secondly, they know there is no effective way for Defence Solicitors to
monitor whether their colleagues (including, importantly, Solicitors outside
London) have refrained from sending in their expressions of interest up to the
last minute of the last day allowed. The LSC, as they did in the 2001 contract
campaign, will undoubtedly hint that they have had a “good” (or other
unquantifiable expression) of interest shown – particularly in the last day or
two of the first stage. It is not hard to see a panic setting in.
Any uncertainty will be resolved by Solicitors expressing interest simply to
preserve their position, while hoping they will be in a better position not to
proceed at the bidding stage. That would not be treacherous. It would be an
act of self preservation in the absence of hard evidence.
All these problems were raised but not answered at the London Meeting.
If, following the reasoning of this Paper, the second round – the bidding
process – takes place, the position is near hopeless. Because the first line
was not held, morale will be low. Even the stalwarts will spend time and
money on preparing bids in case they should be needed, and thereby cross
an important psychological barrier. They will know, believe, or suspect, that
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some of their colleagues had let them down once. Why would they expect a
change in the second round?
This Paper argues that the tactic it sets out can only assist in the difficult fight
described above. It has the obvious tactical advantage which follows the
taking of a positive action i.e. serving notice to determine the contract,
namely, that it can be carefully tracked. Defence Solicitors will be able to
send their notice to the Law Society (or other representative organisation) to
be held until, say, 90% of the whole body has done so. They can withdraw
their notice before an agreed final date of their despatch if the figures of those
participating are insufficient. It has the great tactical advantage of mobilising
all Defence Solicitors in England and Wales to support their London
colleagues. It also addresses a wider problem than that of competitive
tendering, vital though that is, namely, the survival of the Defence Service
facing increasing costs and diminishing returns.
A Solicitor who has served notice terminating the contract in accordance with
the Resolution set out in this Paper will find it immeasurably easier not to
submit a bid in the London competitive tendering process. In fact, possessing
a General Criminal Contract is a pre requisite to expressing an interest and
submitting a bid. No contract, no process.
Does this process infringe EU and domestic anti-competition law, which is
designed to prevent a monopolist seizing the whole or part of a market? In
modern western societies, the government of the country is frequently itself a
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monopolist in the supply of goods or services. In the case of criminal defence
services, the Government created a monopoly principally by the Access to
Justice Act 1999, and despite means testing for Legal Aid, remains the
dominant and monopolist party in the Criminal Defence Service.
European law, however, exempts governments from the strictures of anticompetition
law because they are presumed to act in the interests of their
electors, despite being monopolists. The cynical electorate must find that
presumption difficult to swallow. It is, however, qualified. If the government is
itself a supplier of goods or services, it cannot then invoke anti-competitive
measures against a private supplier. This is still a live issue in the European
Court.
Another exception is found in the case of the Dutch Bar Association, which
although prima facie imposing anti-competitive measures, was found to be
exercising a traditional role, and therefore was allowed an exemption.
The Law Society Special General Meeting Resolution of 17th January 2007,
was carefully crafted to introduce both elements in aligning the Law Society
against the Carter Proposals. The Law Society had previously obtained an
advice from Olswang, Solicitors, which did not exclude the possibility of a
successful challenge to the government’s proposals, although it advised The
Law Society against action. When The Law Society obtains advice in these
circumstances, its first interest is to secure the lawfulness of its own position
which may not be all square with that of its members.
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Can I again urge Defence Solicitors to read the first Paper I refer to, because
it does attempt to provide the intellectual basis for the new sort of relationship
with the Legal Services Commission which we now, with the help of The Law
Society, seek.


One idea I will be putting before LARF is that The Law Society should set up a
Commission to consider the issues of Access to Justice, and in so doing, take
on a positive role, rather than the negative one of simply seeking to defeat the
Carter Proposals. A figure such as Sir Geoffrey Bindman who addressed our
rally last Monday would make an excellent chairman. While we fight furiously
to resist the Carter Proposals we could then take on in the public eye a role
no other body has attempted, other than as a cynical cost cutting exercise.
The Commission could call upon evidence from across the political spectrum
and TLS could also be gathering evidence for it, and employ a number of
solicitors to act in a role bearing some features with that of Peer Reviewers
who may find The Law Society position more congenial than that of the Legal
Services Commission and abandon one for the other. Fortuitously, that would
bring the Carter Proposals to an early halt, because absent Peer Reviewers
have no future.


Since this paper was first drafted, the Lord Chancellor has launched a vital
document “a Fair Deal for Legal Aid”. His accompanying letter makes it clear
that fees must be cut. He also commissioned Lord Carter of Coles to carry
21 out an “independent” review. The review will consider the means by which to
deliver “the Government’s vision”, set out in a Fairer Deal for Legal Aid, for
procuring publicly funded legal services, particularly criminal defence
services. Interestingly, the Legal Services Commission commissioned a
report “Demand Induced Supply” which effectively destroys the Government’s
stance that Defence Solicitors are responsible for rising Legal Aid costs. The
Resolution will immeasurably strengthen the negotiating position of the Law
Society and any other professional body e.g. CLSA etc. negotiating in our
interests.