Clarke unveils plans for radical reform of justice

16 Nov 2010 01:30 PM

Justice Secretary Kenneth Clarke has recently unveiled a programme of wide-ranging reform to legal aid and civil litigation costs.

This is to support a simpler, better and more affordable system of justice which continues to enable necessary access to justice at proportionate cost.

Two consultations, published yesterday, mark the first step in a wider programme of work to radically reform and rebalance the justice system, to make it quicker, cheaper and less combative wherever possible. We aim to encourage more people to have the confidence to resolve disputes out of court, where it is sensible to do so.

The consultation on legal aid reform aims to tackle the spread of expensive and often unnecessary litigation into everyday society at the taxpayer’s expense, and bring down the £2 billion plus cost of the legal aid system in England and Wales, focusing it on those who most need help. The civil litigation costs paper contains proposals to tackle the spiralling costs payable by people who have been sued in “no win no fee” cases, alongside other proposals to make civil costs more reasonable and proportionate.

Justice Secretary Kenneth Clarke said:

“I strongly believe that access to justice is the hallmark of a civilised society. But at more than £2 billion each year, we currently have one of the most expensive legal aid systems in the world. This cannot continue.

“Since the scheme was established in 1949 its scope has been widened far beyond what was originally intended. There has never been a substantive review of the entire system to ensure it is sustainable, proportionate and affordable.

“I believe that the taxpayer should continue to provide legal aid to those who need it most and for serious issues. But the current system can encourage lengthy, acrimonious and sometimes unnecessary court proceedings, at taxpayers’ expense, which may not always ensure the best result for those involved.

“The proposals I have outlined today suggest clear tough choices to ensure access to public funding in those cases that really require it, the protection of the most vulnerable in society and the efficient performance of the justice system.”

Justice Minister Jonathan Djanogly added:

“Alongside our ambitious proposals for reforming the legal aid system, we have also set out important plans to reform funding arrangements in the civil justice system, which will support wider Government efforts to help businesses and public bodies fearful of costly litigation.

“These are difficult issues which have been grappled with for some time, as all who are familiar with this area of law know. But I believe that today’s consultation marks the way forward.

“One of our key proposals is reforming the current “no win no fee” regime. We want to reduce overall costs, ensure claimants have a financial interest in controlling legal costs incurred on their behalf and deter avoidable, unnecessary or unmeritorious cases.

“Under the current arrangements claimants generally have no interest in the costs being incurred on their behalf because, win or lose, as they do not have to pay anything towards them.

“Today’s proposals are designed to prevent the situation in which, regardless of the merits of their case, defendants are forced to settle for fear of prohibitive costs.

“I want to strike the right balance between access to civil justice and ensuring that costs are proportionate, sustainable and affordable.”

The consultation document Proposals for the Reform of Legal Aid in England and Wales outlines proposals which aim radically to reform the system and encourage people to take advantage of the most appropriate sources of help, advice or routes to resolution. If implemented in their entirety, it is estimated that the proposals will achieve savings of around £350 million in 2014-15, making a significant contribution to the Department’s commitment to reduce its overall spend by £2 billion by 2014-2015.

Every aspect of legal aid has been considered for reform. Proposals include:

Legal aid will still routinely be available in civil and family cases where people’s life or liberty is at stake, or where they are at risk of serious physical harm, or immediate loss of their home. For example, legal aid will be retained for asylum cases, for debt and housing matters where someone’s home is at immediate risk, and for mental health cases. It will still be provided where people face intervention from the state in their family affairs which may result in their children being taken into care, and cases involving domestic violence or forced marriage. It is also proposed to retain legal aid for cases where people seek to hold the state to account by judicial review, for some cases involving discrimination which are currently in scope, and for legal assistance to bereaved families in inquests, including deaths of active service personnel.
Retaining legal aid for those criminal cases where it is currently available, in order to ensure fair trials for those accused of more serious criminal offences can access the representation required to provide a fair trial.
Clear choices are proposed in order to introduce a more targeted scheme which directs limited resources to serious issues in civil and family cases which have sufficient priority to justify the use of public funds, subject to people’s means and the merits of the case. Some types of cases will no longer routinely qualify for legal aid funding.
- This will include private family law cases, for example, divorce and child contact, where long-drawn out and acrimonious cases going through the courts can often have a negative impact on the well-being of any children and not necessarily achieve the most effective result. Funding for cases where domestic violence is involved will, however, continue to receive funding. And funding will also continue to be provided for mediation as a better alternative to family disputes going to court in most cases.
- Other civil cases which will no longer routinely qualify for legal aid funding include clinical negligence, where in many cases alternative sources of funding are available, such as “no win no fee” arrangements (Conditional Fee Agreements). Other issues proposed for removal from the scope of the legal aid scheme include debt, education, employment, housing, immigration and welfare benefits (except where there is a risk to anyone’s safety or liberty or a risk of homelessness), where in many cases the issues at stake are not necessarily of a legal nature but require other forms of expert advice to resolve.

Legal aid funding may still exceptionally be provided for individual cases through a new funding scheme for excluded cases, generally only where it is necessary to meet our domestic and international legal obligations, for example, in a particularly complex clinical negligence case involving a disabled claimant who cannot represent themselves where access to the court could not otherwise be secured.
Telephone services will be extended to help people find the easiest and most effective ways to resolve problems.
Changes will be made to means testing for non-criminal legal aid. These seek to ensure that those who, on the basis of their disposable capital or income, can pay or contribute towards the costs of their case should be asked to do so. The proposals include ensuring that all civil legal aid applicants undergo an assessment of their available capital, including those on benefits. Greater account will also be taken in future of equity in people’s homes when assessing their capital means. A minimum £100 contribution to their legal costs will be introduced for all successful applicants with £1,000 or more disposable capital, and higher contributions will be expected from those who currently contribute to their legal fees.
Changes will be made to the way that lawyers are paid in criminal cases in order to promote an efficient system of justice and to ensure that the taxpayer is receiving the best possible value for money. The intention is to move towards a competitive market to replace the current system of administratively set fee rates. In the meantime, there is a series of proposals designed to promote swift and efficient justice as well as to achieve savings. These include proposals to pay the same fee in respect of a guilty plea in the Crown Court regardless of the stage at which the plea is entered. In Crown Court cases that could realistically have been dealt with in the magistrates' courts, it is proposed to pay a single fixed fee for a guilty plea based on fee rates in the magistrates’ court. This complements other reforms to the justice system designed to encourage cases to be brought quickly and efficiently to justice, so sparing the victim the ordeal of giving evidence in court unnecessarily, and the justice system significant but avoidable costs.
To contain the growth in costs of the most expensive (Very High Cost Criminal Cases – VHCCCs) we propose to bring the arrangements for solicitors in VHCCCs into line with those the last Government introduced for advocates. This will mean that more of these cases will be paid within a graduated fee scheme where costs are more easily controlled.
In order to strike a better balance between using tax payers money efficiently, and ensuring that people can access legal aided services where necessary, fees paid in civil and family cases will be reduced by 10% across the board. It is also proposed to extend lower legal aid ‘risk rates’ in civil cases where costs are likely to be paid by the opponent, pending the introduction of competition once any proposed changes to the scope of civil and family legal aid have bedded in. Similar levels of reductions are envisaged in experts’ fees to exert greater control over costs.
The paper also consults on suggestions for alternative sources of funding for the legal aid fund, to help supplement existing funding arrangements. These include making use of the higher rates of interest generated by money invested in a new pooled account where solicitors would hold their clients’ money, and recovering a proportion of legal aid funds in cases where a successful claim for damages has been made.
Views are also sought on how to make the administration of legal aid more efficient and less bureaucratic for solicitors and barristers doing legal aid work.

The second consultation Reform of Civil Litigation Funding and Costs in England and Wales takes forward our response to Lord Justice Jackson’s report published in January. Its key intention is to reduce the spiralling costs payable by people who have been sued in ‘no win no fee’ cases. Defendants are currently liable for substantial additional costs while the claimant has no interest in restraining legal costs when deciding to bring a case. The consultation proposes that the claimant should have a financial interest in controlling costs incurred on their behalf, which would also lead to lawyers having to keep costs down in order to compete for business.

The key proposal is to abolish recoverability of success fees and associated costs in no win no fee conditional fee agreements. Under the current regime, defendants must pay these additional costs (which can be substantial) if they lose. The proposal would mean that claimants have to pay their lawyer’s success fee and will therefore take an interest in controlling the costs being incurred on their behalf.
It is also proposed to allow damages-based agreements (also known as contingency fees) in litigation before the courts. These are another form of no win no fee agreement, under which lawyers can take a proportion of the claimants’ damages in fees. This would increase the funding options available to claimants.
The consultation also seeks views on some of Lord Justice Jackson’s other recommendations, which are designed to balance the impact of these major changes, in particular to assist claimants. These recommendations include a 10% increase in general damages, and introducing a mechanism to protect the vast majority of personal injury claimants from paying a winning defendant’s costs (through qualified one way costs shifting).
Other proposals would further encourage parties to make and accept reasonable offers, as well as introducing a new test to ensure that overall costs are proportionate. It is also proposed to increase the costs which can be recovered by people who win their cases without representation by lawyers.

Notes to editors

Consultation on Legal Aid Reform
Consultation on the Jackson Review
Lord Justice (Sir Rupert) Jackson was commissioned in late 2008 by the then Master of the Rolls to undertake a review of the rules and principles governing the costs of civil litigation in England and Wales and to make recommendations to promote access to justice at proportionate costs. The review was established on the basis that the costs of civil litigation are too high. Sir Rupert published his report, Review of Civil Litigation Costs: Final Report, in January 2010. This independent and comprehensive report makes a broad range of recommendations for reducing costs in the civil justice system in England and Wales.
CFAs are a type of ‘no win no fee’ agreement under which lawyers do not receive a fee from their client if they lose a case, but can charge an uplift (a ‘success fee’) on top of their base costs if they win. When the lawyer wins a case, these costs including the success fee are ‘recoverable’ i.e. paid by the losing party. Success fees allow lawyers to cover the costs of cases they take on which ultimately do not succeed. Under the current arrangements, success fees of up to 100% of base costs and after the event (ATE) insurance premiums are recoverable from the losing party. ATE insurance can be taken out by parties in a CFA funded case to insure against the risk of having to pay their opponent’s costs and their own disbursements if they lose.
The Ministry of Justice Press Office can be contacted on 020 3334 3536.