SP Paper 437

Annexe A: Extracts From The Minutes

JUSTICE AND HOME AFFAIRS COMMITTEE

EXTRACT FROM MINUTES

26th Meeting, 2000 (Session 1)

Wednesday 6 September 2000

Present:

The meeting opened at 9.36 am.

Legal Aid Inquiry: The Committee agreed in principle to appoint an Adviser to assist the Committee in its forthcoming inquiry into legal aid and access to justice, and agreed the specification for that appointment set out in paper JH/00/26/3.

JUSTICE AND HOME AFFAIRS COMMITTEE

EXTRACT FROM MINUTES

31st Meeting, 2000 (Session 1)

Tuesday 31 October 2000

Present:

The meeting opened at 9.31 am.

Legal Aid Inquiry: The Committee agreed a remit for the inquiry. It was also agreed to add the Sheriffs' Association and Victim Support Scotland to the list of organisations from whom written evidence should be invited.

JUSTICE 1 COMMITTEE

EXTRACTS FROM MINUTES

5th Meeting, 2001 (Session 1)

Wednesday 27 February 2001

Present:

Apologies were received from Phil Gallie, Paul Martin and Euan Robson.

The meeting opened at 10.04 am.

Legal Aid Inquiry: The Committee took evidence from Professor Alan A Paterson, Strathclyde University Law School.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

7th Meeting, 2001 (Session 1)

Wednesday 13 March 2001

Present:

Apologies were received from Euan Robson.

The meeting opened at 9.46 am.

Legal Aid Inquiry: The Committee took evidence from Martyn Evans, Director, and Sarah O'Neill, Legal Officer, Scottish Consumer Council; Susan McPhee, Head of Social Policy and Public Affairs; Professor Alan Paterson, Chair of Legal Service Committee; Liz Cameron, Bureau Manager; and Jim Melvin, Bureau Manager, Citizens Advice Scotland; and Muriel Robison, Principal Legal Officer, and Angela O'Hagan, Senior Policy Officer, Equal Opportunities Commission.

Legal Aid Inquiry: The Committee took evidence from Colin Campbell QC, Vice Dean; Peter Gray, Advocate; and Eugene Creally, Advocate, Faculty of Advocates.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

8th Meeting, 2001 (Session 1)

Tuesday 27 March 2001

Present:

Apologies were received from Euan Robson.

The meeting opened at 9.22 am.

Legal Aid Inquiry: The Committee took evidence from David McKenna, Director, and Rosemary Lester, Services Manager, Victim Support Scotland. Gordon Jackson and Maureen Macmillan both declared an interest in legal aid.

Legal Aid Inquiry: The Committee took evidence from Peter Hunter, Director of Scottish Low Pay Unit, and Neil Anderson, Scottish Representative of Federation of Information and Advice Centres (FIAC), Association of Scottish Legal Advice Networks; Louise Johnston, National Worker on Legal Issues, Edinburgh office; Jean Riley, East Lothian Women's Aid; and Mairead Tagg, Greater Easterhouse Women's Aid, Scottish Women's Aid; and Gerald P. Macmillan, President; Vincent Smith, Vice President, and Andrew Stevenson, Treasurer, Glasgow Bar Association.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

10^th Meeting, 2001 (Session 1)

Wednesday 25 April 2001

Present:

The meeting opened at 9.22 am.

Legal Aid Inquiry: The Committee took evidence from Gerard Brown, Convener, and Ian Smart, Vice Convener, Legal Aid Committee, and Michael Clancy, Director, The Law Society of Scotland.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

13th Meeting, 2001 (Session 1)

Tuesday 8 May 2001

Present:

The meeting opened at 9.16 am.

Legal Aid Inquiry: The Committee took evidence from Lindsay Montgomery, Chief Executive, Jean Couper, Chairman, Tom Murray, Director of Legal Services, and Colin Lancaster, Head of Policy Unit, Scottish Legal Aid Board (SLAB). Maureen Macmillan declared an interest in legal aid.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

19th Meeting, 2001 (Session 1)

Tuesday 30 May 2001

Present:

Phil Gallie	Gordon Jackson (Deputy Convener)
Maureen Macmillan	Paul Martin
Alasdair Morgan (Convener)	Nora Radcliffe

Apologies were received from Michael Matheson.

The meeting opened at 10.00 am.

Item in private: The Committee agreed to take item 4 in private.

Legal Aid Inquiry: The Committee took evidence from Professor Alan Paterson.

Legal Aid Inquiry (in private): The Committee considered the findings of its inquiry.

The Committee adjourned from 10.54 am to 11.06 am.

JUSTICE 1 COMMITTEE

EXTRACT FROM MINUTES

22nd Meeting, 2001 (Session 1)

Tuesday 19 June 2001

Present:

The meeting opened at 1.41 pm.

Legal Aid Inquiry: The Committee took evidence from Roger Hamilton, Policy and Legal Director, the Legal Services Commission.

Legal Aid Inquiry: The Committee took evidence from Iain Gray MSP, Deputy Minister for Justice. Gordon Jackson and Maureen Macmillan declared an interest.

Annexe B

ADVISER'S REPORT

1. This report contains a basic description of the Legal Aid system in Scotland and an analysis of key issues. It supplements the written and oral evidence submitted by various bodies to the Committee. The report is structured on thematic lines. This links issues raised by different witnesses. It also allows the report to draw out the implications of the analysis of one issue for other issues and the wider implications for the legal aid system. The broad themes adopted to structure this report are:-

The current legal aid system in Scotland

Factors affecting the demand for and access to legally aided services

Factors affecting the supply of legally aided services

The organisational framework of the legal aid system.

2. The focus of the report is on those issues which are susceptible to critical analysis based on research evidence. Consequently it does not cover every issue raised with the Committee. The report has to be taken together with the experiences and opinions of those who submitted written and oral evidence to the Committee.

The current legal aid system in Scotland

3. As outlined in the Scottish Executive's briefing paper to the Committee, legal aid is intended to provide the means whereby individuals on low and modest incomes can be given access to the legal system. Legal advice and assistance is available on any matter of Scots Law, for both civil and criminal proceedings. It covers the cost of assistance from, and representation in court by, solicitors and advocates where this is required, as well as any expenses incurred by solicitors in providing these services. In general, legal aid is only accessible through a solicitor. Responsibility for policy matters on legal aid rests with the Scottish Executive. This includes matters of eligibility, the proceedings for which legal aid is available (scope) and the rates payable to solicitors and advocates. The Scottish Legal Aid Board (SLAB), which is a non-Departmental public body, administers the system.

4. Several forms of legal aid are provided through SLAB: Advice & Assistance (A&A); Civil Legal Aid; Duty Solicitor Scheme, Criminal Legal Aid, Legal Aid for Children and Legal Aid for Contempt of Court. Access to these schemes is regulated by eligibility criteria which relate to the applicant's financial position and an `interests of justice' test. However, initial representation from custody under the Duty Solicitor scheme does not require an eligibility test to be satisfied, nor does initial representation under solemn procedure. The financial criteria for legal aid in criminal proceedings are less specific than for civil legal aid. In civil cases the interests of justice test has two parts: probabilis causa and reasonableness.

5. Expenditure on legal aid rose continually (in cash and real terms) until 1997/8, since when it has declined. In that year, it was just over £145m (£134M from Legal Aid Fund) in cash terms. By 1999/2000 it had fallen to £130m (£117m from LA Fund). It is predicted by the Scottish Executive to have risen again in 2000/1. The chart below shows the growth of expenditure from the Legal Aid Fund from 1987/8 to 1999/2000.

Chart 1

Source: 'Legal Aid -Recent developments and current issues', Note by the Scottish Executive Justice Department to Justice 1 Committee.

Advice & Assistance

6. Advice & Assistance provides publicly funded legal advice on any matter of Scots Law to those who meet the eligibility criteria. It is, as the name suggests, a scheme for legal advice and does not cover representation except in well defined cases. Its primary function is to ascertain whether the matter is one for which full Legal Aid may be granted. The amount of A&A is limited, in the first instance to £80 but may be increased to £150. Representation, however, is available for the form of A&A known as Advice By Way Of Representation (ABWOR). ABWOR may be granted in criminal proceedings where an accused person wishes to plead guilty or change a plea of not guilty to guilty. It is also available in civil matters for representation before certain proceedings including those before the Immigration Appellate Authority and, from 15^th January 2001, Employment Tribunals. In 1999/2000 (1998/9) the number of intimations of advice and assistance was 165,567 (164,399) for civil A&A; 127,569 (123,829) for criminal A&A; and 23,686 (22,959) for ABWOR. Expenditure under these headings (average cost) were £18.13m (£129), £7.51m (£62) and £2.64m (£174) respectively.

7. Applicants with income below the lower eligibility level of £76 per week and capital below £1,000 are not required to make any financial contribution. Those whose incomes are between £76 and £180 per week or whose capital exceeds £1,000 are required to make a financial contribution. However, anyone in receipt of Income Support, income-based Jobseekers Allowance, Working Family Tax Credit, Disabled Persons' Tax Credit and with disposable capital of less than £1,000 will be eligible for advice and assistance without payment of a contribution. However, in assessing eligibility for A&A no account is taken of actual outgoings. This means that the required contribution can be relatively high under A&A.

Civil Legal Aid

8. Civil Legal Aid is available, subject to certain conditions, for those involved in a dispute which can only be resolved by court proceedings or who have had civil proceedings raised against them. Civil legal aid is not available for actions for defamation or verbal injury, election petitions, simplified actions of divorce, small claims and certain proceedings under the Debtors (Scotland) Act 1987 or for any proceeding before any courts or tribunal not referred to in the legislation. The financial eligibility criteria differ from those for A&A. The lower income level is £2,723 after certain allowable expenses for housing and dependants are deducted. The lower capital eligibility level is £3,000. The upper eligibility levels (above which no legal aid is provided) are £8,891 and £8,560 respectively. Applicants whose means are between the lower and upper eligibility levels are required to make a contribution of one third of the sum above the lower eligibility level. Unlike under A&A some benefits such as Working Family Tax Credit are counted as income. A total of 14,551 (15,661) grants of Civil Legal Aid were made in 1999/2000 (1998/9) of which 2,909 (3,080) were subject to contributions which totalled £2.071m (£2.138). Gross expenditure on Civil Legal Aid in 1999/2000 (1998/9) was £30.25m (£32.09m).

9. When a party to a civil law case is successful, the court may award expenses against the unsuccessful party. When the successful party is legally aided these expenses accrue to the Legal Aid Fund. Some commentators on legal aid have pointed out that an award of Civil Legal Aid is really a `loan' to the assisted person to pay for legal advice and representation. If the assisted person is successful the `loan' must be repaid. The first source of repayment is any expenses awarded against the other party. Where the expenses awarded are less than the `loan', further repayment is from any financial award made to the assisted party or any assets or property preserved as a consequence of obtaining the decree. In 1999/2000, a total of £7m was recovered from expenses and £l.6m from property recovered or preserved. Contributions from assisted persons amounted to a further £1.4m. Thus the net expenditure on Civil Legal Aid was £20.25m. In 1999/2000 Civil Legal Aid expenditure accounted for 23% of gross expenditure on legal aid and 17% of net expenditure. When A&A for civil matters is added to Civil Legal Aid the share of expenditure accounted for by civil matters is 37% of gross expenditure and 32% of net expenditure.

10. Expenses awarded against unsuccessful unassisted parties represented 23% of the cost of Civil Legal Aid in 1999/2000. However, it is likely that many family and matrimonial cases do not give rise to an award of expenses. The Faculty of Advocates, in its evidence to the Committee, suggested that `non-matrimonial legal aid is self-financing to a large degree'. In fact, expenses recovered are 43.5% of the cost of non-matrimonial cases. Therefore, expenses recovered account for between 23% and 43.5% of the cost of Civil Legal Aid. In addition, £1.6m was raised from property recovered or preserved. This raises the proportion of gross Civil Legal Aid costs met by the parties to between 28% and 53.5%. When contributions from assisted parties are added to expenses and contributions from property recovered or preserved only 68.4% of the costs of cases supported by Civil Legal Aid actually fall on the Legal Aid Fund.

Criminal Legal Aid

11. Legal representation in proceedings before any of Scotland's criminal courts, for those persons who qualify, is provided through Criminal Legal Aid. This also covers necessary expenditures for advice and case preparation by a solicitor or counsel. It covers representation before Summary Courts (District, Stipendiary Magistrate and Sheriff Courts where the Sheriff sits alone) and Solemn Courts (Sheriff and jury trials and the High Court of Justiciary).

12. The Duty Solicitor Scheme provides for the attendance of a solicitor at any identification parade, attendance on any person in custody on a charge of murder, attempted murder or culpable homicide, advising and acting for any person appearing from custody under solemn procedure or any person appearing from custody or on undertaking for their first appearance on a charge under summary procedure. A person who pleads guilty from custody under summary procedure will continue to be represented by the duty solicitor.

13. Expenditure on the Duty Solicitor Scheme was £870,000 (£943,000) in 1999/2000 (1998/9). An accused person not in custody and pleading guilty may be eligible for limited representation through ABWOR. Almost all grants of ABWOR have been for accused persons pleading guilty or changing a plea from `not guilty' to guilty. In 1999/2000 (1998/9) expenditure on ABWOR was £2.642m (£2.641m).

14. If a plea of not guilty is entered to one or more of the charges under summary procedure an application for Summary Legal Aid will be required. This application can be made through a solicitor of the accused person's choice. Eligibility for Summary Legal Aid requires SLAB to be satisfied that the accused or her/his family would suffer undue hardship in meeting defence costs. In addition, SLAB must be satisfied that it is in the interests of justice to grant legal aid. In sum, full Summary Legal Aid is available only to accused persons who plead `not guilty'.

15. Since 1^st April 1999 payments to solicitors for work under Summary Legal Aid have been made under a system of fixed fees. Prior to the introduction of fixed fees payments were on a `time and line' basis for all work judged by SLAB to be necessary. Such payments were made according to a scale of fees fixed by regulation. Fixed Fees were introduced under the Criminal Legal Aid (Fixed Payments) (Scotland) Regulations 1999. The payments are of two broad types.

16. Core Payments which cover all work up to and including any diet at which a plea of guilty is made or accepted or plea in mitigation made together with the first 30 minutes of representation at a proof in mitigation or the first 30 minutes of any trial. The rate for core payments is £300 in the District Court and £500 in the Sheriff Court.

17. A series of Additional Payments for representation at trial or proof in mitigation beyond 30 minutes and representation at any deferred sentence diets. The rates of payment are £50 (£100), £50 (£200) and £100 (£400) for the first, second and third & subsequent days respectively in the District Court (Sheriff Court). Additional payments are also made for bail appeals and diets of deferred sentence. These rates are net of VAT.

18. The core payment for certain remote Sheriff Courts was raised to £550 by the Criminal Legal Aid (Fixed Payments) (Scotland) Amendment Regulations 1999. SLAB has indicated that currently more than 70% of criminal accounts are paid for under the fixed payment regime.

19. In 1999/2000, 31,727 cases were funded under fixed payments at a total cost of £19m, representing an average cost of £599 per case. During this year 26,703 summary cases carried over from the previous `time and line' system were continuing. Their total cost was £25.92m. The total cost of Summary Legal Aid in 1999/2000 was £44.9m representing 34.5% of all legal aid expenditure. No evidence was led in 52,696 (90%) of the 58,430 Summary Legal Aid cases because the accused eventually pled guilty as libelled or to a reduced set of charges or the case was dropped. These cases involved expenditure of £39.5m. This represented 79% of Summary Legal Aid Expenditure and 30.3% of all legal aid expenditure in that year (33% of net expenditure).

20. Under powers introduced by the Crime and Punishment (Scotland) Act 1997 a Public Defence Solicitors' Office (PDSO) has been established on a pilot basis in Edinburgh. The pilot PDSO provides defence services to persons charged under summary procedure to appear before Edinburgh District and Sheriff Courts whose birthday falls in January and February. The pilot is the subject of a detailed research study whose report is to be presented to the Parliament in October 2001. The Committee specifically excluded consideration of the PDSO pilot from this Inquiry into Legal Aid and Access to Justice.

21. In the case of solemn procedure an accused person is automatically entitled to criminal legal aid up until bail is granted or the accused is placed in custody. However, legal aid beyond that stage requires an application to the court. Provided the court is satisfied that legal aid may competently be given the only test that must be satisfied is one of undue hardship. In 1999/2000 6,343 cases were funded through Solemn Legal Aid at a cost of £22m or £3,452 per case. This represented just under 18% of all legal aid expenditure

22. When Summary and Solemn Legal Aid expenditures are added to criminal expenditure under A&A (including ABWOR) together with expenditure on the Criminal Appeals, the PDSO pilot office and the Duty Solicitor scheme, total legal aid expenditure on criminal matters in 1999/2000 was £80m. This represents 61.5% of gross expenditure on legal aid (66.6% of net expenditure). This percentage is slightly down on that for most years of the 1990s but is still considerably higher than that for England & Wales where the figure, for most of that decade, was below 50%. Criminal matters dominate Scottish legal aid expenditure. It should be noted that total (i.e. criminal and civil) expenditure on legal aid per head of population in Scotland was almost identical to that for England & Wales for most of the 1990s.

23. Chart 2 illustrates expenditure in each of the three main schemes of legal aid from 1987/8 to 1999/2000. The figures are expressed in 1997/8 prices i.e. increases due to general inflation have been removed.

Chart 2

24. The description of the Scottish legal aid system presented in the preceding paragraphs with questions of eligibility criteria and definitions of scope is suggestive of a somewhat bureaucratic, state administered, system. Although it does have some of these characteristics, its functioning and some of its problems are probably best understood by seeing it as a somewhat regulated insurance system. Indeed, comparative scholars of legal aid systems categorise the Scottish system as a `Judicare' system. Those who meet the eligibility criteria are in the same position as insurance policyholders: when a risk covered by the policy occurs the insurer will meet the costs of dealing with it (in part or in full depending on the terms of the policy).

25. Just as with house contents and car insurance policies, the insurer does not actually provide the service to repair the damage done but pays the costs of obtaining the repair service. The state does not provide the legal advice and representation required in a Judicare system. It pays an independent supplier to provide those services. The state, however, determines who is qualified to be a supplier and specifies the terms under which it will remunerate the supplier. No supplier is compelled to provide the service. Suppliers respond to the incentives provided by the fees and the opportunity cost of providing the service. The assisted person does not become a policyholder by paying a premium but by satisfying the eligibility criteria. The requirement that assisted persons whose income or capital lie between the upper and lower eligibility limits have to make a contribution is similar to a compulsory excess for certain risks under an insurance policy.

26. It has often been said that the legal aid system is demand led: all persons who meet the eligibility criteria are entitled to legal aid for all contingencies which fall within the scope of the system. There is no cap on expenditure on legal aid. However, all expenditure on legal aid must come from the Scottish Executive Justice and Home Affairs Department's budget which is capped. Thus growth in legal aid expenditure which exceeds the growth in the Justice and Home Affairs Department's budget reduces the amount available for that department's other activities. The only means available to control the legal aid budget are changes in eligibility criteria, changes in the scope of the system or controlling the payments made to the suppliers of services. These are equivalent (returning to our analogy) to an insurance company altering premiums, changing the terms of the policy and controlling the costs of replacement/repair. All three have been tried with legal aid in recent years.

27. The preceding paragraphs have provided a brief description of the main elements of the Scottish legal aid system. The succeeding paragraphs examine issues and problems which have arisen in recent years in the operation of the system. To facilitate the analysis of these problems, their interrelations and possible solutions to them, following the analogy used above, we look first at factors which affect the demand for legal aid and then turn to factors affecting their supply.

Factors affecting the demand for and access to legally aided services

Civil Legal Aid

28. The demand for legal aid for civil matters is largely determined by the scope of the Advice & Assistance scheme and the Civil Legal Aid scheme and their respective eligibility criteria. A&A, as described earlier, is a solicitor administered scheme which allows eligible persons to obtain advice from a solicitor on whether or not a particular dispute is remediable by legal means. The eligibility conditions for A&A are more generous than those for Civil Legal Aid. Some benefits give automatic access to A&A but are treated as income in the determination of eligibility for full Civil Legal Aid (e. g. Working Families Tax Credit). This has led to claims of inconsistency by some witnesses. The Deputy Minister's defence of this is that a rapid evaluation of a problem is achieved by having generous eligibility criteria for Advice & Assistance. The open-ended nature of full Civil Legal Aid, it is then argued, requires greater rigour in assessing eligibility.

29. The number of A&A cases paid for rose steeply in the first few years of the 1990s but since 1992/3 it has continued to rise but at a much lower rate. However, the figure for Civil A&A has remained almost static since 1992/3, even although treating WFTC as a passporting benefit increased eligibility.

30. Some would argue that the generous treatment of eligibility for A&A may raise expectations that an applicant may be able to remedy a problem through accessing legal aid only to have them dashed when full legal aid can only be accessed with a significant contribution. It should be noted that the contribution is calculated in terms of the applicant's `free income' and not as a proportion of the costs of pursuing the case. This is likely to work against applicants with low case costs and in favour of applicants with high case costs.

31. The Committee may wish to consider making a recommendation on the harmonisation of the treatment of benefits (such as WFTC) for eligibility to Advice & Assistance and Civil Legal Aid.

32. The effective demand for Civil Legal Aid will be reduced by any decrease in eligibility in the same way that an increase in the premium for an insurance policy would reduce its effective demand. It has been argued by many that this is what has happened with Civil Legal Aid in Scotland since 1993.

33. The lower income eligibility level for legal aid was reduced by 25% in 1993 and the maximum contribution payable by those above the lower income level was raised from one quarter to one third. Many commentators have argued that these changes not only reduced the number of people eligible for legal aid but also acted to discourage those who qualified for legal aid subject to a contribution from applying or taking up an offer.

34. The number of successful applications for Civil Legal Aid had been rising until 1992/3 but has dropped dramatically since then. This appears to be consistent with the lower eligibility level from 1993 discouraging applications. However, as the Deputy Minister pointed out in evidence, there has been a 40% reduction in fault-based divorce cases. When a distinction is made between Civil Legal Aid granted for family matters and that granted for other matters, the picture is less clear. The decline since 1993 has largely been in grants for family matters. The grants for other matters have only fallen significantly since 1998/9. It would not be safe to conclude on this evidence that the decrease in demand for Civil Legal Aid is due simply to a reduction in eligibility levels. SLAB has commissioned research to establish whether the number of people who qualify for legal aid is now smaller than it was in 1993.

35. The Committee may wish to consider making a recommendation on eligibility levels when it has received the results of the research commissioned by SLAB.

36. The proportion of successful applications for Civil Legal Aid not taken up has risen dramatically since 1992/3. This appears to be consistent with the higher level of contributions discouraging the take up of offers. The proportion of those granted Civil Legal Aid who are required to make a contribution now stands at around 20%. Prior to 1993 it fluctuated between 15% and 18%. Thus the proportion required to make a contribution has risen by between 10% and 33% depending on the year of comparison. Furthermore, the ratio of those grants not taken up to those required to make a contribution is significantly higher after 1993 than before. This evidence points to the increase in those required to make a contribution reducing the take up rate for offers.

37. The Committee may wish to make a recommendation on rates of contribution to be made by assisted persons whose incomes are above the lower eligibility level.

38. The lower capital limit for Civil Legal Aid has not been increased since 1983. It is £3,000. Had it been increased in line with inflation since then it would be £5,685. If it is accepted that the figure of £3,000 was appropriate in 1983 there is every reason to increase it to the significantly higher level now.

39. The Committee may wish to make a recommendation on the up-rating of the lower capital limit in line with inflation since 1983.

40. As discussed in paragraphs 9 and 10 above, parties assisted by Civil Legal Aid who are successful may be required to contribute to the Legal Aid Fund from any property recovered or preserved. This will happen if expenses awarded against the other party are less than the cost to the Legal Aid Fund. This would reduce the value of any award to the assisted person.

41. The uncertain prospect of being liable to pay some of the costs of legal aid from the award may discourage some potential applicants from taking out an action. However, similar considerations apply to any unaided party contemplating a civil court action. A change in practice with respect to aided clients would put them at an advantage over those who do not qualify for legal aid (unless the courts typically award lower expenses to legally aided parties than to successful parties whose opponents are unaided).

42. When an assisted person looses an action legal aid becomes, in effect, a grant. Furthermore, an unsuccessful assisted person is not liable for any expenses of the unassisted party even when he/she initiated the case. However, given the low income and capital qualifications for legal aid it is unlikely that expenses could ever be recovered from an assisted person anyway. Nevertheless, the award of legal aid becomes a `powerful weapon' in the hands of the assisted person. It must increase the demand for legal aid compared to what it would be if assisted persons faced the downside risk of having to bear the expenses of the other party if the case is lost. It may also intimidate an unaided opponent into making an out of court settlement to avoid liability for expenses.

43. However, the question remains as to whether the successful unassisted party should be able to obtain expenses against SLAB. The Legal Aid (Scotland) Act 1986 does allow for this possibility but only where the assisted party initiated the case and the successful unaided party would suffer severe financial hardship were expenses not awarded. This happens only in a negligible number of cases. Indeed, up until the SLAB Annual Report ceased to publish the information (in 1995/6) the number of cases in which expenses were awarded to the unaided party never exceeded 0.1% of aided cases (2.3% of the aided cases in which the unaided party was successful). Evidence to the Committee suggested that in 1999/2000 expenses of only £36,000 had been awarded against SLAB. It would appear that Scottish courts interpret the legislation narrowly.

44. Prior to the changes in the funding of `money cases' by the Legal Aid Board in England & Wales the courts had begun awarding costs to successful unaided parties in that jurisdiction. Although the English legislation had the same requirement concerning `severe financial hardship' as the Scottish legislation and the courts had adopted, initially, a similarly narrow interpretation of it, latterly, the interpretation became less restrictive. In 1994/5 expenses totalling more than £61m were awarded to successful unaided parties in England & Wales. This was equivalent to 7% of the cost of providing Civil Legal Aid to assisted parties and 28% of the sum awarded in costs against unsuccessful unassisted persons. A comparable percentage in Scotland would give rise to expenses of just over £2m being awarded against SLAB. The English courts had also interpreted the protection of unassisted parties from severe financial hardship as applying to companies as well as individuals.

45. Why should the successful unaided party not be entitled to expenses as they would be if the unsuccessful party had been unaided? It seems unjust that the successful unaided party should bare the costs solely because the unsuccessful party was legally aided, even more so if the aided party had initiated the action. The purpose of legal aid is to give those on low incomes access to the legal system but surely not at the expense of their opponents rather than the taxpayer. The present practice might be seen as an expedient way to keep down the cost of legal aid to the public purse. Making SLAB liable for the judicially approved expenses of the successful unaided party would put SLAB in the same position as the funder of a private action. SLAB would have to consider the potential award of expenses to the other party when considering whether or not to fund a case.

46. Any change in practice with respect to expenses would require legislation changing the criterion for award from that of `severe financial hardship' since the courts interpret it so narrowly. However, putting SLAB in the same position as the funder of a private case would also require a change in the merits test for Civil Legal Aid. In particular, the test would have to require SLAB to consider the likelihood of the aided party being unsuccessful and the possible size of the expenses to be awarded against the Board. This would then effectively become part of the `reasonableness' criterion. Returning to the analogy with insurance, it is the case that any insurance company pursuing a claim on behalf of a policyholder would reserve the right to make a judgement of the cost effectiveness of pursuing the matter in court.

47. The Committee may wish to make a recommendation concerning the awarding of expenses to a successful unaided party.

48. The demand for Civil Legal Aid is also affected by it only being available to individuals and not corporate bodies and associations (including community councils). There is no evidence on how much greater the demand would be if eligibility were extended to `organisations' as well as individuals. Nor has there been any suggestion as to what financial eligibility criteria could be applied. Nevertheless, it has been suggested to the committee that eligibility be extended beyond individuals.

49. The Committee may wish to consider making a recommendation that the Executive (or SLAB) examine how access to legal aid could be made available to `organisations' as well as individuals and what financial eligibility criteria might be applied to `organisations'.

50. The demand for civil legal aid is restricted by the scope of legal aid as well as by the eligibility criteria. The scope of ABWOR has recently been increased to include Employment Tribunals. However, full Civil Legal Aid is not available in the case of Employment and other Tribunals. Payment under ABWOR is at a relatively low level. The average ABWOR payment in 1999/2000 was £174. An employed person on low income may be required to make a significant contribution in the case of ABWOR because no deductions are made from income in assessing contributions.

51. A number of commentators have argued that the sums at stake in Employment Tribunals and the complexity of the issues involved are just as significant as those involved in cases within the scope of Civil Legal Aid, yet representation at the Tribunal is outwith the scope of Civil Legal Aid. The opposing party might also be legally represented at an Employment Tribunal.

52. The Committee may wish to consider making a recommendation on further extending the scope of Civil Legal Aid to Employment Tribunals.

53. It has been pointed out frequently by commentators that there is a largely unmet need for legal aid services in the area of social welfare law. This suggests that there is a (latent) demand for such services which fails to come through as an effective demand. In principle, this could either be because the scope of legal aid limits the availability of funding for such services or that there is a failure of supply. In 1999/2000 the field of social welfare law accounted for 27% of intimations for civil advice and assistance. Published figures do not allow a similar analysis to be carried out for Civil Legal Aid but SLAB indicates that the proportion attributable to social welfare law are lower than for A&A. Citizens Advice Scotland has argued that CABx deal with many more issues of social welfare law than do solicitors. Furthermore they are unable to refer many clients with social welfare law problems to solicitors because solicitors do not have the expertise to deal with them. This suggests that the problem here is one of supply rather than demand. It will be returned to below.

Criminal Legal Aid

54. The demand for criminal legal aid might at first sight seem to have fairly straightforward determinants: the number of persons brought before the courts charged with criminal acts. This, in turn, might seem to be determined simply by the number of crimes committed and the effectiveness of the police service in solving these crimes. However, a number of factors intervene to complicate the relationship somewhat. First, there is the discretion exercised by the Procurators Fiscal in the Scottish criminal law system. Secondly, the nature of the charges and the level of court in which prosecution is to take place and thirdly whether the accused pleads guilty or not guilty.

55. In the Scottish legal system only the Crown may prosecute a criminal offence. Apart from for the most serious offences, Procurators Fiscal carry out this function in each Sheriff Court district. The members of the fiscal service determine not only whether a prosecution will take place for a given crime but also what charges will be libelled against the accused and (for most crimes and offences) whether the prosecution will take place under summary or solemn jurisdiction. However, a recommendation to prosecute under solemn procedure must be passed to the Crown Office for decision. When the decision is to prosecute under summary procedure the fiscal will also decide whether prosecution will take place in the District Court or in the Sheriff Court.

56. These decisions affect the demand for legal aid because the more serious the offence, and thus the higher the court in which the case is prosecuted, the more likely it is that the accused will qualify for full criminal legal aid. Under summary procedure where full criminal legal aid is only available on a plea of not guilty, such a plea is more likely to be entered if the case is heard in the Sheriff Court as opposed to the District Court. Because of the substantial overlap in jurisdiction of the Sheriff and District Courts the fiscal has a choice of where to prosecute. However, the Sheriff Court has greater powers of sentence. This may lead to a greater likelihood of a not guilty plea to the charges, at the initial diet, in the case of the Sheriff Court.

57. Not only does the Procurator Fiscal's decision on initial charges and venue for prosecution influence the initial plea and thereby the demand for legal aid but the right of the prosecution to amend the charges in the course of the prosecution gives rise to the phenomenon of plea bargaining. A plea of not guilty to the charges as libelled provides the accused with access to criminal legal aid and the services of a defence agent to evaluate the strength of the prosecution's case and bargain with the fiscal for a guilty plea to a lesser set of charges. Given the considerable pressure under which the fiscal service operates, a certain conviction to a lesser charge may be preferred to an uncertain result of a (time consuming) trial on a higher set of charges.

58. As discussed in paragraph 19 above, in 90% of summary cases in 1999/2000 where a not guilty plea was entered and summary legal aid granted no trial took place. This is usually a result of a change in plea to a reduced set of charges and is not unusual. These 52,696 cases incurred £39.5m of legal aid expenditure and represented 33% of total net legal aid expenditure in that year. What research evidence there is on this topic suggests that such behaviour is not the result of self-interested behaviour of defence agents but a result of the nature of the criminal prosecution procedures combined with rational self-interested behaviour on the part of accused persons.

59. It should be noted that in the Scottish system the court is not required to take a guilty plea into consideration when deciding sentence. In England & Wales the sentence must be reduced in recognition of co-operation with the court and the consequent reduction in the cost of the trial. Recent legislation in Scotland permits the court to take account of a guilty plea but does not require it to do so. Evidence suggests that courts in Scotland do not take account of guilty pleas when deciding sentences.

60. It has also been suggested that the pressures on the fiscal service are such that there is no opportunity for plea (or charge) bargaining prior to the initial or even intermediate diet. The introduction of compulsory intermediate diets during the 1990s does not seem to have helped in this respect. It is the impending trial diet which appears to focus the minds of fiscals as well as accused persons and their agents on the issue of plea negotiation. It might be that if the fiscal service were more generously resourced, fiscals would have more time to focus on this issue prior to the trial diet. Under the fixed fee system defence agents receive the same fee whether a guilty plea is entered at the intermediate diet or at the trial diet. However, where a custodial sentence is a likely outcome of a guilty plea and the accused is not in custody, there is an incentive for the accused to postpone the change of plea until the last minute.

61. In summary, the demand for criminal legal aid is not determined solely by the number of crimes committed and the effectiveness of the police service in solving them. It is affected by the policy of the Crown Office and the choices of individual Procurators Fiscal on the charges to be libelled and in which courts they are to be prosecuted. Demand may also be affected by the resources available to the fiscal service and the incentives faced by accused persons and their defence agents.

Factors affecting the supply of legally aided services

62. The supply of any service will be determined by the attractiveness of that market to potential suppliers. Some suppliers will be attracted to a market because it provides financial rewards. Others may be attracted for non-economic reasons. Perhaps, because they have a preference for an activity which provides a socially desirable form of public service. However, incentives (whether financial or non-financial) affect all potential suppliers. Supply may also be affected by any restrictions on who is permitted to be a supplier of those services.

63. In Scotland's `Judicare' system of legal aid, services are supplied exclusively through the legal profession: solicitors and advocates. For the most part, provided they meet certain requirements, suppliers are freely chosen by clients with SLAB acting as a third party who is responsible for meeting the cost. With the exception of some experimental or pilot activities only legally qualified persons may provide legal aid services. Below the factors that are likely to effect the supply of legal aid services by the legal profession are discussed, as are some alternative methods of provision.

64. Although many members of the legal profession undertake legally aided work for the most laudable of motives there is an underlying commercial relationship. Solicitors' firms and individual advocates require a revenue stream to cover their costs and provide a return on their investment in knowledge and expertise. When the return in one area of activity falls relative to that in others there is likely to be a shift of suppliers towards the higher return areas. However, the shift may only take place in the longer run because some suppliers are locked into their existing activities because they have become highly specialised and they lack alternatives. Less specialised suppliers will find the adjustment of their activities easier. For them it may be a matter of merely adjusting the balance of activity.

65. Most of the solicitors' firms in Scotland who carry out legally aided work would not appear to be legal aid specialists. A study in 1994/5 reported that 17% of solicitors' firms in Scotland did no legal aid work. Conversely, in the same year SLAB reported that 10 firms (1%) accounted for 13% of all expenditure on legal aid. However, according to the SLAB annual report for 1999/2000 the top 19 earning firms accounted for only 13% of all legal aid costs in that year. SLAB reports that there are 707 firms registered as complying with their Code of Practice for Criminal Legal Aid and thus eligible to provide criminal legal aid services. This represents the vast majority of solicitors' firms in Scotland. The Register included 1,863 solicitors. In oral evidence from SLAB the figure was reduced to 1803. This represents 29% of solicitors in private practice in Scotland. There may of course be others willing to provide legally aided services on civil matters.

66. It has been suggested that, perhaps, 25% of solicitors firms in Scotland do 75% of the legally aided work. SLAB is currently carrying out a study to assess the number and distribution of solicitors' offices offering legal aid services. What is more important than the existing number and distribution of offices offering legal aid services is the future distribution. As argued above (paragraph 64) the adjustment in supply of a specialist service may only take place over the long run as existing specialists may be `locked in'. If returns to providing legally aided services are lower than in other areas of legal practice it is to be expected that the inflow of new practitioners to that specialism will be reduced. Thus what it may be most important to establish is the number of recently qualified lawyers and trainees employed on legally aided work rather than the number of principals active in these areas.

67. Representatives of the legal profession have clearly indicated a belief that the supply of practitioners willing to provide legally aided services is in danger due to the decline in legal aid fee rates relative to the rates chargeable for other areas of legal advice and representation. The attractiveness of legal aid services will also be affected by the costs incurred in supplying those services. The impact of such factors in now examined, first with respect to civil matters and then criminal matters.

Civil Matters

68. The rate of fees paid to solicitors for A&A has not changed since 1992. The general rate of inflation between then and 2000 has been 23% and the growth in average earnings has been 37%. However the average payment for A&A has also risen over this period by 40%. There is no evidence on which to judge whether this increase in average payment is due to more work being done or is a disguised rate increase.

69. In the case of Civil Legal Aid there was an increase in the hourly rate in 1995 but there has been none since that date. The rate of inflation since that date has been 11.4% and the growth in average earnings has been 24.4%. Legal Aid rates have always been below those for private work. The Glasgow Bar Association has suggested that the difference was originally around 10%, had risen to 24% by 1995 and now stands at 50% when compared to the Judicial Table of Fees for Glasgow Sheriff Court. The validity of this comparison depends on whether the actual fees negotiated between solicitors and self-financing clients are based on the Judicial Table or are below that.

70. The average payment per case has also risen over this period from £1,495 to £1,918, an increase of 28.3%. The average payment to solicitors per case has risen by a similar percentage over this period. This increase in average cost obscures different rates of growth for different types of cases. There is no evidence on which to judge whether or not the increases are due to increasing complexity of the work required. However, the increase in the payments per case to solicitors has been greater for civil cases in the Sheriff Court than in the Court of Session. It has been 29% in the Sheriff Court and 23% in the Court of Session. There has also been a shift in the balance of Sheriff Court cases with the proportion of non-Family/Matrimonial cases rising from 39% to 46%. The number of legally aided civil cases in the Sheriff Court has fallen by 30% from 21,524 in 1995/6 to 15,020 in 1999/2000.

71. The gross income derived by the solicitors profession from legally aided civil matters (Civil Legal Aid and A&A) was marginally greater in 1999/2000 than in 1995/6. The share of that income coming from Civil Legal Aid has fallen from 59% to 52%. If, as has been suggested by bodies representing solicitors, fewer solicitors are now providing legal aid services then these solicitors must be earning a higher real gross income than in the past from legal aid

72. A longer term comparison going back to 1991/92 shows that solicitors' gross revenue from legally aided civil matters has risen by 75% while inflation has been just over 23%. Income from Civil Legal Aid has risen by 65% whilst the number of cases has fallen by just over 22%. The average case cost is now more than twice what it was in 1991/2. Gross income from A&A for civil matters has risen by 88% but the number of intimations has risen by 35%. The average cost of civil A&A has risen by 40%.

73. However, what matters for the long run supply of civil legal aid services is the return on this work relative to privately funded civil work. If the Judicial Table of Fees is truly representative of what is paid for privately funded work, Civil Legal Aid is relatively less attractive than it has been in the past. Further research would be required to establish what the appropriate comparison with privately funded civil work would be.

74. In the case of advocates the position is less complex. Civil cases in the Court of Session generated £1.5m of gross fees for advocates in 1999/2000 representing a cost per case of £2,047. In 1995/6 advocates derived £2.05m in gross fees in the Court of Session at an average case payment of £1,899. This represents an increase in the fee per case of 10%. The fee rate for advocates has not been increased since 1992. In 1991/2 advocates' fee income for such cases was £622,363 or £570 per case. Thus there has been an increase in gross income of 69% and in average case payments of 259%. The inflation rate for this period was 23% and average earnings have risen by 37%.

75. Advocates have increased their involvement in legally aided civil cases in the Sheriff Court. In 1999/2000 advocates derived £1.1m of gross fee income from that source (representing 41% of their income from civil legal aid). This compares with £590,561 in 1995/6 (22%) and £296,896 in 1992/2 (31.5%). An average case cost figure does not make much sense in this context as advocates are only involved in a relatively small number of Sheriff Court cases. Nevertheless, this represents an 84% increase in gross income between 1995/6 and 1999/2000 while inflation has been 11% and the growth in average earnings has been 24.4%. However, over the longer period since 1991/2 the increase has been 15% with inflation of 23% and growth in average earnings of 37%.

76. An assessment of how advocates' incomes from civil legal aid have faired in recent years depends on the time period over which the view is taken, the area of work concerned and whether inflation or increases in average earnings is the comparator.

77. Some commentators have expressed concern over quality assurance in the field of Civil Legal Aid. In particular, questions of quality arise from the infrequency with which solicitors might deal with particular legal questions. On the other hand, members of the legal profession have expressed concern that SLAB may introduce quality assurance mechanisms for civil legal aid of the type introduced for criminal legal aid. They have argued that this could lead to solicitors' firms withdrawing from the supply of civil legal aid services. It must be recognised that there will be compliance costs associated with any such scheme. These costs should be factored into legal aid fees.

78. The Committee may wish to consider making recommendations concerning the revision of fee rates for solicitors and advocates who provide Civil Legal Aid and for Advice & Assistance together with the question of quality assurance in Civil Legal Aid.

79. The question of unmet demand for advice and representation on matters of social welfare law was raised in paragraph 53 above. It was suggested there that the problem might largely be one of supply. There are two components to this. First, solicitors may not have sufficient knowledge or experience in areas of social welfare law to cover the needs in that area. For example, a survey revealed that less than 25% of law firm principals dealt with welfare benefits and social security rights. Secondly, there is a lack of incentive for solicitors to become more knowledgeable on social welfare. Most social welfare law issues are dealt with under A&A, payment for which is limited. Solicitors have no incentive, therefore, to devote sufficient time to carry out the research etc. necessary to remedy a problem. It has been suggested that solicitors might be encouraged to develop more expertise if higher remuneration was paid for this type of A&A work. However, as things stand, this would require legislation.

80. It has also been argued that expertise on social welfare law already exists in sources outwith the current legal aid system: in the voluntary advice agencies. Citizens Advice Scotland has argued that CABx deal with many more times the number of enquiries relating to social welfare law issues than solicitors. However, as legal aid is presently constituted they do not receive any funding from the legal aid system. However, SLAB is using the powers under Section V of the Legal Aid (Scotland) Act 1986 to carry out pilot studies under which the Board will employ solicitors to act for people getting legal aid and to assist voluntary advice agencies. The experience of these pilots will feed into the Working Group on Community Legal Service.

81. One way of viewing the proposals for a Community Legal Service is that it would expand the types of suppliers of advice, dispute resolution and possibly representation for those involved in civil disputes and welfare law problems. It could, for example, provide a new framework under which those in need of advice could have their problem diagnosed and the appropriate route for resolution identified. Other views might involve wider implications for the legal aid system such as who should be the core providers of advice and assistance on certain matters such as social welfare law. A Community Legal Service might also make provision for specialist advice in rural areas. The Report of the Working Group may have far reaching implications for the future shape and scope of legal advice in Scotland.

82. The Committee may wish to make recommendations on the provision of legal aid services in the area of social welfare law or await the Report of the Working Group on Community Legal Service before considering recommendations on this area.

Criminal Matters

83. The fee rates paid to advocates for criminal work and those paid to solicitors for cases under solemn procedure have not been changed since 1992. Fees to solicitors for work in summary cases were altered by the introduction of fixed fees in April 1999 as discussed in paragraphs 15 and 16 above.

84. The way in which payments were reported in SLAB Annual Reports at the time makes it difficult to compare gross fee incomes for solemn cases in 1991/2 with 1999/2000. The introduction of fixed fees makes comparison of summary cost in 1999/2000 with earlier years difficult. The initial comparison will be made for all criminal legal aid payments and for the years 1991/2 and 1998/9.

85. Gross payments to solicitors for Criminal Legal Aid in 1998/9 were £61.9m for 67,561 cases at an average case payment of £917. In 1991/2 the comparable figures were £39.3m, 60,144 cases and £653. The growth in gross payments is 57.9% and in average case payments is 40.4%. Over this period the rate of inflation was 21.7% and the growth in average earnings was 31%. Clearly gross income fell from 1998/9 to 1999/2000 with the introduction of fixed fees in summary cases. In 1999/2000, 49% of cases were paid by fixed fee. Solicitor's gross income was £58.1m from 64,773 cases at an average payment of £897. Inflation over that year was 2.2% and average earnings increased by 4.4%. When all summary cases are covered by fixed fees there will clearly be a further fall. SLAB estimate that the projected £10m annual saving from the introduction of fixed fees will be achieved.

86. Advocate's gross fee income from Criminal Legal aid has risen from £2.8m in 1991/2 to £4.3m in 1999/2000 an increase of 54.4%. There has been a change in the pattern of advocate's income. In 1991/2, 22% was earned from cases heard in the District and Sheriff Courts. That share had fallen to 15.7% by 1999/2000. Looking only at High Court cases, advocate's gross income rose from £2.2m to £3.6m, a 64% increase. The average payment per High Court case rose from £1,376 to £3,190, a growth of 250%. This compares with inflation of 24.4% and a growth in average earnings of 37%. The number of legally aided High Court cases has fallen significantly between these years. When the focus is on cases which go to trial, advocate's gross income has risen by over 63% although the number of legally aided trials has fallen by 36%. The average gross payment to advocates per trial has risen from £1,960 to £4,933 a growth of 252%.

87. However this growth has not been uniform over the period. In 1996/7 the gross income from High Court trials was almost the same as in 1999/2000 representing a growth of 64% from 1991/2, although the number of trials was greater than in 1999/2000. In 1996/7 the average payment per trial was £3,532 representing an increase of 80% in five years when inflation had been 14% and earnings growth 19%. The growth since 1996/7 has clearly been less. Gross fee income has actually fallen slightly, while average trial income has risen by 40%. Inflation over the second period has been 8% and the growth in average earnings has been 15%. However, it must be recognised that the pattern of offences and length and complexity of trials will differ between any two years. Nevertheless, the data seems to suggest that trial advocacy grew in financial attraction in the first half of the 1990s and has declined in attractiveness since the middle of that decade.

88. The Committee may wish to make a recommendation concerning the fee rates paid for criminal work by advocates and by solicitors for cases not covered by the fixed fee regime.

89. What effects will fixed fees have on the supply of legal aid in summary cases? To the extent that the introduction of fixed fees was designed to achieve a reduction in Criminal Legal Aid expenditure of £10m per annum, it clearly makes the supply of that service less attractive. The Summary Legal Aid bill in 1997/8 at the time of announcement of the proposed scheme stood at £40m. Thus the proposal envisaged a reduction in Summary Legal Aid costs of 25%. The scheme eventually introduced has been estimated to reduce the savings to 21%. This is before taking account of the changes introduced by the Convention Rights (Compliance) (Scotland) Act.

90. The introduction of fixed fees not only reduces the total sum payable for Summary Legal Aid work but it may also mean that the income of firms who do summary work will be subject to significant fluctuations. This is related to what has been called the `swings and roundabouts' effect of fixed fees. Different summary cases involve different amounts of work by the defence agent. It is probable, therefore, that the fixed fee will result in overpayment in some cases and underpayment in other cases when compared with a `time and line' fee which was designed to generate the same average payment per case as the fixed fee. When fixed fees were introduced it was argued, by its proponents, that these differences would average out (`swings and roundabouts') for each firm.

91. The swings and roundabouts argument only applies to firms doing a large number of summary cases in a given year or over a large number of years. Firms doing a small number of cases could therefore be systematically `under-paid' or `over-paid' compared to a time and line basis. If solicitors handle cases in the same way as before the introduction of fixed fees (as they maintain they do) this under or over payment will pass through to their incomes. A simulation study has shown that there will be little fluctuation in the incomes of major providers of summary legal aid and those who carry out relatively few cases. However, there are likely to be significant fluctuations in the incomes of those firms who carry out between 40 and 50 summary cases per solicitor per year. This last category would apply where about one third of a solicitor's time was devoted to summary cases prior to fixed fees. The study predicted that this would either lead to firms in the last category moving away from the supply of summary legal aid or reducing the level of service provided to accused persons. The former might have implications for the availability of such services in rural areas. No research has been carried out as yet on the actual changes in behaviour brought about by fixed fees.

92. The Committee may wish to consider making a recommendation on the operation of fixed fees or on the need to monitor its impact on the availability of solicitors willing to undertake criminal legal aid throughout Scotland.

The organisational framework of the legal aid system

93. The preceding analysis of the demand for and the supply of legally aided services utilised the analogy between our `Judicare' system of legal aid and an insurance system. However, a major difference between the two is that in an insurance system the insurer will actively change premiums, policy coverage and its relationships with the suppliers of `repair' services as patterns of demand and supply change over time in order to achieve it overall objective. Such changes may occur as frequently as the policyholders have to renew their policies. SLAB, on the other hand, has to operate a relatively inflexible system enshrined in statute. Essentially, it administers rather than manages the system. Changing even small elements of the system is time consuming and is in the hands of Ministers and the Scottish Parliament. Some of the problems in the supply of and demand for legally aid services may have their roots in the system's inflexibility.

94. The Committee may wish to make a recommendation that there be a general revision of legal aid regulations to simplify them and bring them up to date.

95. It has been argued that effective management of the legal aid system requires greater flexibility and strategic vision than is permitted in the present system. For example, where there is unmet demand for a service it may be necessary to stimulate supply (or even to provide it) in ways not possible under present legislation. A Community Legal Service may provide this possibility. Some have suggested the more radical route of establishing a Legal Services Commission to provide a strategic vision not only covering community legal services but also criminal defence work and determining the balance of expenditure between them.

96. This proposal has its attractions, particularly given the rigidity of the present system. However, examination of the operation of the Legal Services Commission in England & Wales suggests that its advantage over the present Scottish system may come to some degree from the nature of its contractual relationships with suppliers of services. It would appear that it is the combination of a `strategic vision' and contractual flexibility guided by general objectives set by Government that holds out the prospect of a more `intelligent' management of the system in England & Wales. It may be possible to achieve the same outcomes in Scotland without going as far as creating a Legal Services Commission.

97. The Committee may wish to consider making recommendations which would lead to SLAB being given a greater strategic role than at present together with some degree of flexibility of operation.

98. As pointed out in paragraph 2 above, this report has not covered all the issues raised in evidence to the Committee. It has concentrated for the most part on those matters open to analytical scrutiny rather than opinion or subjective experience.

Frank H Stephen

Professor of Economics

University of Strathclyde

Annexe C: Oral Evidence And Associated Written Evidence

5th Meeting, 2001 (Session 1), 27 February 2001

SUBMISSION FROM PROFESSOR ALAN A PATERSON, STRATHCLYDE UNIVERSITY LAW SCHOOL

Summary

1. Any inquiry which is looking at the provision of legal aid and advice, access to justice, legal problems and the unmet need for legal services, needs to stipulate the definitions of these concepts which are being adopted for the purposes of the inquiry.

2. An inquiry into legal aid, its adequacy and how it should be reformed, needs also to examine the purpose of legal aid as it is understood today and to consider what the purpose of state funded legal services should be in the future.

3. Given that the need for rationing and prioritisation is now widely accepted in advanced legal aid jurisdictions, the inquiry might find it useful to look at the methods of rationing that have been implemented hitherto in Scotland.

4. Similarly, the inquiry should consider the options available in Scotland for prioritisation in the future in the areas of financial and legal eligibility, fees and scope.

5. The major deficiency of legal aid in Scotland is the lack of a body charged with thinking coherently, strategically and proactively as to the provision of poverty legal services, including Community Legal Services, in the future. Such a body would need to work closely with those responsible for the Courts, Court procedures and Law Reform, since access to justice depends on the combination of all of these factors, not simply on the availability or otherwise of legal aid.

Introduction: Access to Justice and the Purpose of legal aid

6. An inquiry into legal aid and its contribution to access to justice in Scotland faces the immediate challenge that concepts such as `access to justice' and `the unmet need for legal services' or even the question as to what is a `legal problem' do not lend themselves to easy analysis. Indeed the prevailing orthodoxy is probably that all of them are subjective in nature and are not open to objective verification. On this view, the pursuit of `access to justice' is nearer to an unattainable ideal than a benchmark against which the current provision of legal services can be measured. Cappelletti and Garth¹ provide an idealist approach to these questions:

7. "The words `access to justice' are admittedly not easily defined, but they serve to focus on two basic purposes of the legal system - the system by which people may vindicate their rights and/or resolve their disputes under the auspices of the state. First, the system must be equally accessible to all, and second, it must lead to results that are individually and socially just".

8. But more pragmatist writers would argue that the aim of the system is to produce `justice according to law' rather than `justice' per se. Secondly, that in an era of finite resources, it is not just equal access, but how much access, that matters. In 1950 80% of the Scottish population was eligible for civil legal aid, judged on income grounds. It could thus be fairly argued that the purpose of legal aid was to enable those of low or moderate income who had a reasonable case to raise or defend an action without the handicap of inadequate resources or a fear of having to pay crippling expense should they lose. Equality of access really meant equality for all users of the system. By 1995 the Scottish Office was arguing that this was a distortion and that the purpose of civil legal aid was and had always been merely to "permit those of insufficient means that same opportunity to pursue their rights as is available to those of moderate rather than abundant means". In short, that equality of misery was all that legal aid sought to achieve. If someone of moderate means could not afford to litigate, neither should those from the lower income sector. This, almost perverse view of access to justice, stems from a modern fear that it would be unfair for a publicly funded litigant to be put in a stronger position than a privately paying litigant. A second challenge, therefore, which confronts the inquiry, is to establish what it considers to be the purpose of legal aid today.²

The unmet need for legal services

9. If `access to justice' is problematic, so too is the notion of unmet need. It is not a matter of estimating the incidence of legal problems in the community and noting how many are not taken to a lawyer. First, because it is now widely accepted that legal services will often be provided by non-lawyers. Secondly, and more importantly, a statement that a particular problem is a legal one is not a statement of fact but an assertion that of the available options for dealing with the problem, resorting to the law and legal services is the most appropriate. Similarly, to assert that one has a need for legal services is not to make a statement of fact so much as to make a subjective value judgement. Necessarily, such judgements are open to challenge. No amount of fieldwork, therefore, could establish the "true" extent of the need for legal services in Scotland.

How much legal aid should the state provide?

10. How then can we resolve questions as to whether there are deficiencies in the existing supply of legal services as a result of recent changes to legal aid in Scotland? Here it might help to revert to the justification for the state to provide legal services to its citizens. Over the years scholars have put forward a variety of arguments on this. Foremost amongst them is Griffiths who concluded that the argument for state funded legal services is:

" not that they are a form of wealth, not that they are good for people, not that social change will result from distributing them, but rather that the just operation of the legal system demands a more equal distribution of the use of facilities collectively believed to be important to the realisation of legal entitlements and protections". ³

11. This, of course, is close to the answer that in an adversarial jurisdiction such as Scotland, poverty legal services are necessary to provide `equal access to justice'. However, as we saw earlier, such an argument fails to address the question of limited resources. If `access to justice' is seen as an ideal, clients and legal services providers alike, will always want more resources. The access argument provides administrators with little help in using a limited budget. Yet in a world of finite resources some form of rationing is inevitable.⁴

12. The prevailing solution amongst contemporary thinkers to these problems of definition and analysis relating to access to justice, unmet need, the nature of legal problems and rationing legal aid is that identified by the Hughes Royal Commission on Legal Services in Scotland,⁵ namely, stipulation. As the Hughes Commission recognised, the fact that tackling these problems requires the making of value or policy judgements, does not mean that the judgements cannot be defended on rational grounds.

13. The definitions and policy judgements that the Hughes Commission made in this field make an excellent starting point:

Unmet Need

14. "Where a citizen finds a non-legal solution which satisfies him, we would not be justified in claiming that he is deprived of legal services. That would depend on his awareness of his legal rights. In assessing the need for legal services we must therefore think in terms of two stages- firstly enabling the client to identify and, if he judges it appropriate, to choose a legal solution; and, secondly, enabling the client to pursue a chosen legal solution.

15. Accordingly, when we speak of a need for legal services in our Report we are speaking of a need for services-facilities, advice, assistance, information or action-to enable a citizen with a problem to assert or protect his rights in law by identifying and, if he so chooses, pursuing a legal solution, that is a solution which involves a knowledge of rights and obligations or of legal procedures. When we speak of 'unmet need' we are concerned about instances where a citizen is unaware that he has a legal right, or where he would prefer to assert or defend a right but fails to do so for want of legal services of adequate quality or supply."

16. Hughes, it will be seen, starts from the client's perception of need. It has the merit of avoiding paternalism and highlighting the citizen's needs for information and education with respect to legal services. However, by not looking at the interests of other stakeholders, and notably the Treasury, they failed to tackle the problem of finite resources.

Prioritisation and rationing - the history

17. Of course, a form of rationing has existed from the outset of legal aid. This is the financial and legal eligibility tests. These however, are mirrored everywhere and rooted in the requirements of the European Human Rights Convention. Yet for almost forty years from the inception of legal aid in its modern format in 1950 overt discussion of rationing or prioritisation was kept to a minimum. Legal aid was a demand led budget and justice was not seen as a commodity which could or should be rationed. This undoubtedly enabled legal aid expenditure in Scotland, as in England, to rise exponentially in the last twenty years, well in excess of GDP, inflation or productivity.⁶ The Treasury was nevertheless concerned at these developments. Legal aid continued to be seen as the "Cinderella of the social services" and the ever-growing expenditure was perceived by civil servants to be a problem.

18. In the sixties curbs were introduced in the fees for summary criminal legal aid cases since cost-chasing by solicitors was suspected. In the seventies legal aid was excluded from tribunals more on expense grounds than logic. Since then successive governments have sought ways of curbing expenditure but always in a tactical rather than a strategic way. The strong tendency has been to rely on ad hoc interventions with a low political visibility. e.g. failing to uprate the financial eligibility limits or the level of civil legal aid fees with inflation, or slipping in a change in the "claw-back" regulations around Christmas time, rather than a coherent vision. It was only in the 1990s that the Government began to signal overtly that the ever-rising cost of legal aid must be curbed and the existing resources targeted more to those whose needs were greatest.⁷

19. The first major attack came in the 1993 cuts in eligibility. By reducing the "free" limit for civil legal aid, reducing allowances and increasing the size of contributions required of applicants, the cuts deterred individuals from pursuing or defending their actions.⁸ Symbolically, it appeared to mark a move of civil legal aid from a citizenship right to a welfare benefit - without a debate or discussion in Parliament or the wider world. It also highlighted the vulnerability of the civil legal aid budget. Unlike England, nearly seventy percent of net legal aid and advice expenditure in Scotland in recent years has gone to criminal cases. If the Treasury is now intent on "capping" legal aid expenditure, the risk must be that in a era of human rights the criminal budget will be better protected than the civil budget. This would represent an unthinking tactical stipulation or prioritisation of criminal cases over most civil cases (including domestic violence cases) which might, if unchecked have led to the substantial erosion of civil legal aid in the next ten to fifteen years.

20. Whether influenced by this concern or by the ever rising unit cost per criminal case or by the fact that legal aid and advice expenditure per capita on criminal matters in Scotland in recent years has surpassed that of any other jurisdiction in the world - and not by a small margin,⁹ the Government next introduced fixed fees in summary criminal cases. Whilst the concerns which precipitated this development were understandable and indeed, from some perspectives potentially justifiable, it is not clear that the mechanism with which it was implemented was the right one, as the current amendments to take account of human rights concerns partially demonstrate. It is perhaps unfortunate that research was not commissioned to monitor the impact of fixed fees when they were introduced.

Prioritisation and rationing - which way forward?

21. Given this history, what are our options? First, financial eligibility. The Scottish Legal Aid Board (SLAB) is commissioning research to assess the current proportion of the population which is eligible on financial grounds for legal aid. However the answer is unlikely to exceed 50% of the population, and the proportion who are likely to accept an offer of legal aid is probably considerably below this, because of the size of their assessed contribution.¹⁰ Indeed, the Lord Chancellor's Department regards the current eligibility as at the limits of acceptability. Nonetheless, even if a substantial uprating in eligibility could be achieved there would always be those individuals whose finances put them just beyond the upper limit of eligibility. The Legal Aid Eligibility Review¹¹ looked at this problem, yet lacked the courage to implement the radical proposal of removing the upper eligibility limit for legal aid. Curiously such a reform would not have been particularly expensive and would have accorded much more closely to the ideal of `equal access to justice' for the population as a whole, than our current system. It appears to have been rejected purely on policy grounds.

22. Secondly, legal eligibility. Although the recent SOHHD consultation paper on civil legal aid¹² questioned whether the "probable cause" test and the "reasonableness" test both needed to be retained, the two tests perform different functions. The available figures from SLAB show that refusal of legal aid applications on these grounds varies as between different types of case - an issue which might merit further scrutiny - but that the global figure has been relatively constant in recent years and over a fifteen year period.

23. Thirdly, lawyer's fees. With the exception of the introduction of fixed fees in summary criminal cases, successive Governments have tended to leave fee rates relatively untouched despite inflation over the years - particularly in civil cases. This is a tack also adopted in the Netherlands. However, as those Governments might well reply, the increase in the unit cost of civil and criminal legal aid cases at a time when the level of fees and the volume of cases have been have been reducing in real terms, offered little incentive for them to raise fee levels.

24. Fourthly, scope. Hitherto, scope has been addressed in an ad hoc way. Because the court system primarily provides remedies which are individuated rather than collective in nature, it perhaps inevitable that legal aid struggles to deal effectively with situations where a cause of action is common to a large group of individuals (e.g. a defective drug or motor car). Companies and partnerships are also excluded from legal aid. This may well cause hardship since current research in England is demonstrating that small businesses - usually the self-employed or partners who have fallen out - have a desperate need for legal aid when business failure looms.¹³ Again, from the sixties onwards as more social welfare rights were created, the Treasury and other Government Departments resisted the extension of the scope of legal aid to cover representation before tribunals. The resistance was not based on a strategic vision of where and how `access to justice' should develop, so much as a tactical considerations - including cost. As the Tribunal system has developed it has become clearer and clearer that this exclusion is very difficult to defend logically. Many tribunals involve sums of money which are greater than those typically dealt with in the summary cause procedure - where legal aid is available. Moreover, some tribunals are every bit as legalistic as courts. Recognition that this is the case and the human rights implications of such recognition, appears to lie behind the extension of ABWOR to certain proceedings before employment tribunals from 15^th January 2001.

25. Nevertheless, at present the overwhelming majority of civil legal aid goes on family matters¹⁴ or reparation and the great bulk of advice and assistance goes on family, criminal and reparation. Although social welfare law¹⁵ expenditure has gradually increased in Scotland, as a proportion of advice and assistance expenditure and in terms of expenditure per capita it lags behind the position in England and Wales. Yet surveys of the incidence of social or "justiciable problems" in the UK strongly suggest that these extend far beyond family, criminal and reparation matters.¹⁶ In the face of this the Legal Services Commission in England and Wales and its predecessor - the Legal Aid Board have determined to prioritise expenditure in the social welfare law area. Certainly the research conducted by the Scottish Legal Aid Board in the 1990s¹⁷ strongly suggested that the market was failing to supply social welfare law advice and assistance in many rural areas in Scotland. This, of course, is one of the arguments for a Community Legal Service in Scotland, although that development is also bolstered by the need to make the scarce resources in the "access to justice" field work to their best advantage.

Conclusion

26. It will be seen that perhaps the biggest single problem in relation to the pursuit of "access to justice" in Scotland is the lack of a central strategic vision. The fault does not lie with SLAB since its founding legislation (unlike that of its English counterpart) denied it such a strategic or proactive role. However, if we are to move in the direction of "joined up legal services" - an effective Community Legal Service, with the available resources directed to where they will be most effective, a coherent, strategic vision will be required, and a body to exercise it. In other advanced jurisdictions this function is performed by a Legal Services Commission. Such a body would be expected to play a proactive role, looking for areas of defective supply, conducting user surveys (including advice-seeking behaviour)¹⁸ and assisting with the conduct of local needs analysis.¹⁹

27. A Legal Services Commission for Scotland would strive for a partnership between public and private resources as well as an appropriate mix of salaried lawyers, private solicitors and lay advisers in the delivery of legal services.²⁰ Again a Legal Services Commission could look at lawyers' fees as well as the rather neglected topic in Scotland of quality assurance or value for money from providers paid from public money.²¹ The LSC would seek to develop a strategic vision on the prioritisation of expenditure. Perhaps surprisingly, the Human Rights Convention would be of relatively little value here. The flexibility in the interpretation of its provisions throughout the EU helps to explain the dramatic variations between EU jurisdictions in terms of expenditure per capita on legal aid.

28. Finally, a Legal Services Commission would have to work very closely with the Government Departments responsible for the Courts, Dispute Resolution and Law Reform. This is because the effective pursuit of `access to justice' requires not only a strategic vision in relation to the provision of legal services, but also of court procedures or court-annexed procedures<sup>22</sup> as well as the legal rights and entitlements of the public. Rises in legal aid expenditure are more often caused by changes in legal entitlements or procedures or in the level of court fees, than by lawyers responding to economic incentives. As we may see in relation to divorce reform in the future, changing procedures and entitlements may be a more effective way of pursuing `access to justice' than providing very substantial sums to assist in the litigation of family disputes. Similarly, it could be argued that one explanation for the high per capita expenditure on criminal legal aid in Scotland is due to our criminal justice system and the uncodified nature of our criminal law.

Professor Alan Paterson

Strathclyde University

21 December 2000

Footnotes

1 Cappelletti and Garth (eds) Access to Justice: A World Survey ( Sijhoff and Noordhoff, Alphen aan den Rijn, 1978 )

2 Curiously, the cuts in financial eligibility in 1993 may have undermined the "equality of misery" approach by leaving the poorest in society able to litigate as easily as the richest but squeezing out those of modest means either through the threat of substantial contributions or through the lowness of the upper levels for income and capital in terms of eligibility. There is some evidence both from Netherlands and from the Nuffield Foundation Access to Justice survey of Scotland to suggest that those with the lowest income do in fact use solicitors to a greater extent than those of moderate means.

3 Griffiths, "The Distribution of Legal Services in the Netherlands" (1977) 4 British Journal of Law and Society 282-6.

4 See Paterson and Goriely eds, Resourcing Civil Justice ( Oxford University Press, 1996 ) at p.31.

5 Report of the Royal Commission on Legal Services in Scotland ( Cmnd 7846, HMSO ).

6 See Paterson, Bates and Poustie, The Legal System of Scotland (4^th edn) (W.Green, 1999) at p.311 and Stephen, Legal Aid Expenditure in Scotland (The Law Society of Scotland, 1998).

7 See Paterson and Goriely eds, Resourcing Civil Justice ( Oxford University Press, 1996 ) at p.17.

8 The refusal rate of applicants offered legal aid with a contribution rose sharply (and understandably) in the year after the cuts. Since then the refusal rate has remained relatively static.

9 See Goriely, Tata and Paterson, Expenditure on Criminal Legal Aid: Report of a Comparative Pilot Study of Scotland, England and Wales and the Netherlands, Scottish Office Central Research Unit, HMSO, 1997.

10 A further indication that having a contribution is a substantial disincentive to accepting an offer of legal aid comes from the fact that even after the 1993 cuts only 20% of legally aided litigants have a contribution.

11 Review of Financial Conditions for Legal Aid: Eligibility for Civil Legal Aid (SOHHD, 1992).

12 Access to Justice beyond the Year 2000 (SOHHD, 1998).

13 The catastrophic effect at a personal level of business failure for small businesses is set out in another research project, Whyley, Risky Business: the Personal and Financial Cost of Small Business Failure (Policy Studies Institute, 1998).

14 This may change to some extent if the recently mooted "quickie divorce" reforms are implemented in Scotland.

15 Covering employment, housing, debt, welfare benefit, immigration and mental welfare cases.

16 The largest and most recent survey was by Professor Hazel Genn and funded by the Nuffield Foundation, [ H.Genn, (1999) Paths to Justice, Hart Publishing]. It covered not only the incidence of problems, but how individuals responded to them, which agencies and professionals they consulted, the outcomes which were achieved and the satisfaction levels with different parts of the justice system. It has been influential in the development of Community Legal Services in England. In conjunction with Professor Alan Paterson, Professor Genn has carried out the same project with the same questionnaire and methodology in Scotland, also funded by the Nuffield Foundation. It is hoped that the preliminary results from the survey will be available in February 2001.

17 Paterson and Turner-Kerr, "Research Report on the Distribution of Supply of Legal Aid in Scotland (SLAB, 1993) and Paterson and Montgomery, "Access to and Demand for Welfare Legal Services in Rural Scotland" (Scottish Legal Aid Board, 1996).

18 The English Legal Services Commission plans to conduct regular surveys of "advice seeking behaviour" based on Genn's Paths to Justice research.

19 See Paterson and Montgomery (above) and Pascoe Pleasance, Report of the Legal Needs Project (Legal Services Research Centre (forthcoming).

20 It is widely accepted amongst administrators, policymakers and academics in the jurisdictions with the most developed legal aid systems globally, that the optimal way forward is to implement a "planned mixed model" of legal services provision. This entails a strategic vision and a varied mix of salaried, private lawyer and lay adviser services depending on area of law and geographic location.

21 A comparative survey of quality assurance initiatives in advanced jurisdictions around the world in relation to the provision of legal aid is contained in Paterson and Sherr, " Quality Legal Services" pp.233-58 in Regan, Paterson, Goriely and Fleming (eds) The Transformation of Legal Aid: A Comparative Study. (Oxford University Press, 1999).

22 Despite the need for strategic thinking in relation to court procedures, repeated requests for a civil justice review in Scotland have been rejected in favour of piecemeal, ad hoc changes.