What Could the Changes to the Rules on Legal Aid and Civil Costs Mean?

October has been a busy month for reforms within the legal profession – in particular, two major changes in how legal services are provided. The first change was implemented on 6 October 2011: the creation of Alternative Business Structures (ABS’s). With ABS’s, for the first time in the UK, non-lawyers will be able to own and invest in law firms.1 The possibility that more money will be invested in the legal profession is exciting, and we will consider how this may affect you before the end of the year.

The second change is likely to be introduced by the Legal Aid, Sentencing and Punishment of Offenders Bill. The bill, if made law, is going to affect ‘the big picture’ - how ordinary members of the public access the legal system. Obviously, from a personal point of view this may be of interest if you ever need to seek legal advice in the future. From a professional point of view it is also important, because it is likely to affect the profitability (and therefore provision) of certain legal work currently carried out by hundreds of legal firms around the country.

The bill has already been passed by the House of Commons, and it is due in the House of Lords at the end of October. It is likely to become law before the end of the year, and in its current form it will reduce access to legal aid and make radical changes in how legal costs are dealt with. The provisions on civil legal costs are complicated, but they broadly follow the recommendations of the 700-odd-page Jackson report.2

Now, anything that reduces legal costs or saves taxpayers money must surely be a good thing? Unfortunately on this occasion that may not be the case in the long run.

The most striking result of the reforms has been the prediction by the Chairman of the House of Commons Justice Committee, Sir Alan Beith MP, that there will be an increase in the number of people who will have to act as litigants in person. Ever since the last major reform to the civil justice system back in 19983 there has been strong encouragement for members of the public to act for themselves rather than be forced to instruct lawyers. For the most part this has been successful and has meant that lawyers have been involved in the more challenging or complex cases rather than small claims that a client is perfectly capable of dealing with. So far, so good. The problem is that the new reforms target areas such as matrimonial law or ‘low’-value civil claims. Would you feel comfortable dealing with your own divorce, arranging contact and residence issues for any children, or dividing matrimonial property? How about a ‘low’-value personal injury claim where you have ‘only’ suffered losses and injury of £25,000? These are the types of claims that future lawyers may have to advise clients to deal with in person, as any legal costs will have to be funded privately or out of the victim’s damages.

Increasing the number of people forced to act on their own behalf (known as litigants in person) will discourage people from bringing perfectly valid claims. If they do bring a claim, then through no fault of their own, they are likely to cause delays and disruption to the courts. District judges are used to assisting litigants in person, but if there is a huge increase in numbers, judges may find they are spending a lot of time ‘finding’ the evidence so they can make the right order rather than being given the evidence in an organised way.4

The fact that we have a legal system where litigants in person have rights of audience is something we can be proud of as a free and just society. The difficulty with the changes being proposed is that rather than increase access to justice, they are likely to do the exact opposite. If you can afford to bring a claim or you are a wealthy Defendant able to employ teams of lawyers, then you may be very happy with the changes.

When we return to the subject of reforms to the legal profession with the introduction of ABS’s we will try to assess how the wider reforms discussed in this article appear to be affecting law firms. Obviously, in any walk of life, when you are looking for employment you should concentrate on growth areas. What does seem clear is that law firms concentrating on mainly matrimonial work or high-volume claimant civil actions are in for a difficult time. The future opportunities in the legal profession may be with firms doing Defendant work for large corporations – or perhaps the large corporations themselves as new entrants to the legal sector. If you are in the legal profession now, as the Chinese proverb goes, you will be living ‘in interesting times’.

1. Commonly referred to as ‘Tesco law’

2. A copy of the full report can be found on the judiciary website at http://www.judiciary.gov.uk/publications-and-reports/reports/civil/review-of-civil-litigation-costs

3. The introduction of the Civil Procedural Rule based on the Wolfe report recommendations

4. See a previous ILSPA Journal article on the importance of court bundles