Chapter 8: Ability to Pay and Financial Eligibility: Possible Significant Changes
The consultation stated:
Concern has been expressed over a number of years that the existing financial eligibility arrangements for civil legal aid exclude many of those on relatively modest incomes who could not bear the risk of the potentially open-ended financial commitment of instructing a lawyer privately. The existing system is argued to be particularly harsh for those who find themselves just outside the current eligibility criteria: a very small difference in disposable income can make the difference between being legally aided or not.
We are giving serious consideration to a significant restructuring of financial eligibility to extend access to justice beyond the relatively narrow range of circumstances covered at present. We are considering with SLAB possible ways in which a system of extended and tapered financial eligibility might be designed, and what the implications for the coverage of legal aid and for public expenditure would be. Such a system might raise the eligibility threshold whilst increasing contributions for those higher up the income scale brought into eligibility for the first time. Those in the new upper ranges of eligibility might be asked to pay a higher rate of contribution than those who are currently eligible.
A tapered scheme could have several advantages:
- It would restrict newly eligible clients' costs to the level of their contribution, thus limiting financial risk as compared to that run by a client paying a solicitor privately;
- It would allow the client to pay the cost of contributions by interest free instalments over an extended period; and
- It would provide the client with some protection against the risk of having to meet their opponent's costs.
We believe that these advantages could be realised even in cases where the size of the contribution paid by those newly made eligible covered the full actual cost of the case. This would be likely to apply in many of the cases funded under an extended tapered scheme. In those cases, legal aid would facilitate access, rather than pay for it: the taxpayer would bear the risk which would otherwise be borne by individual litigants. On the other hand, it could be argued that the existence of such provisions might result in a higher number of expensive and arguably unnecessary cases being brought. However, the tests of probable cause and reasonableness are already in place to prevent unnecessary cases being brought, and these would continue to be rigorously applied.
We are at present developing, in close collaboration with SLAB, detailed models for new structures of financial eligibility based on the principles of tapering and higher proportionate contributions at higher income levels.
8.1 The consultation asked:
Q14: In the longer term, should a system of extended and tapered financial eligibility be introduced for civil legal assistance?
Overall, 43 responses addressed (66%) these issues with 41 of these expressing a firm view and the remaining 2 providing relevant commentary. A summary of the firm responses is in Table 14.
Table 14: Summary of views on whether a system of extended and tapered financial eligibility should be introduced for civil legal assistance
| No. | % |
|---|
Yes | 36 | 88 |
|---|
No | 3 | 7 |
|---|
Don't Know | 2 | 5 |
|---|
Total | 41 | 100 |
|---|
NB. Percentages may not total 100% exactly due to rounding
A sizeable majority (88%) of those who responded was in favour of a system of extended and tapered financial eligibility for civil legal assistance.
A common theme was that too many people were currently excluded from receiving legal aid and the proposals would widen access to meet needs (Vol, LA, Leg). Many respondents argued that the proposals would result in a fairer system ( LA, Oth, Leg, Indiv). One comment was that the scheme:
" would accord much more closely to the ideal of 'equal access to justice' for the population as a whole" (Indiv)
A system of extended and tapered financial eligibility was welcomed as eliminating what was seen as the current arbitrary cut-off point for legal aid ( LA, Leg). It was commented that:
" Tapering would remove this arbitrary distinction and enable broader access to justice than the current eligibility regime" (Leg)
The proposals were viewed as " imaginative" (Leg), and a way of addressing the problem emerging from anecdotal evidence of people unable to get past the initial hurdle of proceeding with their case due to concerns regarding costs (Vol). Several respondents called for the proposals to be brought in immediately rather than in the longer term (Leg). Others argued for the scheme to incorporate automatic "passporting" to legal aid of individuals on incapacity or other benefits (Indiv), or women involved in serious domestic abuse cases (Vol).
Caution was expressed that any expansion in eligibility for legal aid should go hand-in-hand with sufficient provision of solicitors willing to deliver the service (Leg). Others suggested that further research was required to, for example, learn from experience in England and Wales (Vol) and analyse the likely implications of bringing within scope the cases of those on relatively higher incomes (eg are these cases different (more costly?) to those brought by people on lower incomes?) ( LA).
In contrast to these views were those of respondents who opposed the proposals. One view was that the system was already complicated enough and introducing tapering would be costly (Indiv). Another considered that the scheme might be in danger of providing a service which may not actually be required. They argued that other means of widening access to civil legal aid existed, such as schemes provided by various companies, employers and agencies (Leg).
8.2 The consultation asked:
Q15: Assuming that an extended and tapered scheme was affordable, what should be its main features?
Overall, 31 respondents (48%) addressed this question. Four features dominated the responses:
- Higher income threshold than at present enabling a greater degree of eligibility
- Provision for payments by interest free instalments
- Protection against the risk of meeting the costs of the opposing side
- Greater clarity of operation and of eligibility criteria
Other features were suggested for an extended and tapered scheme. These included a rigorous application of test of probable cause and reasonableness (Indiv, Leg, LA); the prevention of frivolous actions ( LA); simpler legal aid applications forms ( LA); and an onus on SLAB to collect instalments due (Leg).
One respondent emphasised that in their view, assets should not be taken into account in assessing eligibility (Leg). Other consultees stressed that state benefits should be disregarded in this context (Leg), or certain categories of benefits should be disregarded for the purposes of assessing eligibility (Leg). A call was made for an end to what one respondent considered to be discrimination against older people, by introducing a disregard of their pension credit which currently is not disregarded for civil legal aid purposes (Vol).
Other ideas included establishing different income thresholds for different cases (Vol, Leg). The view was expressed:
" It should be recognised that different types of case reflect different types of social problems and there is no reason in principle why financial eligibility for one case should be the same as financial eligibility for another" (Vol, Leg)
One consultee suggested that the possibility of risk sharing with private markets should be investigated (Leg). Another raised the particular case of families involved in fatal accident enquiries in which there may be no prospect of recovering a capital sum or their costs. In such cases, it was considered that they should not be required to pay any contribution to legal aid costs (Vol).
8.3 Recovery of Costs at the End of the Case
The consultation stated:
At present, even a person who is legally aided may have to pay for their case in full, either because their assessed contribution exceeds the cost of the case, or because they are asked to pay for it out of property they have recovered or preserved as a result of the action (this is often referred to as 'clawback'). This arrangement is similar to charging arrangements for privately paying clients whereby a solicitor can obtain a charging order to secure his fees and outlays from property recovered or preserved. There are inconsistencies in the way the clawback provisions (and specific exemptions) apply as between A&A and civil legal aid: the rationale for these is not always clear.
In developing models for new structures of financial eligibility, we will review the range of exemptions available, with a view to encouraging greater consistency as between A&A and civil legal aid. We will also consider the test of 'grave hardship', which exempts some clients from making any contribution out of property recovered or preserved, and the fact that it only applies to A&A.
The consultation asked:
Q16: In the longer term, what detailed changes to the clawback arrangements might desirably be made?
Overall, 26 respondents (40%) addressed this question. Three themes emerged from their responses.
Greater Clarity Regarding Clawback Arrangements
Many respondents from several different sectors made a plea for greater clarity regarding the clawback arrangements. It was remarked that neither the public nor many members of the legal profession really understood the intricacies of the clawback approach (Leg) and people needed to be made aware at the outset what the implications of the clawback arrangements might be for them (Vol, LA).
Greater Consistency Between A&A and Civil Legal Aid
A recurring comment was to request greater consistency between the clawback arrangements under A&A and civil legal aid. In particular, respondents called for the use of the "grave hardship" concept within civil legal aid (Vol, Leg, Indiv), although one view was to replace the notion of "grave hardship" with one of "hardship" only (Leg).
Review Range of Exemptions
Many calls were made for the current list of exemptions from the clawback arrangement to be reviewed and extended. One consultee remarked that it was not clear that exemptions had kept pace with inflation over the years (Indiv). It was commented that the current system of exemptions was too severe and could act as a disincentive to pursuing a case (Leg). One view was currently the system often disadvantages certain groups such as women and children (Leg).
Respondents made various suggestions for change. These encompassed including property (Leg) or non-moveable assets ( LA) amongst the range of exemptions from clawback. Others considered that state benefits should be removed from consideration (Vol, Leg), or all assets below a set threshold should be protected (Vol).
The view of a few respondents was that there should be no clawback in cases where the recovery of expenses could not be made from the opposing party, for example in cases of criminal injuries (Leg, Vol).
Finally, one consultee called for more radical changes to the system, and suggested replacing the clawback arrangements with the use of legal aid provision along the lines of legal expenses insurance as a fall-back cover for unsuccessful parties (Leg).
8.4 Summary Points
- A sizeable majority (88%) of those who responded was in favour of extended and tapered financial eligibility for civil legal assistance.
- A common theme was that too many people were currently excluded from receiving legal aid and the proposals would widen access to meet needs.
- The main features of an extended and tapered scheme were identified as: a higher income threshold than at present; provision for payments by interest free instalments; protection against the risk of meeting the costs of the opposing side; greater clarity of operation and of eligibility criteria.
- Regarding clawback arrangements, respondents requested greater clarity in their operation; a greater consistency between the clawback arrangements under A&A and civil legal aid; and a review of the range of exemptions with a view to extending the current list.