Asset-stripping and the future of social welfare law
Where does publicly-funded law fit into the new world of “Tesco law”? The expectation is that big business will storm the aisles like a deranged contestant on Supermarket Sweep throwing all the money-making stuff—personal injury, conveyancing etc—into its trolley and leaving non-remunerative, publicly funded law to gather dust on the shelf.
The likes of the Co-Op, the AA, after-the-event insurer DAS, and most recently the consumer group Which? have all announced an intention to take advantage of the Legal Services Act. Alternative business structures (ABSs), which will enable firms to be partly owned by non-lawyers, are expected to arrive around 2011. The worst fear of legal aid lawyers is that this relaxation will prompt a bout of asset-stripping on the high street.
In the July issue of Legal Action, we ask big business what are its intentions (if any) for social welfare law. Would, for example, the Co-Op move into legal aid? “It depends on demand and it also depends on how the membership might view it,” replies Eddie Ryan, managing director of the Co-Operative Legal Services.
It is easy to see the provision of “access to justice” fitting into the retail giant's “ethical” corporate agenda. They are already talking the talk. Ryan describes the Co-Op's relationship with its members as “wrapping our arms about people who need our help”. The Co-Op has already set up its own legal services in anticipation of the liberalisation. The rhetoric at the moment outstrips reality but the potential is huge. It is already available to four million members, plus 1.5m policy holders who have legal expenses insurance (LEI) attached to motor and household insurance.
The Legal Services Act will re-energise the legal expenses industry. ABSs mean that insurers will be able to streamline their business model by dispensing with cumbersome law firm panels. Coverage is already huge and the insurer DAS reckons that there are 10m UK policy holders. For Kathryn Mortimer, its head of legal services, the relationship between LEI and publicly-funded advice is clear. “It is an alternative to legal aid,” she says. Insurers are hoping for a more sympathetic environment for their businesses—in particular, a lifting of the restriction of the right of policy holders to choose their own lawyers. “The government needs to watch very carefully that they don't alienate the LEI market because we're picking up the tab for clinical negligence, personal injury, contract and property disputes, which the Legal Services Commission doesn't cover,” she adds.
As Which?—a long-time advocate for LEI—noted in 2001 that one of its deficiencies of legal insurance products was that cover was heavily prescribed and policy- holders (if they knew they had LEI at all) didn't know what exactly was covered. The pressure is on to develop wide-ranging services to offer members total legal protection. The “demand and appetite from members is for full-service”, Which?'s Gordon Wilson acknowledges. So will it take advantage of the forthcoming liberalisation and set up or take over a firm which covers everything including legal aid? “I would not want to answer that at the moment,” he replies.
Not everyone is waiting for the arrival of ABSs. Sheffield-based A4E, through its partnership with the legal aid firm Howells, has scored a notable hat-trick: winning tenders for community legal advice, the Leicester CLAC (community legal advice centre) and is now preferred bidder in the Hull CLAC.
The provision of high quality legal advice for those who can't afford to pay privately is critical. When it comes to tenders, one hopes that the lure of new private sector interest shouldn't take precedence over the committed but beleaguered network of private practice firms and advisers. LAG recently learnt A4E will pull out a year early from a contract to provide training schemes for offenders in eight prisons in Kent. According to the Universities and Colleges Union, A4E has announced it is unable to run the Offenders' Learning and Skills Services for the third year because it stands to make a loss of £892,000. If A4E wins the Hull CLAC tender, it looks as though that will be at the expense of the 70-year-old citizens advice bureau which will be forced to close. Let's hope the powers-that-be in Hull are confident that A4E is in it for the long-term.
