All roads lead to ABS – including legal aid

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22 June 2011

Posted by Neil Rose, Editor, Legal Futures

Mergers: the inevitable consequence of legal aid reform?

After all the breathless anticipation, we rather got what we were expecting yesterday on legal aid and the Jackson reforms – full steam ahead into the parliamentary process, with the odd tweak of the former (the tweaks of the latter having already been announced in March).

I have written before that alternative business structures (ABSs) are the bigger picture of the Jackson reforms, and surely the same goes for legal aid, albeit for different reasons.

The green paper response briefly recognises this in a section putting the legal aid changes into the context of wider justice reforms, including the Legal Services Act. It says: “We… expect that new ways of obtaining legal advice will become more prevalent as the legal profession modernises and takes greater advantage of technological advances – for example by offering advice over the Internet or via a telephone helpline.”

The impact assessment accompanying the legal aid reforms is not the most useful document you will ever read, because the MoJ has no idea how the market will respond to having £430m of fees taken out of it. “If providers are able to cut costs and identify other efficiencies, or if providers are able to move into other business areas, the impact on them would be lessened,” it says, somewhat hopefully.

The assessment recognises that the main victims of the reforms will be small law firms, because they make up the majority of legal aid providers. So what is to be done? Scale and technology driven efficiency is surely going to be the order of the day. We will start seeing mergers galore among the thousands of small law firms involved in legal aid.

The previous chairman of the Bar Council, Nick Green QC, also envisaged that criminal barristers would have to join forces with solicitors to form “litigation units” to survive.

External investment of some sort may well be needed to achieve all this consolidation – late last year, the country’s largest civil legal aid provider, Duncan Lewis, already the most “corporatised” legal aid practice of them all, admitted that it was being courted by a public company for a takeover.

We know that welfare-to-work provider A4e wants to expand its legal footprint and it could well become an ABS. Maybe it will take a new entrant to the market to find a radically different way to deliver legal aid services and still make a living out of them, although a few legal aid firms have seen the way the wind is blowing and changed the way they operate. Scomo, the now virtual law firm run by Law Society deputy vice-president Lucy Scott-Moncrieff, is a good example.

But none of this should come as a surprise to legal aid lawyers. Back in 2009, the then Lord Chancellor, Jack Straw, gave a speech that envisaged consolidation, saying the Legal Services Act would allow firms to adapt to the changing legal aid world. It is a speech his successor, Ken Clarke, could quite easily have given.

“Often I hear concerns expressed that having fewer individual practices will lead to a reduction in people’s access to justice,” he said. “But here I think access is at risk of being confused with physical proximity. People have grown used to a far wider range of telephone and Internet-based services – and demand more rapid and convenient access to services, but not necessarily an office on the street corner.”

(It is worth noting that the Legal Services Board shares this view that access to justice is not about the quantity of law firms on a high street, but rather the quality of access provided.)

This is the future. It is often pointed out that ABSs are, of course, just another option. But for many legal aid solicitors and barristers, they could be the only option.

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