Emmerson: Providers working grossly excessive hours
Housing legal aid is on the brink of collapse, the Law Society has claimed, with all of the providers it has spoken to making a loss.
The average fee-earner was only able to recover around half of the full costs of providing housing legal aid.
The number of providers had fallen by a quarter in the last five years, with high turnover rates among trainees and paralegals leading to a “hollowing out” of the workforce.
Researchers commissioned from Frontier Economics based interim findings from a wider study of the sustainability of civil legal aid on detailed information received in the last two months from 25 housing law providers, of which a quarter were private practices and the rest not-for-profit.
The analysis found that, when adjusted for the recovery of inter-partes costs at market rates in successful cases, “all providers are found to be loss-making”.
It said: “Those continuing to provide housing legal aid typically do so based on a sense of social conscience and moral responsibility, and must rely on a variety of cross-subsidisation models (e.g. private work, grant funding) in order to sustain the provision of this work.”
The lack of profitability was driven by “relatively low legal aid revenues”, which had not increased with inflation, and “relatively low levels of billable time”.
Meanwhile there was a “high and increasing cost burden” associated with administration and delivery.
“Our provisional findings demonstrate a substantial funding gap which could only be closed if relatively large increases in housing legal aid fees were introduced.
“The sample of responses to date indicates that on average, fee-earning staff are able to recover only around half of the full costs of providing housing legal aid.”
Providers responded by employing different tactics, including working longer hours, with legal aid-only firms “particularly reliant on this model”, cross-subsidies from other sources of funding (such as private work and grant funding) and recovering costs at higher inter-partes rates.
Researchers estimated that general costs in the economy are 40% higher today than they were in 2011, when legal aid fees were last cut by 10%, and over 90% higher than in 1996, the last time there was a civil legal aid fee increase.
However, the number of hours which could be billed for housing legal aid work were in general lower than for privately paying clients.
Many tasks “are not remunerated but must be completed, leading to low-cost recovery for a large amount of the work that legal aid providers are required to do”.
Uncertainties surrounding billing and cash flows were “a particular issue”, with providers reporting that it could take up to two years to recover fees and court backlogs making things worse.
High levels of turnover, particularly at junior levels such as paralegals and trainees, who left for “seemingly better roles in terms of pay or work-life balance”, created a “hollowing-out of the workforce” and burdens on the senior staff responsible for their supervision and training.
“This is leading to an aging supervisory group, and a thin pipeline of talent willing to pursue a career in the area.”
Researchers said their work was intended to complement the review of civil legal aid launched in January 2023 by the Ministry of Justice.
“To the best of our knowledge, this is the first time that an exercise collecting detailed financial information from civil legal aid providers has been carried out.”
Nick Emmerson, president of the Law Society, said the research revealed the “lengths providers have to go to keep housing legal aid afloat in the current environment – routinely working grossly excessive hours and cross-subsidising from other parts of their businesses”.
He went on: “At a time when the cost-of-living crisis is driving rising numbers of evictions and repossessions, the UK government needs to use its civil legal aid review to invest in legal aid now before it collapses completely.”
