It has now been seven years since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 completely altered the legal aid landscape. It has been more than 20 years since fees were properly reviewed. At no time in the intervening period has the government given due consideration to the sustainability of civil legal aid providers and many would question the efficacy of its reviews of criminal legal aid. The COVID-19 crisis has had a further hugely damaging impact on the viability of many legal aid providers.

The time has come to bring these issues into the public domain. To this end, the All-Party Parliamentary Group on Legal Aid is launching a cross-party sustainability inquiry. Members of the panel are set to include Lord Bach (Labour), Lord Low (crossbench), Baroness Bennett (Green Party), Karen Buck MP (Labour), James Daly MP (Conservative), Gareth Bacon MP (Conservative) and Daisy Cooper MP (Liberal Democrats). We will be calling for written and oral evidence from practitioners across the whole legal aid sector to assess the sustainability of the provider base. Change is needed and needed now.

Sustainability implies endurance over a long period of time. When applied to any market or business sector, the term will have myriad contributing factors. But a common factor underpinning the sustainability of any business sector is income. If we think of legal aid as a discrete business sector, there is only one source of income: fees claimed from the Legal Aid Agency in accordance with remuneration rates set by the Ministry of Justice (MoJ). Business models can be mixed and complex, but for clients of limited means, and for most types of family, crime and social welfare problems, there is only one significant source of funding for legal advice. What is also true is that the other side of the ledger – expenditure – is not controlled by the MoJ and varies (generally increasing) over time without any reference to government-prescribed remuneration rates.

So, what happens to a business sector when the income is fixed or declines and the cost of delivering services increases? In the legal aid world, the consequences have been adverse and predictable: a decline in those willing to take on or retain contracts; an inability to recruit and retain staff; acute vulnerability in the face of crises such as the one currently gripping the nation; a lack of resources to invest in technology, staff development and new ways of working; and, yes, you could argue that for some it means an inability to keep pace with the heavy toll of compliance.

But how stark is the disparity in the legal aid world between fee levels and the cost of delivering services? This is a complicated question, but it must be addressed if the government is to properly understand the drivers behind the sustainability crisis in legal aid.

The COVID-19 crisis has shone a spotlight on the fragility of the legal aid provider base, but it didn’t create that fragility – the sector has been unsustainable and in decline for many years. This article could have been written two, 10 or 20 years ago and the concerns would have been the same. We work in a sector that has survived because of the willingness of legal aid lawyers to go above and beyond, day in, day out, effectively donating thousands of hours of free labour to prop up a failing system. Providers also subsidise legal aid work with income from other departments or grant funding. They chase the Holy Grail of inter partes costs orders or those few big cases that cover the costs of the many on which they lose money. That doesn’t sound like a sustainable system.

While it is impossible to accurately track the rising cost of delivering services, no one can dispute that costs gradually increase over time. In other sectors, those rising costs are generally passed on to customers and consumers. This is reflected in numerous official indicators such as the retail price index (RPI) and the consumer price index (CPI). If we compare legal aid fees with the rising cost of delivering services, the analysis does not read well for the government.

Let’s take a snapshot of fees at the introduction of the 2007 Unified Contract. Legal aid fee schemes are enormously complex, with different fees for different levels, types and categories of work. However, taking two examples illustrates the point that current fees simply do not reflect reality.

In October 2007, the fixed fee for community care legal help cases was £290. The hourly rate for preparation and attendance in civil certificated cases was £70 in London and £66 outside (Community Legal Service (Funding) Order 2007 SI No 2441 Schedule Tables 1 and 10(a)). These fees were subject to a 10 per cent cut in 2011 and have not been adjusted since.

If the contracts contained mechanisms to uprate fees in line with the RPI, the rates would have increased by 2019 to £406, £98 and £92 respectively (see graphs below). These increases would have done nothing more than ensure that fees kept up with the rising cost of delivering services, which, according to the RPI, cumulatively increased by anywhere between 40 and 50 per cent in those 12 years. Without that mechanism, lawyers are being continuously asked to provide the same level of high-quality service for, in real terms, an ever-decreasing fee.

In other publicly funded sectors, such as the NHS, systems are in place to ensure periodic review of salary levels. The Review Body on Doctors’ and Dentists’ Remuneration (DDRB) is an independent body that carries out an annual review of salaries. In making its recommendations, the DDRB takes into account very sensible factors such as the need to recruit, retain and motivate doctors, regional/local variations in labour markets, funds available to health departments, government inflation targets and the overarching NHS strategy to place patients at the heart of all it does. While its recommendations are not legally binding, the annual consultation seeks to ensure that NHS salaries are adequate recompense for the service provided.

An independent body should be set up to periodically review the cost of delivering legal aid services and adjust remuneration rates accordingly. The DDRB advises directly on salaries, and here we must be cautious about making comparisons across sectors. Salary levels for legal aid lawyers are not directly linked to fees, but there is an intrinsic relationship between the income that can be derived from legal aid and the amount that organisations can afford to pay their staff. This relationship impacts on morale, recruitment, retention and working conditions. Why shouldn’t lawyers who dedicate their lives to helping vulnerable and disenfranchised clients have the same transparent and sensible remuneration system as those applied to other publicly funded professionals? The APPG on Legal Aid will be asking this, and other searching questions, as part of the inquiry.