If the Government's ruining law, the solution is not more Government

More lawyers should be hired directly by the state; but the rest should get used to living without legal aid, writes Preston Byrne.

It seems that the entire legal profession – solicitors, barristers, and social welfare advocates alike – opposes the Coalition's reforms to legal aid, arguing that jobs will be lost, firms will close, lawyers will earn less, and the rule of law will be undermined. Under the Coalition's watch, the extent of legal aid for civil proceedings has already been limited; now, the Government proposes to reduce it still further, by:

  1. introducing competitive tendering for publicly funded criminal defence work,
  2. reducing the fees payable by the state to private lawyers for legal aid work, and
  3. restricting the types of work and classes of claimants eligible for legal aid.

Very few have come out in support of the Government, and those who have point to the system's significant costs, arguing that the only problem with the budget cuts is that they “don’t go far enough.” They assert that “we’ve let a small group of not particularly gifted people monopolise the legal control of… routine, if crucial, acts” some of which, they maintain, only requires an online form and some simple instructions. In the hands of high street lawyers, it is argued, this results in a “staggering waste of money." This is, however, the minority view.

The New Statesman's David Allen Green likened the proposals to “[bulldozing] an entire market square,” cutting the number of criminal defence firms eligible to provide legal aid from 1,600 to 400. This constitutes, in his view, an “attack on a whole sector of small and medium sized enterprises.”

Similar pessimism is heard from the Chairman of the Criminal Bar Association when he said that the cuts will “destroy… the criminal Bar” and “we are facing absolute devastation to what is the finest legal system in the world.”

Opposing this perspective is the view that their professional ire is misdirected, taking the position that in the legal aid arena, budget cuts are merely the symptom of a wider problem: the state's role in providing legal aid in the UK is so significant that it distorts the market for legal services in general. Using criminal defence as an example, where assistance is presently granted automatically for serious crimes and in Magistrates' Courts a government study (pdf) showed that “nearly all” of the represented defendants “were publicly funded,” legal aid has been criticised as being a “publicly funded monopoly.” (page 119) But is this view correct?

Remuneration structures for legal aid mean that service providers have traditionally had no incentives to “compete on price,” competing instead on “the basis of reputation.” This arrangement, pointed out the final report of the Labour-commissioned Carter Review in 2006, penalises “the efficient practitioner who manages to dispose of a case efficiently in circumstances where this is the right course of action” as he or she would “receive less in case fees than the inefficient practitioner who does not succeed in addressing case issues efficiently.” (page 26)

The inefficient practitioner, in certain circumstances, is thus rewarded. This is not to say that reputation should not be a factor in selecting a lawyer – far from it. Even with classes of goods that are more homogenous in function, such as toasters, an individual product can command a higher price if it is of better quality. In the private sector, a client's selection balances a lawyer's reputation against his or her fee, with the client benefiting from price competition between equally talented providers. No such competition, however, exists, nor can it exist, within the current legal aid structure.

The Labour government attempted to address these issues in 2008 by introducing graduated fee arrangements – termed differently, price controls. Lawyers found these problematic when they were introduced, (paragraph 11) and continue to find them problematic today (paragraph 389); much of available state-funded work is “plainly inadequately remunerated,” says the Bar Council, despite the fact that the cost of the system to taxpayers continues to rise.

But where the Spectator's Harry Mount blames “Georgian terraced houses, Buckinghamshire country piles and children’s school fees” for the high and rising cost of legal aid, anyone who knows junior practitioners in either of the two professions (apart from City solicitors or the Chancery Bar) will know such a statement is sensationalist in character. The proposition put forward by the Carter Review, that despite “many well-known anomalous and exceptionally high cost claims on the legal aid budget, the scale of the continued rise in spending… is the result of systemic weaknesses in the way legal aid services are procured and therefore inefficiencies in the way those services are delivered,” seems more likely to be correct. Which goes some way to explain why both taxpayers and lawyers are unhappy with the system. To lawyers competing with the state for clients (particularly volume criminal work), legal aid is a monopoly. To lawyers competing with other lawyers for funding, legal aid is a price-controlled monopsony. To the taxpayer, it is a system that by its very nature rewards inefficiency.

But by opposing the cuts, does the profession demand access to justice, or state aid for lawyers? Simply refusing to accept the Government's proposals while making no alternative suggestions is to ignore the fact that two sets of competing and equally valid interests are at play: the need to reduce costs and the need to ensure the fair administration of justice.

Is a hybrid approach possible? Can we widen access to justice while reducing costs? Given a fixed pool of taxpayer money and a state monopoly, no: any increase in legal aid service provision requires either (1) cuts to lawyer remuneration or (2) additional support from the taxpayer, a problem which is potentially never-ending for, as the Ministry of Justice has suggested, increasing legal aid funding creates a positive feedback loop which only draws more lawyers into the system (page 11).

Create a free market, however, and no-one has to choose how much legal services are "worth" – leaving only the matter of how to widen access for the needy.

On the criminal side, the the all-encompassing state apparatus would need to be replaced with an expanded corps of salaried public defenders to (1) act as a backstop guaranteeing representation for all in criminal matters as a last resort and (2) ensure the continuation of steady work for the segment of the profession which currently services the indigent (though in exchange for this security, public defenders would give up the possibility of taking on privately-paid work).

Free from state dominance, lawyers whose primary practice would be in the newly-private markets would be able to compete for contracts at reduced rates to supplement the corps of civil legal aid lawyers or public defenders. Such a system would operate on the understanding that (1) the quantity of cases which would be received supports the practitioner's overhead costs in a reliable way and (2) at the junior end, achieves the objective of developing expertise which can be leveraged in that practitioner's private practice.

Though clearly a greater proportion of middle class clients would be made to bear the costs of their representation than is the case today, a greater number of private sector lawyers servicing this new pool of (formerly legal aided) clients should drive down the market price of private representation. Reducing the threshold of eligibility for civil legal aid, in particular, such that only those who are genuinely unable, rather than merely unwilling, to pay for a lawyer receive representation would eliminate market-distorting effects of legal aid in relevant areas.

Services for the indigent could be provided by non-profit legal aid providers which compete with each other for a substantially smaller pool of state funding (hundreds of millions of pounds, rather than billions). Such a model has, at least in the United States, been found to generate positive outcomes for clients, while still incentivising a significant part of the population to shop for a lawyer based on reputation and price. Add to this an hour-per-hour alternative to Continuing Professional Development by donating time on a pro bono basis to eligible non-profit legal aid providers, and the profession could generate a robust and high calibre legal aid sector at no additional cost to the taxpayer, profession or state.

Despite all this, there would be gaps. As lawyers would stand to gain the most from market reforms of the legal aid sector, it only seems fair that – post-liberalisation – responsibility for addressing any shortcomings should be the profession's burden, not taxpayers'. This realisation is not new: in a 1954 article in the Louisiana Law Review, Professor John S. Bradway pointed out that “if we work out a [voluntary] system whereby everybody… actually does get the same quality of justice according to law… reasonable men will find fewer grounds for criticism,” thus heading off the “threat of socialized law… we see in Great Britain.”

Ultimately, it is up to the lawyers to make the choice between a self-sufficient profession where individual members volunteer their energies to ensure access to justice out of a sense of professional obligation, or allowing the state – and the changing whims of one government to the next – to make those decisions for us. I know which I prefer.

The Royal Courts of Justice. Photograph: antmoose/Flickr, CC-BY

Preston Byrne is a fellow at the Adam Smith Institute.

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Chuka Umunna calls for "solidarity" among Labour MPs, whoever is voted leader

The full text of shadow business secretary Chuka Umunna's speech to Policy Network on election-winning ideas for Labour's future, and the weaknesses of the New Labour project.

There has never been an easy time to be a social democrat (or “democratic socialist” as we sometimes call ourselves in Britain). Whereas the right can demonise the poor and extol the virtues of the market, and the hard left can demonise the market and extol the role of the state, our position of constraining the domination of markets and reforming the state is, by definition, more complex.

It is nonetheless the case that social democracy has a historic responsibility, in every generation, to renew democracy and preserve a civic culture. This is achieved not through soundbites and slogans, but through the hard-headed development of a progressive politics that reconciles liberty and democracy, new comers and locals to our communities, business and workers, in a common life that preserves security, prosperity and peace.  This historic mission is all the more urgent now and my determination that we succeed has grown not weakened since our election defeat last May.

But, in order to be heard, it is necessary to make balanced and reasonable argument that both animates and inspires our movement, and which is popular and plausible with the people.  The first is pre-requisite to the second; and there is no choice to be made between your party’s fundamental principles and electability. They are mutually dependent - you cannot do one without the other.

We are in the midst of choosing a new leader and it is clear to anyone who has watched the UK Labour Party leadership election this summer that amongst a significant number there is a profound rage against Third Way politics – as pursued by the likes of Bill Clinton, Tony Blair, Gerhard Schröder and others - as a rejection of our fundamental values.

In the UK there is a view that New Labour accepted an uncritical accommodation with global capital that widened inequality, weakened organised labour and we were too close to the US Republicans and too far from the European left.

I do not believe this is fair, not least because we rescued many of our public services from the scrap heap when we came to office in 1997 and there were very significant achievements  we should celebrate.  New Labour renewed our National Health Service in a fundamental way; we built new schools and improved existing ones; we set up new children’s centres all over the country; we brought in a National Minimum Wage; we worked with others to bring peace to Northern Ireland; we introduced civil partnerships.  Just some of our achievements.

However, though we may take issue with the critique, I do not think we can simply dismiss out of hand those who hold critical views of New Labour. Like any government, the New Labour administration made mistakes - it could and should have achieved more, and done more to challenge the Right’s assumptions about the world. In the end, it is not unreasonable to be ambitious for what your party in government can achieve in building greater equality, liberty, democracy and sustainability. It is far better we acknowledge, not reject, this ambition for a better world, as we seek to forge a new politics of the common good fit for the future.

Realising our values in office has been disrupted by globalisation and the surge of technological forces that are displacing and reshaping industry after industry.

Some argue that globalisation as an ideological construct of the right. But we must recognise that we live in an increasingly integrated world in which markets have led to an unprecedented participation of excluded people in prosperity, a rise in living standards for hundreds of millions  of people and a literacy unprecedented in human history – this is particularly so in emerging economies like my father’s native Nigeria. And the internet has led to a level of accountability that has disturbed elites.

Yet, this has been combined with a concentration of ownership that needs to be challenged, of a subordination of politics that requires creative rather than reactive thinking, and these global forces have exacerbated inequalities as well as helped reduce poverty.

So it is important that we understand the sheer scale and impact of new technologies. At the moment we are engaged in a debate about Uber and its threat to one of the last vestiges of vocational labour markets left in London, those of the black taxi cabs and their attainment of 'The Knowledge'. But the reality is that within the next decade there will be the emergence of driverless cars so we have to intensify our exploration of how to support people in a knowledge economy and the realities of lifelong learning, as well as lifelong teaching. As people live longer we will have to think about how to engage them constructively in work and teaching in new ways.

Once again, I'm addressing all of this, Social Democracy requires a balanced view that domesticates the destructive energy of capital while recognising its creative energy, that recognises the need for new skills rather than simply the protection of old ones. A Social Democracy that recognises that internationalism requires co-operation between states and not a zero sum game that protectionism would encourage.

Above all, Social Democratic politics must recognise the importance of place, of the resources to be found in the local through which the pressures of globalisation can be mediated and shaped. Our job is to shape the future and neither to accept it as a passive fate nor to indulge the fantasy that we can dominate it but to work with the grain of change in order to renew our tradition, recognising the creativity of the workforce, the benefits of democracy and the importance of building a common life.  Sources of value are to be found in local traditions and institutions.

This also requires a recognition that though demonstration and protest are important,; but relationships and conversations are a far more effective way of building a movement for political change.

One of the huge weaknesses of New Labour was in its reliance on mobilisation from the centre rather than organising. It therefore allowed itself to be characterised as an elite project with wide popular support but it did not build a base for its support within the party across the country, and it did not develop leaders from the communities it represented. It was strong on policy but weak on strengthening democratic politics, particularly Labour politics.

Over half a million people are now members, supporters or affiliated supporters of our party, with hundreds of thousands joining in the last few weeks. Some have joined in order to thwart the pursuit of Labour values but many more have joined to further the pursuit of those values, including lots of young people. At a time when so many are walking away from centre left parties across the Western world and many young people do not vote let alone join a party, this is surely something to celebrate.

So it is vital that we now embrace our new joiners and harness the energy they can bring to renewing Labour’s connection with the people. First, we must help as many them as possible to become doorstep activists for our politics. Second, I have long argued UK Labour should campaign and organise not only to win elections but to affect tangible change through local community campaigns. We brought Arnie Graf, the Chicago community organiser who mentored President Obama in his early years, over from the U.S. to help teach us how to community organise more effectively. We should bring Arnie back over to finish the job and help empower our new joiners to be the change they want to see in every community – we need to build on the links they have with local groups and organisations.

I mentioned at the beginning that in every generation Social Democracy is besieged from left and right but the achievements of each generation are defined by the strength of a complex political tradition that strengthens solidarity through protecting democracy and liberty, a role for the state and the market and seeks to shape the future through an inclusive politics. Solidarity is key which is why we must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office.

Yes, these are troubled times for social democrats. All over Europe there is a sense among our traditional voters that we are remote and do not share their concerns or represent their interests or values.  There is surge of support for populist right wing parties from Denmark to France, of more left wing parties in Greece and Spain and in Britain too. There is renewal of imperial politics in Russia, the murderous and abhorrent regime of ISIL in the Middle East, volatility in the Chinese economy and in Europe a flow of immigration that causes fear and anxiety.

But, the task of Social Democracy in our time is to fashion a politics of hope that can bring together divided populations around justice, peace and prosperity so that we can govern ourselves democratically. We have seen worse than this and weathered the storm. I am looking forward, with great optimism to be being part of a generation that renews our relevance and popularity in the years to come.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.