I recently posted my summary of what the legal aid changes mean. I was reminded of something that Matt Fresco from PoliceStationReps.com (does what it says on the tin) had written as to what the changes mean.
It’s worth a read, and gives a good overview of the impacts on reps and solicitors.
One particular point that is worth highlighting is in relation to what happens to duty solicitors :
“There is no point being a Duty Solicitor. The only hope you have is to obtain Higher Rights. The Criminal Bar is about to collapse. All the advocacy is going in-house.”
As I said, this is written by a solicitor for solicitors and police station reps, not for barristers. It was also written well before the deal. Given that, and the fact that the bar was never his target audience, it makes it even more important for barristers to read it.
Over to him (or at least, what I’ve cut and pasted from his website) …
THE FINAL CUT
On 27th February the Government published its final plans for the future of Criminal Legal Aid.
Here are the headlines:
- New system starts June 2015
- Unlimited own Client contracts awarded mid 2014
- Limited duty contracts awarded early 2015
- Only 525 duty contracts (210 London, 315 non London)
- 8.75% reduction from 20 March
- A further cut of 8.75% on start of new contract
- Police stations fixed fee for London is £200.93
- Police stations fixed fee outside London is £156.19
- The Escape Fees survive
- You will be able to claim travel and disbursements
- The surviving firms will own the Duty slots
In earlier blogs I have ranted and raved about the insanity of it all. Since this is happening there is little point railing against the Moon. So lets look at the practicalities of all this.
What does it all mean for you?
It could have been worse. Far worse. This is a soft landing for reps. You will have to find a new career but not just yet. The new system comes into force in June 2015 and it will take time for the surviving firms to adjust.
The firms will sack their staff sooner rather than later so you can expect an upturn in business until June 2015. But even that will have to be offset against an increase in the number of reps coming into the market. With massive redundancies many former in-house solicitors are going to give independent rep work a go. Rates will therefore come under even more pressure.
After the new contracts come into force you are probably going to experience a rapid downturn. Not long after that you will probably not see any work at all.
In the short term fees will be cut so expect the firms to ask you to cut your rates before the 8.5% cuts arrive. That has been happening anyway. If you have not cut your fees then you should do so immediately.
The imminent major problem is that many firms are likely to close sooner rather than later. Most firms are heavily indebted to the banks. They have big overdrafts. The banks are not daft and are aware of what is happening. They will call in the loans. Many firms will hit the wall.
Some of the reps will survive of course but the simple fact is that the firms will not support the current market numbers. The new fees are tough. Its going to be challenging, particularly outside London with only £156 to play with. If you survive though you will be busy. Rates will do down dramatically but you will be dealing with a much larger volume of cases. But that will not last forever.
You will be sacked and soon. The firms pay you because you have a Duty slot. That is being taken away from you. You are now too expensive.
There is no point being a Duty Solicitor. The only hope you have is to obtain Higher Rights. The Criminal Bar is about to collapse. All the advocacy is going in-house. If you do not fancy being a Crown Court advocate then get out now.
Of course some solicitors are still going to be needed. But the numbers will drop significantly. Work loads will increase and pay will plummet.
POLICE & COURTS
The courts will have to change the way they work and no doubt they will. The judiciary have not been involved in the process leading up to these changes but they have made their thoughts known publicly at every stage. The police by contrast have been worryingly quiet. The police are going to be forced by these reforms to change the way they operate.
It is possible the boys in blue have been quiet; deliberately, diplomatically staying above the political fray. It is equally possible they are simply unaware of the effect this is all going to have on the way they operate. We deal with police all day long. Perhaps somewhat cynically, we think it is worryingly likely that trained detectives, schooled in the art of deduction are going to be somewhat surprised in June 2015!
OWN CLIENT CONTRACTS
Own client contracts will not save your firm. Some solicitors have a following. That is going to be handy. But it will not be of much use for very long. As the bigger firms consolidate and grow they will tempt away any solicitors you have along with their following.
On top of that the Law Society will steadily increase the oversight, supervision and all the daft requirements you will have to meet to carry on trading. It will be a slow death.
DUTY CLIENT CONTRACTS
Most firms are going to hit the wall. But if you can grab a duty client contract then you will of course survive and even prosper. The deal is a good one even with the cut in fees. But you will have to change the way you work.
The problem you face is that there is a very limited number of contracts particularly outside London. It will only take a handful of national entities to emerge for the vast bulk of the slots to simply disappear. One national firm bidding in every area successfully would take 85 slots or 16% of the total available. It only takes four national players to ensure that small players will simply have no chance at all by seizing 65% of the business. In our view there could be around 20 big, big bids.
In fact small firms will only really exist in Manchester, Yorkshire, Birmingham and Lancashire. Some might try to make it work in Central London and Brent but the numbers make it hard to see how they could turn a profit.
Big is most certainly going to be better. Make a bid but make it a big one: apply for as many areas as you possibly can. Make no mistake that is what the government want.
Your staffing costs are going to go down. You can outsource just about everything (forget the 25% in-house clause its unenforceable and easily side-stepped). Opening 53 offices will not take all that long and its the only real hurdle that the new contract will impose. Office space is cheap and solicitors are about to become very cheap and rather desperate.
So long as you can raise the capital to get started you can clean up. Of course you will have to appear in front of the inevitable select committee but in all likelihood you will get a knighthood too! But getting the backing from a bank to set up a big operation is not going to be easy. Not easy at all.
The table below details how the police station matters all get carved up.
|AREA||SLOTS||VOLUME||RATE||CASES PER FIRM||VALUE PER FIRM|
|Devon and Cornwall 2||4||8,686||£156.19||2,172||£339,167|
|Avon and Somerset 1||5||7,482||£156.19||1,496||£233,723|
|Avon and Somerset 2||5||7,482||£156.19||1,496||£233,723|
|West Mercia 2||4||4,836||£156.19||1,209||£188,834|
|Devon and Cornwall 1||8||8,686||£156.19||1,086||£169,583|
|North Yorkshire 1||4||3,911||£156.19||978||£152,715|
|North Yorkshire 2||4||3,911||£156.19||978||£152,715|
|West Mercia 1||5||4,836||£156.19||967||£151,067|
|North Wales 1||4||3,619||£156.19||905||£141,313|
|North Wales 2||4||3,619||£156.19||905||£141,313|
|AREA||SLOTS||VOLUME||RATE||CASES PER FIRM||VALUE PER FIRM|
The above table does come with a few caveats:
|1.||The numbers assume that any firm with a Duty Contract will get an equal share of all the own client work. That will happen but it will take a bit of time for the own client only firms to fold.|
|2.||Sussex, Devon, Hampshire and some other areas (including the whole of London) have been split into several areas. We have assumed that the split will be even. Those figures are therefore a rough approximation but will not be far off the mark except in Hampshire 2.|
|3.||Hampshire 2 is the Isle of Wight only. Clearly there is no point having a franchise there. It somewhat exposes the insanity of these proposals that there will be four criminal firms on the Isle of Wight fighting over around 100 cases per annum. But it does mean that Hampshire 1 is very attractive indeed.|
|4.||The figures are exclusive of VAT. Travel and disbursements will be payable on top. Escape Fees will still be available but there is no indication as to whether double fees will still exist.|
|5.||It is worth pointing out that crime is on a downward trend at present. It is perhaps counter-intuitive but crime tends to go down at a time of economic depression. Crime will rise as the economy recovers.|
|6.||The Public Defender Service will be assigned an equal share of duty slots in the areas in which it is already established, Gloucestershire, Durham, South Wales and North Yorkshire 1. The PDS will also be eligible to conduct Own Client Work anywhere in England and Wales.|