Official Report (Hansard)

Session: 2008/2009

Date: 03 March 2009

Members present for all or part of the proceedings:

Mr Jimmy Spratt (Chairperson)
Mr Raymond McCartney (Deputy Chairperson)
Mr Alex Attwood
Mr Simon Hamilton
Mrs Carmel Hanna
Mr Alan McFarland
Mr John O’Dowd
Mr Ian Paisley Jnr

Witnesses:

Mr Jim Daniell ) Northern Ireland Legal Services Commission
Mr Gerry Crossan )

The Chairperson (Mr Spratt):

I welcome Mr Gerry Crossan, the chief executive of the Northern Ireland Legal Services Commission, and Mr Jim Daniell, its chairman. I ask members to declare any interests that they have. I declare an interest as a member of the Northern Ireland Policing Board.

I invite Mr Crossan and Mr Daniell to make a short presentation based on the papers that they have submitted to the Committee, after which members will have an opportunity to ask questions.

Mr Jim Daniell ( Northern Ireland Legal Services Commission):

I shall keep my remarks brief so that there will be plenty of time for questions. The Northern Ireland Legal Services Commission welcomes the opportunity to discuss the issues at hand. We recognise that we are responsible for a significant amount of expenditure, which is increasing. That is an important issue in the context of devolution.

I wish to stress a few points from the commission’s perspective. The expenditure that we have described in the papers is, to a large extent, demand-led, in the sense that we work to a legislative framework that, for civil legal aid, requires us to grant certificates for civil legal aid in circumstances that are prescribed by financial eligibility and merit. For criminal legal aid, it is the responsibility of judges to determine when someone should be in receipt of legal aid. In that sense, therefore, expenditure is very much demand-led, from the commission’s perspective.

The quantum paid in particular cases is determined in a range of ways. For example, the very-high-cost case category on the criminal side, which accounts for a significant amount of our expenditure and is not particularly predictable, is a matter for the taxing master, who is a member of the judiciary. In other areas of criminal work, we work to scales that the Court Service sets for us. Similarly, on the civil side, although we set some fees after discussion with representatives of the legal profession, others are set on a statutory scale in the County Court by the judiciary. At High Court level, again the taxing master plays a key role. Therefore, there is a limit to the amount of direct leverage that we have on the amount of expenditure.

I must also mention the level of expenditure over time, which is particularly significant in this conversation. Very often, a certificate for legal aid might be granted and the bill presented for payment some years ahead. Therefore, in some cases, for certificates that we are granting now, payment will be made in three or four years’ time. Obviously, that makes prediction of financial requirements quite complex. It also means that any actions that are intended to have an impact on the amount of money spent on legal aid are likely to have that impact some way ahead. I would go so far as to say that, for the current comprehensive spending review period (CSR), the figures that the Committee has been given are for expenditure that has, more or less, already been committed. Therefore, there is a limit as to what can be done in the current CSR period to reduce the funding, the figures for which have been presented to the Committee. Even going into the next CSR period, it is like turning a big ship around — it would take time to make changes that have an effect on expenditure.

I know that the Committee has been presented with a supplementary paper to provide a bit more background — it is a joint memorandum by the commission and the Northern Ireland Court Service — in addition to the letter of 9 February 2009 that we sent. However, I advise a slight note of caution about making comparisons with other jurisdictions. Obviously, in legal-aid cases, there is an issue concerning whether one is comparing like with like. Indeed, one of the reasons why we did not include figures for the Republic of Ireland is that the system there is so different. Any attempt to compare overall expenditure per capita with that jurisdiction would not work and would be fairly meaningless.

That is all that I want to say by way of introduction. I welcome questions, and we will deal with them if we can.

The Chairperson:

Thank you for your presentation, and for the papers that you supplied.

I will go straight to the point that you made about cost in Northern Ireland in comparison with other jurisdictions. In paragraph 15 of the joint memorandum, there is a dramatic difference in the figures for the cost per capita of criminal legal aid. For instance, the Northern Ireland Crown Court gives a figure of £13,887, compared with £6,300 for England and Wales, and £2,824 for Scotland. The average cost of civil legal aid in England and Wales is slightly higher than that for Northern Ireland.

We want some explanation of the reasons why the cost of criminal legal aid in Northern Ireland is dramatically higher than it is in any other part of the kingdom.

Mr Daniell:

First, we are talking about average costs. The table at paragraph 14 compares net expenditure per head of population, but I will answer the question about average costs as best I can.

I ask members to note that this illustrates the difficulty of comparing cases. The figure of almost £14,000 for Northern Ireland is presented as an average cost for each case, as is the figure for England and Wales. We keep records that are based on average cost, not for each case, but for each bill issued. In some of the more serious criminal cases, for example, one might find that three bills have been issued: one to a solicitor; one to a junior barrister; and one to a senior barrister. The final figure is arrived at by effectively multiplying the average cost of each bill by three. Those calculations were made rather quickly, and the figure that I quoted may have slightly overstated the situation. I do not wish to overdo that, but not every case in the Crown Court involves a solicitor, a junior barrister and a senior barrister. That figure should be slightly lower, therefore. I hope that we can find time to explore that issue in more detail.

There is an important point to make about the Crown Court in Northern Ireland. A different court structure operates in England and Wales to that in Northern Ireland. Full-time district judges sit in Northern Ireland’s Magistrate’s Court, which takes more serious cases than its equivalents in England and Wales. The result of that is that some of the less expensive cases, which would go through the Crown Court in England and Wales, do not go through the Crown Court in Northern Ireland. There is no question that the fees for criminal cases in the Crown Court in Northern Ireland are more expensive, but we must be careful not to exaggerate them. The figures that we have presented, if taken at face value, may slightly overplay the difference.

The Chairperson:

When we compare England and Wales with Northern Ireland, we are not comparing like with like.

Mr Daniell:

We are not comparing like with like; that is correct.

The Chairperson:

In land mass and everything else, we are comparing ourselves to a much larger area. Therefore, the comparison with England and Wales is not reasonable. It begs the question: what can be done to reduce those costs? If devolution of policing and justice powers takes place, Northern Ireland plc — for want of a better expression — must pay for it.

The costs are higher. Has that been the tradition over the years? Has that system been allowed to creep in here, yet not in other parts of the United Kingdom? We do not know the legal-aid costs for the South, so we cannot make a comparison with that jurisdiction. We need an explanation, because the issue that costs appear to be going up and up, even against the backdrop of a more peaceful situation in Northern Ireland, is one that is raised regularly. We need serious answers. I am sorry to put you under pressure, but do you believe that a review of the cost of the legal-aid system is required? Northern Ireland seems to be totally out of kilter with the legal system in the rest of the United Kingdom.

Mr Daniell:

I will make a number of comments in answer to your questions. The annual expenditure on criminal legal aid in the Republic of Ireland is approximately €50 million, which, per capita, is a very much lower level of expenditure than that in Northern Ireland.

I will not simply leave it at this simple answer, but, from the commission’s point of view, the simple answer is that we make payments on the basis of fees on the criminal side that the Lord Chancellor and the Court Service set for us. I know that representatives from the Court Service are appearing before the Committee after us.

Between 18 months and two years ago, there was an inspection of the Public Prosecution Service (PPS), and reference was made to the fact that fees that the PPS paid — particularly counsel fees in certain types of serious criminal cases — are approximately twice as high here as they are in England and Wales. For obvious reasons, there is a relationship between fees paid to counsel by the PPS and those in legally aided cases.

I can only speculate as to why the issue has not been addressed more rigorously over the years. It is possible that, during the Troubles, it was thought prudent not to rock the boat with major reform that would affect the legal profession. There may have been some thinking along those lines.

Another issue, which is particular to Northern Ireland, relates to the costs associated with the nature of the legal profession. When it comes to accessing justice, there has always been a feeling in Northern Ireland that individuals should be able to choose the solicitor whom they wish to choose rather than have it determined for them by the sort of contractual arrangements that exist in England and Wales. It may be that the feeling has been that we want to sustain a legal profession throughout Northern Ireland close to where people live, for instance. That carries some inevitable costs.

I will talk about reforms and control mechanisms in a minute, but we must bear in mind that incidence of very-high-cost cases has mushroomed in Northern Ireland in recent years. That must be looked at carefully. Those cases are complex criminal cases in which the commission has a role. If it is expected that the trial for those cases will last more than 25 days, they are certified as being very-high-cost cases. In those circumstances, the bills are referred to the taxing master for determination.

It is fair to say that the present regime of very-high-cost cases that came in with the Legal Aid for Crown Court Proceedings (Costs) Rules ( Northern Ireland) 2005 was expected to produce around 20 or 30 cases a year. It has produced substantially more than that. Since 2005, there have been around 250 to 280.

The Chairperson:

Why is that the case?

Mr Daniell:

It is an interesting subject. There is an element of speculation in this, but Northern Ireland benefits in some ways from having a falling crime rate, and, in many areas, it has lower levels of crime than England and Wales have. I stress that I am speculating, but I do not think that that applies in cases of extremely complex fraud, money-laundering and organised crime. Those are the types of cases that tend to become the very-high-cost cases, and they are extremely expensive to run. More research in that area would probably demonstrate that that is the case.

The Court Service representatives will speak for themselves, because this is its area on which I am trespassing. A great deal of work is ongoing into how costs can be brought under control. The Court Service is consulting on, and we are working towards, the future introduction of a system in which contractual arrangements will be entered into with practitioners for very-high-cost cases. The commission will want to ensure that it receives case plans, that it can cost plans in advance and that payments are made on the basis of those plans. We feel that that will help bring costs under control.

There are also issues concerning fee levels, and the Court Service will talk about those. There may be scope for reductions in the determination of Crown Court fees. Fixed fees may be considered for non-Crown Court work.

Another area that may be considered in future is the requirements for qualification for legal aid in criminal cases. It is very noticeable that, in the Republic of Ireland, there is a strict requirement that legal aid will normally be granted in circumstances in which someone’s liberty is an issue.

In Northern Ireland, the judiciary can use a number of criteria to determine whether criminal legal aid should be granted. On the merits side, it is considered whether that is in the interests of justice. Although defendants are required to present a statement of means to the judge, I understand that the way in which that is administered allows far more people through the gate to receive legal aid than is the case on the civil side. It may be a question of tightening up the financial-eligibility aspect of criminal legal aid.

There may be questions around representation; for example, the extent to which junior and senior counsel represent defendants in a Crown Court and whether that is always necessary. All those issues are currently being considered, and they would help to bring overall costs under control.

The Chairperson:

Your comments on the costs include much speculation. Does the commission do any solid research on those matters, or is that a matter for the Court Service?

Mr Daniell:

We have worked with the Court Service to do a considerable amount of research on our budgetary needs, and that is the basis on which the figures that we presented to the Committee have been worked out. For example, we have an idea of how many very-high-cost cases are in the system, and we can come to a view on when bills might be likely to be presented on those. The same goes for all categories of case.

By working on past patterns and by considering very-high-cost cases, we can come to an educated view. However, it is no more than an educated view. At last Tuesday’s Committee meeting, the Prison Service said that expected to have x number of prison officers in post in three years’ time and that it needed x amount of capital spent on prisons, but our position cannot be as definitive as that.

Looking ahead, we must bear in mind that the very-high-cost-case area is extremely difficult to predict, but we also must consider other factors that may affect the take-up of legal aid. For example, the recession will inevitably increase the number of people eligible to receive legal aid. The recession may cause an increase in acquisitive crime, an increase in matrimonial problems and housing difficulties, all of which could lead to an increased demand for legal aid. I hope that the Committee will appreciate that it is difficult to come to a clear view on what that will mean for the numbers.

The Chairperson:

Ian Paisley Jnr has joined the meeting. Will you declare any interests for the purposes of the witnesses?

Mr Paisley Jnr:

I am a member of the Northern Ireland Policing Board.

Mr Hamilton:

The Chairperson’s questions initiated a discussion on how very-high-cost cases can be resolved in the longer term. However, I want to touch on the extremely stark financial pressures that you face. You said that the commission is a demand-led organisation, but that demand seems very high. For the remaining two years of the CSR, you face an estimated shortfall of £60 million, which the Court Service, your sponsor department, described as being “inescapable”. You were open in saying that funding is insufficient to address the values of bills that will be presented. Such openness is useful but paints a worrying picture. This year, you received an additional £22 million from the spring Supplementary Estimates. How regularly do you receive that kind of “dig-out” just before the financial year’s end?

Mr Daniell:

I refer you to paragraph 6 of the supplementary paper. The table depicts a graph with three lines. The blue line illustrates allocations in the various CSR periods since 2000-01; the yellow line shows the amounts that we needed to meet the demands on us; and the red line shows the supplementary allocations that we have had to request.

It is worth stressing that almost year in, year out, the commission and the Court Service expend an enormous amount of time and effort trying to find ways in which to boost our in-year funding through negotiations with the Treasury and securing funds from elsewhere. That usually happens in the autumn when it appears that we will not have sufficient funding for the remainder of the year. I have been at the commission for only just over a year, but we were in the middle of that process when I joined, and I am told that it as regular an occurrence as day following night.

Although it is understandable that allocations are set as stringently as possible, in order to seek value for money, the amount of time and effort that is spent by the management of both organisations in arguing for more money could be better spent on considering how to manage the budget in future. We cannot avoid spending the money — there is no question of that — yet we still spend weeks and months trying to find ways in which to secure it.

Mr Hamilton:

You have only been there for a year, but you are already battle-scarred by going back and forward to address financial pressures.

The table in paragraph 6 is alarming: it shows that you required an additional 50% to meet costs in 2004-05, and even in the current year you require an additional one third. The Assembly is used to Departments requiring a small additional percentage from the in-year monitoring processes, but that is a substantial chunk in addition to your existing allocation.

I presume from much of what you said in response to the Chairperson’s questions that you were talking about long-term changes being required, and you compared the situation to an oil tanker that takes a long time to turn around. Therefore, we could expect this scenario to continue indefinitely.

Mr Daniell:

“Indefinitely” is a big word, but I agree with the Court Service’s view that it is extremely unlikely that, for the remainder of the current CSR period, we will be able to make significant inroads into the projections illustrated in the table. The only point that I want to stress, and I made the same point in the letter of 9 February 2009 that I sent to the Committee, is that the costs of ordinary civil and criminal business are much more predictable and would fit within our normal allocation. However, it is difficult to predict what will happen with the very-high-cost criminal cases that, to a large extent, take us far above our allocation. Perhaps £60 million over the next two years will be an overestimate, but I cannot be certain. However, the taxing master could make determinations that are appealed and, for some reason, increased. If that happens, it is not inconceivable that £60 million could be an underestimate. We have been quite conservative — £60 million is a realistic figure. I would hope that that figure would not increase.

By implication, you may be suggesting that the measures that the commission takes will deal with the problem in the next CSR period, which will take place between 2011-12 and 2013-14. I am very cautious about that. We have estimated that, if the commission were to continue being allocated £65 million in cash per annum over the three years of the next CSR period, that would leave a shortfall of around £50 million. The commission does not consider that the changes that I have been describing, which are being examined at present — a similar exercise is also being carried out on the civil side, which I have not mentioned yet — would be sufficient to eliminate, or even to eat into, that £50 million.

I hate to say it, but I am in the business of speculation. I do not think that the type of changes that we have been discussing would eliminate more than £10 million to £15 million of that shortfall. However, that is to suppose that the present patterns of demand remain the same.

Mr Hamilton:

It is probably even more troubling that that scenario is likely to continue at that scale into the next CSR period. You are telling us today that, other than some of the measures that you have been speaking about that will take a long time to realise any benefit, the only approach available to the commission to meet that shortfall is the begging-bowl approach — asking for additional cash to fill that gap. That is what the commission has always done, and that is what it is likely to do for the remainder of this CSR period, and probably into the next period as well.

Mr Daniell:

That is a fair description; that is what the commission has done. If, looking beyond the current CSR period into the next one and beyond that, I were told now that there was only £65 million a year available, and that there was no conceivable way in which that could be increased, the commission would consider more fundamental changes. However, I am not sure that even those changes could take effect in the first year of the next CSR period.

Mr Hamilton:

Thank you; that is very useful.

Mrs Hanna:

You described the commission as being a big ship that would take time to turn around. With that, you implied that you expect changes — we are, after all, talking about finances. There is a public expectation that the ending of the Troubles would lead to a reduction in legal-aid costs. I am not talking about the historical cases, because I appreciate that we are speaking mostly about the criminal side: fraud; extortion; and so on.

I know that a fairly public discussion took place a few months ago about reducing the legal-aid bill. Were those people just talking about the civil side of the legal service? There was discussion among barristers and the public, and on the radio, and the public had an expectation that that would make sense. You said that it would take time to turn the ship around, but it is the Legal Services Commission and the Court Service that set the criteria and guidelines. However, the taxing master appears to have influence. When policing and justice powers are devolved, we will also have input. In your opening remarks, I thought that you were talking about turning the ship around, but, in response to questions, you seem to be saying that that will not happen in the near future.

Mr Daniell:

Rather than turning the ship around, it will be a case of veering from the course, through making the sorts of changes that I have mentioned. Obviously, after devolution, the Assembly will have the opportunity to legislate, and that is entirely a matter for the Assembly. However, a great deal of the expenditure after devolution has already been committed through the granting of legal-aid certificates. The commission works within a legislative framework, which, up until now, the Lord Chancellor has set. The commission has to grant legal aid in the circumstances that are provided for by legislation. The way in which bills are paid is also provided for by legislation. There will be an opportunity for that to be examined.

If there were a clear desire to reduce substantially the amount of money that is spent on legal aid, legislation would be needed, as would a major change in approach to how legal aid is distributed. The only ways in which to cut expenditure are either to reduce the number of cases in which legal aid is granted or to reduce the fees that are paid to practitioners. There may be other ways of looking at the issue, such as changes to the legal system. For example, could the legal system be operated in a manner that requires less expenditure? On the civil side, the commission is keen to look at alternative means of dispute resolution and collaborative family law, and at whether there are ways to prevent cases from getting to court, and, therefore, being less costly and probably better for the people concerned. Such measures could be considered.

It is worth making the point is that we are engaging in a reform programme on the civil side, and that programme contains a number of components, one of which is the introduction of a funding code, which will enable us to take a much more rigorous approach to the merits test that decides when is it is justified to provide legal aid. For example, is it sensible to give legal aid in a case that there is not much hope of winning? We will be able to take decisions based on the funding code.

The programme will introduce measures such as a simplified approach to financial eligibility and a statutory charge to enhance our ability, when people win cases and are given property or a share of property, to place a charge on that to reduce our expenditure. Therefore, things can be done now, but a sea change would require a new approach.

Mrs Hanna:

That is a bit like a patient going to A&E and paying a cover charge. The issue really boils down to placing qualifications on whether a case is taken on, and we all accept that people need legal aid to get justice in cases for which they cannot afford representation. However, it is fair to say that there is a certain amount of cynicism among the public about the amount of legal aid that is granted and the level of lawyers’ fees.

Mr Daniell:

An example on the civil side is an undefended divorce. In such cases, I suggest that there might be limits to the amount of legal aid that it would be sensible to pay. However, in a case of a freeing order for a child, which results in a child’s links with his or her parents being removed, that represents an extremely serious change to that child’s status, as well as a big change for the parents and others involved. In such cases, there is a degree of vulnerability, which suggests that the case should be made a high priority for help. The funding code will enable the establishment of high-priority cases, in which the merits test will work on the presumption that legal aid should be granted, whereas it may not be in lower-priority cases. In fact, the code will enable some types of case to be taken out of the scope of legal aid altogether.

You mentioned the quantum of fees. On the criminal side, fees are set by others, as they are in a substantial proportion of cases on the civil side — the level of fees set is not entirely within our control. In some areas, we are in discussion with the Bar and the Law Society of Northern Ireland about fee levels, because we are very conscious of achieving value for money.

The Chairperson:

How far in advance of cases are legal-aid certificates issued?

Mr Daniell:

Legal-aid certificates are issued to establish that people can secure legal aid when their cases come to court, and that could mean a couple of months or, in some cases, a couple of years. The other complication is that sometimes there is good reason why the bill is not presented until long after the case has concluded.

That might be because in some of the very-high-cost cases, it may take some time for very complex cases to be assessed. For one or two cases, one might be talking about a year or two for that to happen. On the civil side, it might be that the solicitor wants advice on how to present the claim, and that may also take time. I have seen one case where the bill was presented six or seven years after the case.

Mr McCartney:

I have three or four questions to ask, but I hope that they will run into one another and that they can be answered easily. Once you have identified a pressure on your budget, what process is involved in trying to resolve it? What has been your degree of success — in other words, what are the strengths and weaknesses of the current process? From your perspective, what do you think that the process should be in future? Finally, how do you see the transfer of justice having an impact on the Assembly, and how should it have an impact?

Mr Daniell:

What seems to happen with the budget and the process of resolving it is that an allocation is determined for us during a particular CSR period, but most people will probably feel that it is not enough. Then, on an in-year basis, by about the sixth or seventh month, it is apparent that, given the rate of spend, we will not have enough to meet the bills for the remainder of the year. We then enter into negotiations with our sponsor department — which is the Court Service — about how to meet the shortfall. My experience is limited, but on the occasion in question, there were extensive negotiations between the Court Service and the Treasury about how to secure the funding through Supplementary Estimates. An element of end-year flexibility was involved, and a small amount of money was also secured from Court Service funds. From the commission’s perspective, the process tends to be rather hand to mouth.

As for what it should be, I can present only the ideal, which is that a realistic approach should be taken to what our requirements are likely to be in advance, and a realistic sum is then allocated in the CSR period — or at least in advance of the year in question, rather than leaving it so late in the day. We have the means to say that we know that we will require more than £65 million next year and the year after; therefore, it is far better to resolve that now. It is not a question of our having the ability to reduce that amount. We know that we are going to have to spend it; therefore, it would be much better if the system enabled us to resolve such issues now. If the system then wanted to go on and say that we must ensure that, along with the department concerned — which is the Court Service and the Lord Chancellor, but in future it will be the Department of justice — we had better look for ways to make substantial savings for the next period, that would be an acceptable way forward, as long as people understood what those savings might mean. If the savings are to be substantial, it would mean making significant inroads into the system of legal aid as we know it.

I have a few general thoughts about the transfer of justice powers to the Assembly. I think that it will be of enormous benefit to the commission, and I will give a couple of examples of what I mean. The complexity of legislation is one reason that legal aid increases over a long period. New legislative requirements can increase the number of times that someone might have to go to court, in relation to either the Government or for another reason. One positive example of that is the children’s legislation, which was a very good piece of legislation that was introduced in the 1990s; however, it increased substantially the amount of consequent court appearances that people made and, therefore, expenses. If we are part of a devolved Department of justice, which in turn is part of the family of Northern Ireland Departments, it will be a lot easier to conduct legal aid impact assessments in order to understand the consequences of decisions that are made about policy and about legislation for spend on legal aid.

I can give one specific example that might help. We are not talking about millions of pounds, but there is the potential for hundreds of thousands of pounds. The Criminal Justice ( Northern Ireland) Order 2008 was agreed by the Northern Ireland Office Ministers and passed by the Westminster Parliament, and a substantial sum of money was made available for its administration. That money covered the need for additional probation officers, prison facilities and psychologists, for instance. Nothing additional was provided or — as far as I can see, even thought about — in relation to legal aid.

Following the passing of The Criminal Justice ( Northern Ireland) Order 2008, the required number of parole commissioners was increased, because there was going to be a lot of hearings before the parole commissioners. Those hearings will require representation by a solicitor and probably a barrister. As things stand, that will cost. It will probably not impinge on the current comprehensive spending review period, but it will impinge on the next.

Had we had a devolved environment in which we were much closer to a Department of justice and were part of the Northern Ireland Administration, I would make certain that when changes of that sort are made, proper consideration would be given to the impact on the spend on legal aid. I think that it will help us enormously in that context.

There are bigger issues about such things as the number of people in the legal profession and the way in which they are regulated — both of which have an impact on the availability of services to the public, and so forth. I assume that in a devolved environment, all that will be looked at in a coherent fashion in one Department. All those issues will have the capacity to affect the quality of service that we can provide and its costs. Furthermore, it will be possible to examine them holistically, which will be an enormous benefit.

Mr Paisley Jnr:

Thank you for your evidence. You understand clearly why you are here; we want to devolve policing and justice, and we have to know how much it will cost us. Today, you told us that it will cost a heck of a lot of money. From what I have heard today, I do not know whether we can afford you — you are a high cost. However, I welcome your candour.

Your starter-for-10 question: are you hiding anything else of which we should be aware? If you return to give evidence to a justice and policing Committee in a few years, will you be telling us something that you should be telling us today? Is there anything else that we should know?

Mr Daniell:

Not to my knowledge. As I said earlier, this is not an exact science. We do not know what is over the horizon.

Mr Paisley Jnr:

I have got that. Having read some of your material, I can understand why, come the revolution, lawyers will go to the wall first. Your evidence provides figures on very-high-cost cases. It is important that I read one sentence into the record, because it relates to a substantial payment:

“While every effort has been made to produce a realistic forecast of the costs of VHCCs based on what we know about cases already in the system and the likely incidence of such cases in the future, the actual funding requirement could vary significantly from the figures given in the table above; this particular cost head will be monitored closely and the projected spend kept under review to ensure that the figures are as robust as possible.”

You are projecting for £65 million for very-high-cost cases in the current comprehensive spending review, and the figure for the current financial year — 2009-10 — is £26 million. What percentage of that goes on lawyers’ fees?

Mr Daniell:

Almost all the very-high-cost-case spend will go to lawyers.

Mr Paisley Jnr:

Are you saying that £26 million will go to lawyers in this financial year?

Mr Daniell:

Yes, including VAT.

Mr Paisley Jnr:

Does any of that money go to forensics, or is it all for lawyers’ fees?

Mr Gerry Crossan ( Northern Ireland Legal Services Commission):

The main expenditure will be for lawyers, but some of it will be for fees for expert witness.

Mr Paisley Jnr:

You used the word “mushroomed” to describe what has happened over the past number of years; you said that in the noughties, there have been 280 cases since 2005. Would it be unfair to suggest that since the end of the terrorist war here and the end of the Troubles, lawyers have been incredibly ingenious in finding new ways to make a heck of a lot of money out of this place? Would that be an unfair characterisation?

Mr Daniell:

That would be a little unfair, yes, because —

Mr Paisley Jnr:

How is it unfair, and when is it accurate?

Mr Daniell:

It is unfair to the extent that prosecutions in very-high-cost cases in particular are brought by the Public Prosecution Service. It is obviously critical in any democracy that people have the ability to defend themselves in such cases. Lawyers have to be available to defend cases, and very-high-cost cases almost certainly involve solicitors as well as junior and senior counsel. It is reasonable that defendants should have the opportunity to defend themselves. Whether there is an issue about the amounts of fees that are paid in those circumstances is not something that I should speculate on.

Mr Paisley Jnr:

Does some quantum not exist, given that this situation has mushroomed since 2005? We can look at other trends and see that cases that were typical in Northern Ireland in the 1970s and 1980s have clearly declined since 2005. It is incredible that those types of cases have mushroomed from 2005 onwards.

Mr Daniell:

We do not have sufficient research capacity to go into this subject in great depth; however, that is something that we — or a new Department — may need to do. I said that certain types of cases, such as those involving money laundering, organised crime and fraud, are extremely expensive. Those cases have continued at a rate since the end of the Troubles, and they attract those sorts of fees.

Mr Paisley Jnr:

Although your submission is very nicely written, I am worried that you are basically saying that we need a blank cheque to cover those costs. I am not criticising you for that, but that is essentially what you are saying to me. To ask politicians, who are trying to cut up a budget, to leave a blank cheque for these purposes is completely unacceptable.

You said that fundamental changes may need to be considered. The sort of fundamental changes that you are talking about, which would allow you to run your part of the Department for the ballpark figure of £65 million to £70 million a year, are not just fundamental changes; they are root-and-branch changes. That would have an impact on people’s mentality, on their expectations of justice, on the expectations, rightly or wrongly, that lawyers have of the system, and on how justice is dispensed in this part of the United Kingdom as compared with England, Scotland and Wales. Can the root-and-branch change that you are advocating be achieved, or is it a lullaby or a siren call for such change so that when we arrive at the next CSR period, we will be shafted again with a request for £80 million? I am sorry to be so blunt.

Mr Daniell:

There is not a lot to disagree with in what you said. I will go back to your point about a blank cheque, because I do not agree that we are asking for that. We are making an educated assessment of what we are likely to need over the remainder of the CSR period and, indeed, beyond. However, we do not have the levers that enable us to guarantee that we can live within that amount. The amount that we need may turn out to be less, or it may be more.

Mr Paisley Jnr:

Imagine that your wife came to you at the end of the month and said, “Darling, I need slightly more money than I got last month to balance the budget”. You would ask for a ballpark figure, and she could say that the amount could vary significantly but that she would take a closer look and let you know. However, she would still be clear that she needed more money. That is a blank cheque.

Mr Daniell:

If you are describing a blank cheque in the context of demand-led expenditure, which would be the same as social security expenditure, in which, under legislation, you are required to acquire liabilities, I suppose that it is a blank cheque.

Mr Paisley Jnr:

Does this stuff not make Mr Goodwin look modest?

I have one more question to ask, Chairperson; I do not know whether you have asked it already. Do you pay VAT back to the Government?

Mr Daniell:

Yes. We pay solicitors so that they can pay VAT.

Mr Paisley Jnr:

We have discussed this point generally, and that may be one area of change.

Mr Daniell:

I will answer the second part of your question, which was about the root-and-branch review. I stress that that will not help in the current CSR period. If, when we become part of a Department of justice, we were asked what we would have to do to really bring the expenditure down, on the criminal side, I would suggest looking hard at the extent to which legal aid is granted in the first place. For example, should there be a much stricter means test? One option I have wondered about for some time is whether more could be done in some of the very-high-cost cases, so that if someone is found guilty, they should pay money back into the fund for the cost of the defence. Issues such as that could be examined. There are also issues about levels of representation, which could be looked at radically, and that would have to be done in conjunction with the PPS.

On the civil side, we have a reform programme already that will give us some tools that will help us in that area. However, I do not pretend to say that the reform programme as it stands will make an enormous inroad into the levels of funding that we are talking about. However, one might have to think about going down the same road as England and Wales and have a contracting arrangement whereby solicitors tender for contracts. That will mean that they will undertake to run so many cases a year on the basis of that contract. One may have to think about whether that contract would be solely with solicitors, and they would have to decide whether they wanted to employ barristers. That would come out of a standard fee that would go only to the solicitor. However, not only the legal profession, but other groups, have made strong arguments against taking that route. It would mean a major change and would probably begin to change the nature of the legal profession in Northern Ireland.

Mr Paisley Jnr:

Devolution has to be seen as something that is at least equal to, if not better than, the previous arrangements under direct rule. What you say would scare me, in that the arrangements would get worse, because the system may not function in the way that the public wanted it to. That would be an absolute kick in the teeth for those of us who wanted to devolve those powers. When one accepts the argument about who should get legal aid and one goes down the road of having a means test, etc, as Carmel Hanna quite rightly said, people who have an expectation that they need justice would be penalised as a result.

I like what you said about making the guilty pay; I am very happy with that sort of suggestion, certainly as regards my own personal arrangements. I would also like to find out how much it would cost. How much can barristers, solicitors and the legal profession make out of the system? Would some sort of capping arrangement be a way to bring down the costs?

Mr Daniell:

The contractual arrangements that exist in England and Wales that I have described would be an effective means of capping what would be paid.

Mr Paisley Jnr:

If we started to do that, would the legal profession go on strike?

Mr Daniell:

I cannot answer for the legal profession.

Mr Paisley Jnr:

What is your gut reaction? If you were a lawyer in Northern Ireland expecting to make £26 million in the coming year, and you were then told that, as of the next CSR period, you can expect to make — as a collective group — £10 million, would you go on strike?

Mr Daniell:

The only comment that I will make is that the Bar has withheld briefs in a couple of categories of case; therefore, there is the possibility of that happening. However, we are in the realms of severe speculation. If there is a reality about what money is available, there may be a limit to the extent to which people may be prepared to go down that road.

Mr McFarland:

Thank you for your briefing. I have two questions to ask.

First, following up on the issue of organised crime, the Serious Organised Crime Agency deals with areas where there can be no criminal case, and it then goes after assets. My understanding is that, under the current system in criminal cases, the judge can order the seizure of ill-gotten gains and assets. I presume that that happens already. When it does, does that money go back in to the system? If, for example, the criminal were to receive legal aid, and then £15 million, his ranch in Spain and his cars were taken from him, would that money be credited to the legal aid budget, or would it go to the Treasury?

Mr Daniell:

It goes to the Treasury; we do not benefit from that.

Mr McFarland:

Clearly, that needs to be looked at. My second question concerns the size of your administrative budget. Could others do areas of your work easily, and are there areas of duplication between your work and that of others? Could how all that is dealt with be streamlined if we had more control of it here?

Mr Daniell:

I do not think that there is a large amount of duplication. The Social Security Agency, on our behalf, determines whether people are entitled to civil legal aid, because that determination is largely connected with whether people receive benefits or not. Of course, we need to look at our administration expenditure. There may be scope for making some reductions after the reform period that we are about to enter, but that would possibly be £500,000 or £1 million, not the sorts of sums that would make the difference that is being discussed.

Mr McFarland:

What size is your current budget?

Mr Daniell:

The administrative budget is about £7·5 million. The more that the system is simplified — for example, by the use of standard fees, as opposed to fees that are based on an hourly rate — the more we can begin to think about how things can be done more efficiently and how more savings can be made. We are very conscious of that. In future, we may have to think about the possibility that certain areas will be removed completely from the scope of legal aid, and that would reduce our amount of administrative expenditure.

The Chairperson:

We wanted to cover a whole range of issues, but time is not sufficient to allow us to do so. We will write to you, so you can anticipate quite a few questions hurtling down the track on issues that have arisen from your paper.

I have two or three questions to ask on efficiency savings. Are effort and spending being duplicated by, for example, the Legal Services Commission, the Northern Ireland Court Service and tribunals? What steps are being taken to eradicate any duplication?

In the context of the Deloitte report, do you envisage efficiency savings being made as a consequence of a joined-up approach being taken between the commission and the Court Service? If so, what is the timescale for those efficiency savings, and how significant will the savings be?

Your submission advises that the commission was actively seeking ways to maximise value for money. Will those examinations lead to efficiency savings and a reduction in spend, and what progress, if any, has been made on that to date?

Mr Daniell:

To be fair, I did not answer the previous question as fully as I should have done, and you have sparked a thought in my mind about duplication, the Deloitte report and our relationship with the Court Service. I do not think that there is duplication in our internal processes and in how we process payments, but I think that there is an element of duplication with the policy work that we and the Court Service carry out.

That is a difficult but important area. Northern Ireland is obviously a much smaller jurisdiction than England and Wales. The commission has set up structures to handle legal aid that effectively mirror those in England and Wales. There may be questions about whether that is the right approach in the future. Indeed, the commission has pressed the Court Service and the Northern Ireland Office, which have agreed to review those issues over the next few months.

I will give you some examples of the sort of thing that I have in mind. The commission is responsible for the development of policy and the setting of fees on the civil side of legal aid. A small unit that comprises only a handful of people in the Legal Services Commission is working on a major reform programme. There are also people in the Court Service with whom that unit has to relate and agree certain things. In those areas where the commission is responsible for the setting of fees, it develops a business case for a certain fee level, which the Court Service then has to agree. The commission then goes back to negotiate with the profession, and then back to the Court Service. There is a lot of toing and froing.

On the criminal side, although the Court Service is responsible for fees and policy, there is an argument that it could be a lot closer to the operational side of the commission. Given the constraints, things work very well between the two organisations, but there is a case for improvement.

In England and Wales, for example, the Legal Services Commission and the Ministry of Justice are co-located — they effectively work as one, which is how I think we ought to work in Northern Ireland. The chief executive of the commission in England and Wales is on the management board of the Ministry of Justice, which means that they effectively work together as one.

Speaking partly personally, although I know that the commission agrees with most of what I say, I think that there is case for saying that we ought to look at the architecture of the delivery of legal aid, the relationship between the its operational delivery and the sponsor Department, and whether the current degree of separation is right or whether the two organisations should be much closer together, with less duplication in policy.

There are elements of legal aid that must retain its independence; for example, in matters such as judicial reviews against Government, or care orders in cases involving children, where private individuals might be taking a case against public authorities. On the criminal side, the essential independence of decision-making in individual cases is critical, therefore, it must be retained. However, subject to that, there is a case for reviewing structures and architecture and for saying that perhaps new systems might be developed in the future. Whether a non-departmental public body is the right model is open for discussion.

The Chairperson:

Thank you. As I said, you will probably receive some communication from the Committee in the not too distant future. I thank both of you for coming along today; you have been very frank and straight with us. There are obviously pressures, and work needs to be done to try to reduce some of those pressures.

Mr Daniell:

I would like to make one brief comment; I do not want there to be any misunderstanding of an answer I gave about people who have been found guilty in court reimbursing the commission. In short, the guilty should be made to pay. Obviously, a large number of people who are found guilty in court do not have the means to pay for their defence. However, I was referring to those cases where people who are found guilty clearly have access to resources. There may be a case for those sorts of people paying either a contribution or the full cost of their defence.

The Chairperson:

Thank you.

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