Understanding won't save legal aid firms - we need action, now

As yet another month end approaches, many firms in the legal aid sector are asking us, 'Where is the further support we urgently need to remain in business during this crisis?' This was a sector of the profession that was already in crisis prior to the pandemic. It is quite clear there is a serious risk of sectoral collapse if additional support is not provided. As legal aid firms make their decisions as to whether they can survive another month of salaries and overheads without additional government support, nobody could blame them if they assumed that support will not be forthcoming, and made their decisions accordingly.

Of course, it is important that firms do what they can with the help that is available – the furlough scheme, the rates relief for small businesses, the Business Interruption Loan scheme and others. Our tool helps firms understand which of the Treasury schemes they may be able to use. Practitioners in Wales may be able to access further support provided by the Welsh Government, for example the Economic Resilience Fund. The Legal Aid Agency has made amendments to its provisions for hardship payments and payment on account within the legal aid scheme.

But many firms have explained to us why these schemes are either unavailable to them or are not sufficient to enable them to survive the current crisis. They are not just facing an interruption in cashflow, they are also suffering permanent loss of income. Because many of their businesses were in such a fragile state before coronavirus struck, a combination of commercial loans they can’t repay and accelerated payment of bills that were already due to them just won’t cut it.

It is important to remember that legal aid is a public service. The government has no obligation to ensure a supply of hairdressers or restaurants. It does have a legal obligation to ensure a supply of legal aid solicitors. Moreover, we are not talking about the loss of a handful of firms here and there whose work could be absorbed by those who remain. We are talking about the potential loss of much of the legal aid sector, causing a profound impact on access to justice, and with nobody available to replace them. We are talking about advice deserts across the country, people unable to get advice on domestic abuse, housing issues, community care. We are looking at a further massive increase in litigants in person in the courts, with substantial implications for costs to the public purse. We are facing the possibility that the government may end up unable to meet its statutory obligation to provide a criminal defence service. The government should be in no doubt that the cost of trying to rebuild this supplier base after a collapse will be exponentially higher than the cost of stopping that collapse in the first place.

Since the lockdown started, we have made clear to the Ministry of Justice the risk that the country is facing of large numbers of legal aid suppliers disappearing. We have called for further help with cashflow via the Standard Monthly Payment scheme. We have called for relief from business rates, as a vital reduction in costs to offset the loss of income. We have asked for the reversal of some previous legal aid cuts and the restarting of work on criminal and civil sustainability, so as to give firms reason to believe that there is a better future worth struggling on for.

We formally called on the lord chancellor to provide this assistance over a month ago. In our view, the support we are seeking is entirely in line with what the government’s Public Procurement Note 02/2020 directed its departments and agencies to do for their suppliers, as a matter of urgency, at the outset of this crisis. We have had numerous discussions with officials. I believe that the dire situation that firms are in is understood, and we are informed that officials are working hard to try to construct a package of support measures. Indeed, in his recent reply to us, the lord chancellor acknowledges that 'with current lockdown and social-distancing measures in place the volume of work will have significantly decreased for legal aid solicitors.' He goes on to agree that 'in some of the situations you highlight, we may need to go further, and we are looking at what options might be available – including… business rate relief'.

But hard work and an understanding of the gravity of the situation is not enough to ensure firms’ survival. We need further action, now. Although those discussions are continuing, at this moment I can offer you no assurance from the government that any further support will be offered.

Solicitors have a professional obligation to manage their practices in a financially prudent manner. Many of our legal aid firms are facing a stark choice between an orderly closure now, and a disorderly closure in a few weeks’ time. Much as we still hope that further support will, belatedly, be forthcoming, when making their commercial assessments, nobody could blame solicitors for concluding that they cannot rely on there being any further help, and taking their business decisions accordingly.

Simon Davis, president, Law Society