Thesis Submitted For The Degree Of Doctor Of Philosophy At The University Of Leicester

This analysis seeks to assess the history o f legal expenses insurance and evaluate its current position as a viable addition, or possible alternative, to State funded civil legal aid..

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A C K N O W L E D G E M E N T

My thanks to Professor Robin W hite for his patience and guidance in the com pilation o f this thesis

M odem civil legal aid, has its roots in the post w ar United Kingdom, being a fundamental com ponent

o f the w elfare state, recognised as such by the political parties o f the tim e The provision o f civil legal aid today is a different anim al and does not share the sam e values as the 'old' schem e This analysis will assess the evolution o f civil legal aid, its success and failure, and consider the changes

it has undergone and the forces behind those changes in dictating its current profile as a limited and franchised public services provision

Legal expenses insurance, unlike civil legal aid, is a relative new com er as a provider o f access to civil justice The scepticism that accom panied its arrival in this country, som e 20 years ago, has dissipated Insurers battled w ith the problem s o f adverse selection, European regulation and the public perception o f their product, all o f w hich have influenced m arket penetration The position o f legal expenses insurance w ithin the civil ju stice system has begun to strengthen and is now openly recognised and supported by the legal establishm ent A key objective o f this analysis is to consider the rise o f the legal expenses insurance m arket in the United K ingdom This analysis seeks to assess the history o f legal expenses insurance and evaluate its current position as a viable addition, or possible alternative, to State funded civil legal aid

Therefore, it becom es necessary for this study to con sider the position o f com parative European jurisdictions In addition, the role and reaction o f the legal practitioner situated am idst such significant and fundamental change is solicited and evaluated since they have, at once, fought change and yet accepted it in equal m easure

Finally, this analysis explores the future position o f civil legal aid and legal expenses insurance It considers the survival o f the form er, grow th o f the latter and the dynam ics o f the State and private sectors w orking together to m ould a new m odel for the provision o f access to civil ju stice in the United Kingdom

TABLE OF CONTENTS TITLE PAGE

INTRODUCTION

PA R T ON E

C IV IL L E G A L AID

C H A PTER 1 AN H IS T O R IC A L S K E T C H

1.1 T he R eq u irem en t o f L egal A id for the P oor

1.2 T he P olitical P arties and L egal Aid

1.3 L egal A id in L itigation

1.4 L egal Aid O th er than for L itigation

1.5 T h e R ep ort o f T he R ush cliffe C o m m itte e

2.5 T he M eans T est - T h e P rin cip le

2.6 C u rrent E ligib ility

2.7 T h e D eclin e o f C ivil L egal Aid

2.8 T h e M eans T est - A New In terp retation

2.9 F in ancial Im p lication s

3.1 M eth od s o f P rotection

3.2 C o n trib u tio n s - T h e C on cep t

3.3 A ssessm en t o f M eans

3.4 T h e C o n trib u tio n P aym en t

3.5 T he V alu e o f C o n trib u tio n R ecovery

3.6 G reen Form E ligib ility and C o n trib u tio n s

3.7 C riticism

3.8 C onclu sions

3.9 C osts

3.9.1 C osts O rders and L egally A id ed P erson s

3.9.2 O rder For C osts in F avou r o f the A ssisted P erson

3 9 3 C osts O rders A gain st L egally A id ed P erson s

3.9.4 O rders for C osts A gain st the L egal A id Fund

4.4.2 P aym en t on A ccou n t and In terest R eceived on C osts

6.1 D efinition

6.2 L egal-E xp en ses In su ran ce In T h eo ry

6.3 Inhibitors and False C om p arison s

6.4 Sm all B egin nin gs

6.5 T he D evelop m en t o f L egal E xp en ses In su ra n ce

6.6 A ssessin g the F utu re o f LEI

C H A PT E R 7 THE RANGE O F P R O D U C T S AV AILABLE

7.1 T h e M arket Products

7.2 Stand A lon e N on-Sp ecific P erils L egal E x p en se s In su ra n ce

7.3 Stand A lone S pecific P erils L egal E x p en ses In su r a n c e

7.4 A dd itional S pecific P erils L egal E x p en ses In su r a n c e

7.5 U ninsured L oss R ecovery L egal E xp en ses In su r a n c e

7.6 H elp-lines

7.7 V alue - T h e Public P ercep tion

7.8 C onclu sions

AN A N A L Y SIS

8.1 T he N eed for A n alysis

8.2 A w aren ess and P u rch ase - T h e S a m p le G rou p

8.3 T h e F in din gs

8.3.1 G eneral In su ran ce A w aren ess

8.3.2 LEI A w aren ess

8.3.3 LEI C overage

8.3.4 LEI T yp e

8.3.5 S olicitor U sage

8.3.6 Solicitor U sage C overed by a LEI P olicy

8.3.7 Level o f Interest - Stand A lon e LEI

8.3 C onclusions

8.4 C laim s E xp erience

8.5 C onclu sions

C H A P T E R 9 THE SO L IC IT O R S E X P E R IE N C E

9.1 T h e Im p ortan ce o f the S olicitors E xp erien ce

9.2 T h e S am p le - Its L im itation s and In tent

9.3 P ractice D etails

9.4 C ivil Legal Aid

9.5 L egal E xp en ses In su ran ce

9.6 C ivil L egal Aid - L egal E xp en ses In su r a n c e C o m p a riso n

9.7 C onclu sions

C H A P T E R 10 AN EC D IR E C T IV E S T E P S IN

10.1 In trod u ction - Pre 1987

10.2 T h e D irective, U nited K in gd om L egisla tio n its E x ten t and A p p lica tio n

10.3 C o m p lian ce

10.4 A u th orisation

10.5 C on flicts o f Interest

10.6 C o n flicts and the P osition o f the S o licito r

10.7 F reed om o f C h oice

10.8 Panel S olicitors

10.9 T h e D T I, T h e In su ran ce O m b u d sm a n and T h e EC D irectiv e

10.10 F reed om o f C h oice, the R eg u la tio n s th eir In te rp re ta tio n and the L egal Im p lica tio n s for In su rers 10.11 In surers - N om in ation and R ec o m m en d a tio n o f S o licito r s to the In sured

12.4 Im p lem en tation o f the W h ite P ap er P ro p o sa ls

12.5 T h e L ab our P arty - A N o v L egal A id P olicy?

C H A P T E R 13 CIVIL L E G A L AID A N D L E G A L E X PE N S E S IN SU R A N C E :

C O N CL U D IN G C O M M E N T S

13.1 L egal Aid - L esson s from the Past: S o lu tio n s for T o d a y

13.2 L egal E xp en ses In su ran ce - E x istin g P rob lem s

13.3 P ossib le S olu tion s

13.4 P artnership - T h e W ay A head

A PPE N D IX B

B IB L IO G R A PH Y - BO O K S

B IB L IO G R A PH Y - A R T IC L E S BIBLIO G R A PH Y - R E P O R T S

TABLE OF CASES

CHAPTER

A lm ond x M iles [ 1992] The Times 4 F ebruary 1992 3

A lpine Investm ents C ase C- 384 93 [1995] HCR 1-1141;

Cope x U nited D airies (London) Ltd [1963] 2 Q B 33 3

F ederal Steam N avigation Co Ltd v D T I [ 1974] 2 All ER 97 10

Francis x F rancis an d D ickerson [1955] 3 W L R 973 3

G eneral A ccident L td x F oster [1972] 3 All ER 877 3

H anning x M aitland (N o.2) [1970] 1 All ER 812 (C’A) 3

H unt x R.M D ouglas (R oofing) Ltd [1988] 3 All ER 823 2

K elly v L ondon Transport E xecutive [1982] 2 All ER 842 3

Litster x Forth D ty D ock a n d E n g in eerin g Co Ltd {In R eceivership) [1989] IC R 341 10

M edical D efence Union Ltd x D ep a rtm en t o f Trade [1980] C h 82 10

N eill v Glacier M etals Co Ltd [1965] 1 Q B 16 26 2

R v L egal A id C om m ittee No I (L ondon) L eg a l A id A rea, Ex p a r te R o n d el

R and T Thew Ltd x R eeves [ 1981 ] 2 All ER 964 3

Re H and Others (M inors) (No 2) (1992) 142 N LJ 1004 (H L ) 3

Rew e Zentral AG v B u n d e sm o n o p o lv e rw a ltu n g fu r B ranntw ein C ase 120/78 [1979]

Rodgers x British Transport C om m ission (1963) 107 Sol J 619 3

Scallon v Scallon [1989] The Times 4 O cto b er 1989 3

TABLE OF STATUTES

CHAPTER

Forma Pauperis Act 1495

(An Acte to adm ytt such persons as are p oor to sue in form a pauperis) 1Inheritance (Provision for F am ily and D ependants) A ct 1975 3

Statute Law R evision and Civil P rocedure A ct 1883 1

C H A P T E R

Legal Expenses Insurance D irective 1987 [1987] OJ L 185X77 6

TABLE OF STATUTORY INSTRUMENTS

A uthorisation) R egulations 1990 SI 1990 No 1160 11

Insurance C om panies (L egal E xpenses Insurance) R egulations 1990

Legal Advice and A ssistance R egulations 1989 SI 1989 No 340 3Legal Aid (A ssessm ent o f R esources) R egulations 1989 SI 1989 No 338 2Legal Aid (G eneral) (A m endm ent) (N o 2) R egulations 1988 SI 1988 No 1938 3

This Study has a single central theme That is, the rise of legal expenses insurance in the United Kingdom since it first arrived on its shores in the early 1970’s In order to properly debate this theme it is vital to locate it within the context of the historical development of civil legal aid and to examine its current position As a result, this study is of two very different mechanisms for the delivery of civil legal aid There are, of course, certain principles and a consistency of values common to both in achieving that end Each provides the litigant with legal services, assesses the merits of any application for assistance and, where appropriate to do so, funds the litigation However, statutory civil legal aid is an historical creature that has been viewed as a cornerstone of this country’s welfare state, albeit significantly remodeled in recent years The other, legal expenses insurance, is a private sector creature of fortune It has developed and grown by fulfilling

a perceived need left by the steady reduction in eligibility for state-funded legal aid.

This analysis attempts to break down each legal service delivery system into its component parts in order to assess accurately and comprehensively their relative positions in the United Kingdom today To achieve this, the study is divided into four sections.

Part One considers in detail the principles upon which civil legal aid was founded in 1949, the basis

of eligibility and the mechanisms available for protecting the legal aid fund These sections of the study are important to its central theme since the rise of legal expenses insurance is inextricably linked to the limitations and failures of statutory civil legal aid Civil legal aid was not created in a vacuum It followed a system of aid for the poor that had developed ad hoc and was far from satisfactory With cross party support, a comprehensive set of statutory measures were put in place

in 1949 which, it was perceived, would deliver access to justice for many millions of people in England and Wales to whom it had previously been denied Significantly, the middle classes of this country were to be included amongst those 'enfranchised' by the new civil legal aid scheme.

By the 1990's it was evident that despite the laudable principles upon which it was founded, the civil legal aid scheme was failing It was dogged by cumbersome administration, rising cost to the taxpayer, lack of focus and rapidly declining eligibility as the blunt instrument of the means test was used to define, ever more narrowly, those members of society able to benefit under the scheme The taxpayer was being asked to subsidise a scheme that grew more expensive year on year and one

in respect of which most taxpayers could take no advantage The inequity of this situation was unsustainable The civil legal aid scheme was failing the middle classes of this country who were at the same time, being enticed by the private provision offered by legal expenses insurers.

The previous Lord Chancellor, Lord Mackay, to his credit, embarked upon a quest for change and rationalization of the civil legal aid provision in the teeth of criticism from many legal aid practitioners and a number of academics opposed to the proposed changes Part One of this study details the success and failures of the civil legal aid scheme and the reasons behind Lord Mackay's attack on eligibility The link between the failures of civil legal aid and the emergence of legal expenses insurance is firmly indicated, as is the need for the middle class taxpayer to have some form of insurance (either state or private) should they suffer a civil legal dispute The taxpayer’s reluctance to pay a premium for no cover under the civil legal aid scheme gave Lord Mackay a clear platform for reform.

Part Two explores civil legal aid and the role of the practitioner The concluding chapter of this section considers in particular the concept of franchising Once more, such analysis assists the central theme of this study since the practitioner's perception of statutory civil legal aid has been important in respect of their attitude to reform and to the legal expenses insurance industry In particular the requirements of the Legal Aid Board, with regard to franchising, display interesting similarities to those of legal expenses insurers considered later in the study.

If the civil legal aid scheme is to survive, in whatever form, it must represent value for money In this respect, there was grave cause for concern from assisted person and practitioner alike, let alone from those not eligible to benefit under the scheme Part Two addresses these concerns and

price junior lawyers, or is that charge unjust and apocryphal?

Conversely, why are so many lawyers willing to undertake civil legal aid work if the profits in so doing are as slight as alleged? Furthermore, this section considers the practitioner’s defence of the legal aid system that has seemingly failed to provide either a proper service to its clients or just reward to its practitioners.

In an attempt to deliver a value for money product, franchising was introduced By design, franchising is intended to eradicate the failures and inefficiencies of the past system and to deliver a focused and efficient quality of service under contract with the Legal Aid Board This is a major shift away from the principles upon which legal aid was founded and is akin to the existing relationship between practitioners and insurers within the legal expenses insurance industry.

This part of the study assesses the concept of franchising, the inherent problems of quality control, targeting need via appropriate distribution channels and the fear and potential pitfalls for the franchisee practitioner Whilst in the short term, larger practices have emerged victorious over their smaller rivals, if continuation as a franchisee is, in the future, to be determined by cost alone, the long term prospects are less bright The prospect of the Legal Aid Board driving down proposed franchisee costs in ignorance of the practice's previous investment is a real cause for concern Finally, a comparison is drawn between the development of contracted services under a franchise and as between practitioner and insurer In the case of the former there has been a conscious attempt

to move forward by consent which is absent in respect of the latter Insurers regulate and control the practices they use with the ultimate sanction of removal from their panel However, in each case there is a shared goal, that of a practical solution to the problem of cost effective access to civil justice.

The Third Part of this study, in equal detail to Part One, is expressly concerned with the emergence

of legal expenses insurance, product specification, purchase and use, the practitioner’s experience and European regulation Part Three considers the definition of legal expenses insurance and the types of such insurance currently available in the United Kingdom Its historical development is also detailed along with the role of the practitioner and the importance of the risk control mechanisms employed by the insurers, including a merit test The insurers have had the unenviable task of trying to grow their business whilst at the same time avoiding adverse selection This has not been an easy ride and mistakes have been made, particularly in the stand-alone market, which have had a profound effect on the future development of the industry These effects are discussed along with the emerging solution of the add-on product.

The legal expenses insurance industry has long been in need of establishment support Until very recently, there was a marked reluctance to provide collective support This deeply frustrated the insurers and depressed the growth of their market This part of the study tracks the reaction of the establishment in the guises of the Lord Chancellor's Department, The Law Society and the Legal Aid Board, to the emergence of the legal expenses market.

This section contains a detailed product comparison study of the current market and an analysis of purchase and use, which includes original data in respect of the claims experience of one of the leading insurers It is important for this study to evaluate the extent to which the public shares the insurer's contention that legal expenses insurance provides an affordable 'gateway' to civil justice Again, the writer draws on information taken from a professional sample study, commissioned by his employer at the time, and undertaken with his assistance.

Chapter 9 of this section, by way of the writer's original sample study, aims to assess and analyse the solicitors' experience since their observations in undertaking work for insurers and the Legal Aid Board alike, are an important contribution to this study The study shows practitioners to be

solicitor's concerns are discussed drawing on material from the sample study.

Finally in Part Three, the effect of European regulation on the legal expenses insurance industry is considered The European Directive and its regulations are assessed in detail along with its extent and application In particular, the regulations concerning conflicts of interest are studied closely since it is within these regulations that the insured has been granted freedom of choice of lawyer For many reasons, it was this requirement which rocked the legal expenses insurance industry on its heels at its introduction The problem with variable legal costs in the United Kingdom was singularly troublesome in this regard and left it on an uneven playing field compared to its European counterparts such as Germany The use of panel solicitors is detailed along with the attitude of the insurers, the Department of Trade and Industry and the Insurance Ombudsman to such panels The insurance industry’s interpretation of freedom of choice of lawyer is carefully scrutinised.

Part Four attempts to draw comparisons in respect of this country's position and that of a number of its European neighbours Following this comparative study, the impact of a change of government

on the existing situation is considered along with the anticipated model for a future integrated delivery of civil legal services between the private sector and the State.

In 1997, gross premium income for the United Kingdom legal expenses insurance market was just over £100 million The number of risks covered, according to Association of British Insurers, was around 12 million While the market for traditional legal expenses insurance in the United Kingdom

is growing, the potential for modernising this form of insurance is obvious from examining the success of legal expenses insurance in Germany.

The gross premium income of legal expenses insurance in Germany for 1997 was almost 5 billion deutschmarks (£1.7 billion) Some 50 per cent of the population have legal expenses insurance compared with between 10-20 per cent in the United Kingdom For this reason alone it is necessary for this study to examine a selection of European countries by way of contrast to the position of the

United Kingdom Germany is considered along with the Netherlands, which has a strong civil legal scheme similar to our own and France since it was the birthplace of legal expenses insurance.

The assessment of these countries experiences in the legal expenses insurance market is important, since it enables the United Kingdom to consider the future potential and growth of its own market

It is significant that Germany’s success, in particular, is seen as being due to early specialisation of the insurance companies in legal expenses, the benefits of lawyer’s fixed fees, restricted legal aid provision and the absence of conditional fee arrangements.

The effect of the new Government is assessed in this part of the study since conditional fee arrangements are due to be extended in 1999 amidst other changes afoot which could have a significant effect on the legal expenses market Lord Woolfs proposals for the reform of civil procedure include fixing costs according to the claim value Although there has been some delay in implementing his proposals and doubts over the viability of fixed fees, it is likely some element of greater predictability will be part of the reforms The safety net of civil legal aid is slowly being removed but only to be replaced by the fall back of conditional fees The public debate on conditional fees in place of much of the existing civil legal aid scheme has raised public awareness

of the insurance industry’s role in financing litigation The market is changing and the potential for the insurers is there.

Generally, this study contains the writer’s own original research particularly with regard to the legal expenses insurance industry The research was drawn from the writer’s personal experience and knowledge of the industry The writer was employed from 1986 - 1995 as a senior legal advisor to the Legal Protection Group Limited (a wholly owned subsidiary of The Royal and Sun Alliance Insurance Company Limited) and thereafter within a firm of solicitors dealing with legal expenses insurers as clients The writer is currently employed as General Manager of Legal Services for Abbey Legal Protection Limited.

This study is current up to the summer of 1998.

"Where there is n o legal p rotection there is in effect n o law In so far as citizens are precluded from access to the courts, the rules o f th e law which they w ould like to invoke are for them as good as non-existent."1

It is largely upon this prem ise that the provision o f civil legal aid for the financially disadvantaged developed from early roots in E ngland and W ales For, in pure jurisprudential term s, m ankind w ill inherently set itse lf standards o r codes o f conduct, for

a num ber o f reasons w hether m oral, social, national or religious O bedience to such arethen prescribed by the law A rguably it follow s, in theory, that:

" inability to consult or to be represented by a lawyer m ay am ount to th e same thing as being deprived o f the security of th e law Legal aid is the m ethod adopted to ensure th at n o one is debarred from professional advice and help because o f lack o f funds "2

C o h n H.J " L eg a l A id Lor the Poor: A S tu d y in C o m p a r a tiv e L a w and I e g a l R e f o r m ” ( 1 9 4 3 ) 5 9 I Q R , Part 1 2 5 0 ,2 5 1

It has been argued that the extent to w hich the State is w illing to grant legal protection to its subjects can be m easured by the extent to w hich legal assistance is provided by the State.3 Therefore:

" the question w hether legal aid should be granted in a few exceptional cases and as a matter of charity only, or w hether it should be claimed as a m atter of right by anybody who is financially unable to secure it himself, goes therefore to the foundations o f th e law."4

The need for legal assistance in one form or another has long been recognised and is perhaps as old as the practice o f the law itself H istorically, law yers have counselled and represented the poorest o f folk, before the courts w ithout charge, regarding it as a necessary charity.5 The history o f legal aid in England and W ales as a charity based system dates back to the ninth century and continued in varying form s until the development o f the w elfare state after the Second W orld War

Arguably, the existing charitable system w as inflexible, o f lim ited availability, arbitrary and not recognised by m any o f its users as charitable, due to the frequent requirem ent o f

a deposit It becam e increasingly evident that only som e level o f state involvem ent in the legal aid scheme could provide a m ore socially acceptable w orking m odel

E J Cohn6 writing in 1943 succinctly described the argum ent for a state system o f legal aid:

"There is an astounding contrast betw een th e fact that the law is state-created and state- administered on the one hand and th e fact that the State has divested itself o f all pow ers w ith regard

to the granting of legal aid o n the o th er h a n d "

And against the system o f charity, he w rote:

"All grants depend on the n u m b er o f volunteers fro m the tw o branches o f the profession prepared to render assistance free o f charge If n o volunteers are forthcom ing, n o aid can b e

C o h n , s u p r a n 1 2 5 1

Ibid.

l or a g e n er a l v ie w o f su c h c h a r ita b le le g a l w o rk s e e fo r e x a m p le , L g erto n , R ,‘ H isto r ic a l A s p e c t s o f L eg a l A id ’ ( 1 9 4 5 )

61 l.Q R at p 8 7 and M a g u ir e J ,’ P o v e r ty a n d C iv il l it ig a t io n ’ ( 1 9 2 3 ) 3 6 H arv I R e v , 3 6 1

Those against state assistance in accessing the right to ju stice argued that an increase in the availability o f legal aid for the poor in litigation m ight m ake people m ore litigious.7 This was countered w ith an assertion that, if this resulted in a greater am ount o f ju stice being dispensed, it w as to be applauded as alleviating the currently unsatisfactory state o f legal aid.8

After the First W orld W ar there w as increasing support for state intervention and assistance in m any social aspects D uring the decade o f the 1940's there w as w idespread agreement betw een social com m entators and politicians that legal aid w as a service which a m odem state ow ed to its citizens as a m atter o f principle It w as part o f the protection o f that citizen's individuality, part o f the contem porary conception o f the relation between the citizen and the State The law w as m ade for the protection o f all citizens, rich and poor alike It w as the duty o f the State to m ake its m achinery w ork alike for the rich and poor

As poverty was a social state for w hich the burden o f re lie f rested w ith the w hole o f society, legal aid was a m eans that in certain circum stances could, in part, alleviate the consequences o f poverty For this reason, it w as argued, it should be a burden on the entire com m unity, not on the shoulders o f one charitably orientated group

S e e tor e x a m p le : R e p o r t o f th e C o m m itt e e to E n q u ir e in to th e P o o r P e r s o n s ’ R u le s (l-irst 1 a w r e n c e R ep o rt), ( ’rod 4 3 0 ,

L o n d o n , 1 9 1 9

State support for a com prehensive legal aid schem e w as therefore as m uch a product o f its tim e as a solution to a troubled system o f charity w hich w as thought anachronistic The H aldane Society em braced the new -m odel state legal aid system Support for the new model to replace the existing apparatus increased It soon becam e evident that the State would intervene The debate shifted to the level and m ethod o f intervention.

Prior to the report o f the C om m ittee under the chairm anship o f Lord R ushcliffe in M ay 1945,9 the two m ain political parties held som e consensus and som e opposing views Their respective positions are w orthy o f note, since elem ents o f both parties policies w ere ultimately to form post-w ar m odem legal aid

Whilst previous m oves for reform w ere reje cted 10 the C onservative Party and the L abour Party were now vigorously entering the debate as reform ers o f the existing inadequate systems The two great parties realised that legal aid to the poor w as a problem o f m ajor importance for large sections o f the com m unity T here w as a m ood for change and political gains w ere there to be m ade

The Conservative Party appointed a S ub-C om m ittee on R eform s in the A dm inistration o f Justice11 under the chairm anship o f C.R H avers KC The L abour P arty gave evidence

S e e for e x a m p le : R e p o r t o f th e C o m m itt e e on L e g a l A i d a n d A d v i c e in E n g la n d a n d W a le s ( R u s h c lif f e R ep o r t), C m d ,

6 6 4 1 L o n d o n , 1 9 4 5

S e e for e x a m p le : R ep o rt o f th e L a w r e n c e C o m m it t e e at n 7 a n d G u r n e y -C h a m p io n , F C , J u s t ic e a n d th e P o o r in

E n g la n d , L o n d o n , R o u tle d g e & S o n s , L a w N o t e s , 1 9 2 6

T h e S u b -C o m m itte e w a s to c o n s id e r , in ter a lia , t w o q u e s t io n s ,

i) Is th ere a n y m e th o d b y w h ic h th e e x p e n s e o f litig a tio n c a n b e te m p e r e d to the litig a n t w h o s e in c o m e is a b o v e

the P o o r P e r s o n ’s le v e r ’

i i ) W h eth er th ere h a s b e en a n y c o m p la in t a s to th e e x p e n s e o f le g a l a d v ic e a n d p r o c e d u r e in n o n - lit ig io u s m atters

before The R ushcliffe C om m ittee U nder the chairm anship o f J P Eddy KC a

m em orandum was p rep ared 12

Both parties considered there to be a m aterial difference betw een legal aid in litigation and legal advice The form er w as view ed as highly im portant and the latter, rather unfortunately, given little attention

Both political parties evidently agreed that legal aid should not be restricted to the High Court.13 The C onservatives saw m erit in drafting the rules o f the High C ourt and C ounty Court similarly w ith regard to legally assisted persons The Labour Party advocated two differing sets o f m achinery w ithout clearly countering the argum ent that this w ould entail unnecessary duplication o f w ork and create confusion for law yer and applicant alike

N either party saw fit to extend their proposals for legal aid to any o f the grow ing num ber

o f (legal) tribunals This point w as not m issed by the H aldane Society w ho consistently drew attention to the need for legal representation before these bodies At the tim e both parties were equally criticized by w riters on this subject for th eir lack o f foresight for not,

at least, providing a legal aid fram ew ork for all future trib u n als.14

With regard to term inology both parties saw the need to avoid term s such as "Poor Persons" or "Legal Aid for the Poor" T hey w ere seen as rem iniscent o f England's prim itive "poor laws" w hich belonged to the era o f the industrial revolution and before Such term s w ere based on the assum ption that legal aid w as a charity and could, therefore, be potentially socially degrading for som e recipients As legal aid w as to be an

12 T h e m e m o r a n d u m w a s re p rin ted in th e S u p p lem en ta r y ' R ep o rt a n d S p e c ia l F in a l A g e n d a fo r th e 4 3 rd A n n u a l C o n fe r e n c e

o f the H a ld a n e S o c ie t y M u c h o f it r e fle c te d th e e a r lie r w o rk o f th e H a ld a n e S o c ie t y

11 T h e C o n s e r v a tiv e Party sta ted that:

“an o v er w h e lm in g c a s e h a s b een m a d e o u t to d a y fo r th e n e c e s s it y o f prov id in g a id in th e c o n d u c t o f le g a l p r o c e e d in g s in

the C o u n ty C ourt to p e r so n s o f m o d e s t m e a n s ” R ep o rt o f th e s u b - c o m m it t e e at p 13 N o 2 3

indispensable part o f the adm inistration o f ju stice w ithin a m odem post-w ar state the term

"assisted p erso n "1^ and "person qualified to receive legal a id " 16 w ere view ed by the

C onservatives and the L abour Party respectively, as less hum iliating

The existing criteria w ith w hich to gauge a “poor p erso n”, those w ho earned less than £2 per w eek and w ere w orth less than £ 5 0 17, w ere disliked by both parties T hey agreed reform was necessary

Labour preferred the com plete abolition o f all financial lim its leaving the certifying authority to assess each individual applicant Due regard w ould be given to all the circumstances, incom e, m eans and approxim ate cost o f the proposed proceedings The Conservatives disagreed and looked to a sem i-rigid system o f assessm ent that w ould avoid the potential subjectivity o f the L abour m odel The C onservative proposal w as todrop the property lim it but to adhere to an incom e lim it that w ould be regularly

18

reviewed It w as argued at the tim e that the C onservative m odel fell into the existing trap o f injustice, since a few shillings per w eek could be the difference betw een a person being a fully assisted applicant and being denied any assistance at all E.J C ohn said o f this system:

"The rigid m ethod, even in this m odified form , is based o n to o prim itive an assessm ent of man's needs and requirem ents T o be able to judge w hat sacrifices a m an can be expected to bring for the purpose of taking an action into court, one m ust know m ore about him than just w hat his income is and how m any dependants he has."19

Importantly, the C onservatives prom oted the idea that the applicant should contribute to

Party criticised it on principle but m ore directly indicated that such a system w ould only

be sustainable provided the certifying authority had a far-reaching m easure o f discretion The C onservative's proposed system w as seen as providing lim its for the exercise o f such discretion

There existed a confusing conjunction o f tw o issues Firstly, w ho should the certifying authority be? Secondly, the discretion should they have? The C onservatives saw m erit in keeping the existing expertise o f the Poor Person's C om m ittee o f the various Law Societies throughout the country T hey proposed to include one social w orker as a member o f the C om m ittee to assist w ith the investigation o f m eans The Labour Party agreed with the C onservatives that the C om m ittee's expertise should be retained, but saw

a new role for these C om m ittees

Many critics o f the com m ittee system had previously suggested that they perform ed a judicial function.21 For this reason som e guarantee o f ju d icial independence or m achinery for appeal w as required Labour favoured appointm ent by the Lord Chancellor"" o f a 'Regional D irector o f Legal Aid' w ith ju risd ictio n to hear appeals from the C om m ittees However, w ith regard to legal aid in the C ounty Court, Labour w ished to leave this decision in the hands o f a M aster or D istrict R egistrar, view ing the com m ittee system as too complicated for the county court process The C onservatives argued that this w ould result in an unreasonable burden being placed on such personnel

One issue upon w hich both Parties and the m ajority o f critics23 did agree w as that it w as only fair for law yers to assisted persons to receive rem uneration for the w ork they perform The C onservatives suggested law yers should receive tw o-thirds o f the ordinary

result w as clear, there w as cross-party support for this social burden to be laid upon the Treasury.

H aving agreed on rem uneration for legal aid law yers, it w as suggested by the

C onservatives that if a system w ere to be adm inistered by existing com m ittees, com posed

as they w ere from local Law Society m em bers, a conflict o f interest w ould arise It could

be claim ed that the legal profession w ould becom e ju d g e as betw een itself and the tax ­payer The conclusion was that the investigatory com m ittee should not m ake the decision

to grant legal aid to an applicant A suggested solution w as to leave the decision on granting legal aid entirely w ith the D irector o f Legal Aid H ow ever neither political party appeared adequately to address how such a position could be genuinely autonomous It w as argued that this w as a point not be neglected 24 A truly independent, judicially appointed D irector o f Legal A id, w ho m ade the final decision on assistance, would retain the experience o f the C om m ittees Furtherm ore, it w ould secure for the legal profession a proper share o f influence, w ithout burdening it w ith a responsibility that could harm its reputation and ham per the adm inistration o f legal aid

The C onservative Party R eport recom m ended that the assisted person should be allow ed

to choose his or her solicitor25 and this particular proposal w as com m ended by contemporary w riters on this issue The rationale w as sim ple; w hen an assisted person chooses his ow n solicitor he places in his advocate a higher degree o f confidence than one who has been appointed for him E J.C ohn26 believed this freedom w as a fundamental legal right:

" to preserve the relationship o f confidence betw een solicitor and client m eans to preserve the m ost im portant m oral asset the legal profession possesses."

S e e tor e x a m p le : H.J C o h n ‘ The P o litic a l P a r ties an d L e g a l A i d ’ ( 1 9 4 5 ) 7 - 8 M L R 109.

G u r n e y -C h a m p io n s u p r a n lO at p 8 5

S e e R ep ort p 12 N o 19 N o te a ls o that th is w a s d e p e n d e n t o n th e s e le c t e d s o lic it o r b e in g a lr e a d y o n th e p a n e l o f s o lic it o r s

w illin g to a c c e p t c a s e s u n d er th e s c h e m e

at the very least they requested the am ount w hich the party had to contribute, should depend not only on w hat is the expected expenditure but also on the m eans o f the applicant.28

It could therefore be genuinely said o f the tw o P arty ’s R eports that on m any o f the salient issues there w as agreem ent In hindsight, they could be accused o f lacking attention to detail H ow ever, it is clearly evident from the above analysis that the progressive spirit particularly bom o f the im m ediate post-w ar years w as to the fore C hanges w ould be made

"Legal advice is the key to th e solution of th e p roblem of legal aid to the p o o r."29

If the words o f G u m ey-C ham pion are correct in their assum ption, then both Parties Reports on legal aid other than for litigation w ere not m erely w oefully inadequate but displayed com plete m isunderstanding o f social needs

The heart o f the m atter is that the two R eports w ere overly b rie f on this aspect o f legal aid but G um ey-C ham pion's assum ption is also flawed G ood legal advice is o f no use to a poor person if there is no m achinery by w hich it can be im plem ented, or if the m achinery exists but the funds to access it do not

M e m o r a n d u m at p 19 T h is e n ta ile d th e t e c h n ic a l r e m o v a l o f O rder 16, R u le 2 8 ( 5 ) o f th e th en R u le s o f th e S u p r e m e

C ourt.

H.J C o h n s u p r a n 2 4

The L abour R eport recognised the need for legal advice but its proposed solution to the problem w as poorly defined The C onservative R eport w ent further but in a negative direction The Report concluded that no reform o f the existing position w as desirable.

W hilst the two P arty ’s notions on this issue w ere sketchy, m any contem porary critics and legal aid w orkers had very focused view s on the scope and quality o f such services w hich should be provided for the public M ost agreed that leaving the provision o f such service

to the responsibility o f private charity w as insufficient The present state o f affairs was universally felt to be in need o f im provem ent Several suggestions w ere put forw ard such

as state-funded system o f legal advice b u reau x ;30 local law centres;31 a public legal advice corp oratio n;32 the setting-up o f m unicipal legal aid bureaux and the subsidising o f the existing Poor M an's Law yer C entres.33

All w ere variations on the sam e them e w hich rejected a charity-based system and proposed replacing it w ith a com prehensive netw ork o f legal advice centres, draw ing on Treasury funds specifically to target the low -paid First-stop law shops w ere envisaged providing the poor w ith sound legal advice on any aspect o f the law As M r M ervyn- Jones stated:34

"It is useless and unjust to m ake further appeals to, or dem ands upon, the legal profession for their voluntary services In the absence o f a com prehensive state-aided system of free advice and assistance, voluntary' bodies m ust continue to cope w ith the problem of assistance T hey cannot do this satisfactorily so long as they are ham pered by the absence o f funds."

Cohn35 believed that the U nit Legal A dvice B ureaux o f the Services D ivorce D epartm ent set up during the Second W orld W ar had proved beyond doubt that they perform ed a vital

social service M oreover he conducted a survey at the tim e o f w riting in 1945 w hich indicated that the proportion o f m atters in w hich m ere advice w as required to those w hich involved litigation w as approxim ately ten to o ne.36 He w as concerned, as w ere others, if the com placent attitude o f the C onservative P arty prevailed, the existing advice services known to be successful and praised by all, w ould dw indle w ithout proper funding The

m om entum o f reform w ould be lost

The Labour Party, w hilst failing properly to define their blueprint for advice centres did state encouragingly that it is:

" the duty of the state to take all necessary steps to ensure that p ro p er legal advice is made available for all p o o r persons w ho need it."37

Having stated this as their policy, their recom m endation w ent no further than to retain the present Poor M an's L aw yer's C entres and the C itizens A dvice B ureaux.38

It could therefore be reasonably concluded that both political Parties, in their debate on legal aid, neglected to a great degree the provision o f assistance outside litigation Legal com m entators at the tim e placed their hope for a com prehensive and funded advice system in the hands o f the R ushcliffe C om m ittee, desirous that such neglect w ould not be reflected in the C om m ittee's forthcom ing recom m endations for reform

T h e M a n c h e s te r and S a lfo r d P o o r M a n ’s L a w y e r C e n tr e A n n u a l R ep ort.

1.5 T he R eport o f T he R ushcliffe C om m ittee

In the m idst o f the political debate and sure in the know ledge that the present system would soon be changed, the G overnm ent appointed a D epartm ental C om m ittee under Lord R ushcliffe in M ay 1944 The C om m ittee w as to inquire into the existing facilities for giving legal advice and aid to poor persons and to m ake recom m endations

The C om m ittee considered, carefully, the two political Party R eports, discussed in Sections 1.2 to 1.4 o f this chapter, in detail By O ctober 1944, it also had for its perusal The Law Society's M em orandum o f Evidence that outlined existing facilities, com m enting on them and m aking proposals for a m ore com prehensive system 39 In addition a num ber o f other bodies and individuals provided the C om m ittee w ith evidence

The Law Society recom m endations, unlike the Party Reports, w ere detailed and sought to provide a truly com prehensive legal aid system They saw a need for a legal panel o f

w illing law yers w ho w ould provide to any m em ber o f the public, legal services at a fee

w hich he could reasonably afford to pay and the am ount o f w hich, so far as possible, he

w ould know in advance The schem e w as to cover all courts and those who could afford

no contribution w ould be provided w ith free legal assistance T he panel law yers involved would be adequately paid for th eir work The state should be responsible for such cost not covered by the applicants' contributions

The Law Society's schem e w as intended to supersede all existing schem es England and Wales w ould be divided into adm inistrative areas, each controlled by an A rea C om m ittee served by a legally qualified A rea S ecretary.40 A ssisted litigants w ere to be given protection in respect o f orders for costs against them if unsuccessful

In D e c e m b e r 1 9 4 4 a further and m o re e la b o r a te m e m o r a n d u m w a s s u b m itte d to th e R u s h c lif f e C o m m it t e e b y The L a w

S o c ie t y

The com m itm ent to detail displayed w ithin the Law Society's subm ission w as recognised

by the R ushcliffe C om m ittee and w hen the R eport w as published in M ay 1945,41 it was found to have substantially adopted the proposals o f The Law S ociety.42

The R ushcliffe Report becam e therefore, a near exhaustive study o f legal aid to the poor Upon receipt o f evidence it w as clear to the C om m ittee that the existing charitable system

o f legal aid and advice was:

" a service which wras at best som ew hat patchy [and which] has becom e totally inadequate."43

The Report's m ain recom m endations w ere as follows:

(a) Legal aid w as to extend to all courts.44

(b) It w as intended to provide support to a w ider group o f persons than those

previously classed as "poor"

(c) T hose w ho could not afford to pay for legal aid should receive it free,

thereafter a contributory scale w ould be enforced

(d) The state should b ear the cost o f the new system , but it w ould not to be

adm inistered either as a departm ent o f state (M inistry o f Justice) or by local authorities

(e) The Law S ociety w ould adm inister the schem e acting w ith the Bar

C ouncil and both w ould be answ erable to the Lord C hancellor A central

A dvisory C om m ittee w ould in turn advise the Lord C hancellor on m atters

o f general policy

(f) A N ational A ssistance B oard w ould investigate the m eans o f an applicant

and the m erits o f the case w ould be investigated by a com m ittee o f lawyers Such com m ittees and B oards w ould be regionalised

(g) Legal aid law yers should receive adequate rem uneration for their

services.45(h) A chain o f legal advice bureaux be set-up to provide legal advice outside

litigation im m ediately, w ithout a m eans test.46

The Report w as liberal in character and realistic and therefore stood a good chance o f being im plem ented47

The centre o f gravity o f the R ushcliffe recom m endations w as the A rea C om m ittee that could consist o f solicitors and barristers England and W ales w ere to be divided into ten areas w ith each area having its ow n com m ittee Each com m ittee w as to have its own Area Secretary, a perm anent official, supported clerically The A rea C om m ittee's prim ary tasks w ould be to supervise granting o f legal aid outside litigation and that o f appointing and hearing appeals from Local C om m ittees w hich w ere to decide about applications for legal aid in litigation The A rea C om m ittees w ere thus to be responsible for the general adm inistration o f the schem e, in both branches o f legal aid, w ithin their respective areas Control on the central level w as to rest w ith the Law Society, w hich was in turn answ erable to the Lord C hancellor, w ho w ould have authority to issue rules in respect o f the schem e and w ould allocate a block paym ent to cover the expenses o f the

m achinery to the Law Society The Law Society w as to allocate necessary funds to the individual A rea C om m ittees

Apart from detailing the structure o f the legal aid schem e through the com m ittee system , the R ushcliffe R eport agreed that the term 'poor person' should disappear and be replaced

by 'assisted person' Full legal aid should be available w here necessary and persons

U n d er th e s c h e m e le g a l aid la w y e r s w o u ld r e c e iv e d a p p r o x im a te ly 8 5 per c e n t o f th eir n o rm a l fe e s

T h e c lie n t w o u ld , w h e r e p o s s ib le , p a y tw o s h illin g s a n d s ix p e n c e to th e o r g a n is a tio n , w h ic h on its part w o u ld p a y s e v e n

s h illin g s and s ix p e n c e to th e s o lic it o r , i f a n y , w h o had g iv e n th e a d v ic e

It w a s n o 'w is h l i s t ’, th e G o v e r n m e n t had a lr e a d y p r o m is e d im p le m e n ta tio n s u b je c t to n o rm a l P a r lia m e n ta r y d e b a te S e e

earning or w orth above the benchm ark figures48 m ay be granted legal aid in part The concept o f contribution w here appropriate w as accepted and accom m odated by the Report w ith the level to be determ ined by the local com m ittee

Significantly, 'incom e' and 'property' w ere not to m ean the gross am ounts earned or possessed by an applicant They w ere to be adjusted in accordance w ith a num ber o f detailed rules.49 Such rules w ere the origin o f the 'disposable incom e' and capital rules used today The Report's suggestions, if adopted by the legislation, w ould result in a very substantial increase in the num ber o f assisted persons com pared with the system as existed

W ith regard to the issue o f fair rem uneration for law yers operating the legal aid system it was stated at the tim e o f the Report that:

" the Rushcliffe C om m ittee has therefore been well advised to reject all those schemes and stick to the expensive, but, at the same tim e, the only justified course in holding that free professional men, freely chosen by the client to w h o m aid is being granted, m ust represent the assisted party, and that expertise m ust be b o m e by the tax payer T he im portance o f that principle is such that the details of the machinery' by which it is being carried out hardly m atter."53

In follow ing this path, the R ushcliffe C om m ittee had been strongly influenced by a num ber o f subm issions from A m erica and A ustralia.51

At the tim e, there could be no doubt that the R eport o f the R ushcliffe C om m ittee was viewed as significant to the entire future developm ent o f English Law I f accepted it

w ould result in m uch court business being financed by the State It heralded a new

48 T h e R u s h c lif f e R ep o rt r e c o m m e n d e d that fu ll le g a l a id m a y b e g ra n ted to a s in g le m a n o r w o m a n w ith an in c o m e o f n o

m o r e than £ 1 5 6 p a and c a p ita l o f n o m o r e than £ 2 5 , or to m a rried m en w ith an in c o m e o f n o m o re th an £ 2 0 8 and

c a p ita l o f n o m o r e than £ 5 0

49 S u c h r u le s, it w a s in te n d e d , w o u ld b e p a rtly la id d o w n b y the c o m m itt e e an d p a rtly la id d o w n b y th e L ord C h a n c e llo r as

r u le -m a k in g a u th o r ity

s" C o h n 1 J ‘ L e g a l A id T o T h e P o o r A n d T h e R u s h c lif f e R e p o r t’ ( 1 0 4 6 ) 0 M L R 6 5

M C o h n I J , s u p r a n 5 0 at p 6 4 , re fe rs to the N e w S o u th W a le s A c t o f 1 0 4 3 w h e r e all p o o r p e r s o n s c a s e s w e r e tran sferred

to a p u b lic s o lic ito r It w a s b e lie v e d that s u c h a s y s t e m d e ta c h e d th e le g a l p r o f e s s io n fro m le g a l a id and w a s th ere fo r e n o t

to b e p referred S e e g e n e r a lly :

L ls o n , A , ‘T h e R u s h c liffe R e p o r t’ ( 1 0 4 6 ) 13 IJ C h i L R e v , 1 3 1 -4 4

relationship betw een the State and the legal system that intended to open the courts to

w hole classes o f the population so far excluded The Report em bodied the right o f a

m odem state citizen to receive legal aid E.J C ohn acknow ledged the courage o f the

R ushcliffe C om m ittee for having

" taken the first step on a road the end o f w hich n obody can see."52

He w as not alone in his adm iration

In the m onths that follow ed the R ushcliffe R eport the G overnm ent w ere to accept the recom m endations w ith only slight variation.53 The Law Society w as invited to prepare a detailed schem e incorporating the R ushcliffe proposals.54 The Law Society's schem e was subm itted to the Lord C hancellor and to the legal profession for discussion in February 1946.55 In effect the Law Society's proposals detailed the R ushcliffe recom m endations and form ed substantively the Bill that becam e the Legal Aid and A dvice Act 1949.56 The Act w as to be im plem ented increm entally and received the Royal A ssent on 30th July 1949.57 A rudim entary charitable system o f legal assistance had developed into a form ally com prehensive system o f state funded legal aid arguably then the m ost advanced in existence

The A ct dem onstrated very strong continuities betw een the Poor Persons Procedure and the Legal Aid Schem e and yet represented a significant break w ith the past It was generally view ed w ith consensus as a social reform and not a political arena for battle

C rucially, it extended state protection for legal aid beyond a m ere poor law into the low er

m iddle class o f society

H.J C o h n s u p r a n 5 0 , 6 6

S e e: W h ite P a p er o n th e l e g a l A id and A d v ic e B ill 1 9 4 8 1 9 4 8 C m d 7 5 6 3

M The R u s h c lif f e C o m m itte e it s e l f r e c o m m e n d e d th is a s a p r e lim in a r y s ta g e to le g is la t io n , para 12 7 (7 ).

The charity-based system o f legal aid w as recognised as a failure P olitically there w as a desire to construct a radically different m echanism for the delivery o f civil legal aid The new system w as to be based on principles em bodied in statute A nalysis o f the success and failures o f the statutory schem e is im portant to this study since failure, like its charity-based predecessor, w ould inevitably lead to further reform As can be seen in the next chapter, the m odem civil legal aid system represents a significant dilution o f the political intention that under-pinned its creation Statutory civil legal aid is now view ed

as a failure, in m any respects, by both m ajor political parties thereby opening the door to reform o f the system and to private sector alternatives such as legal expenses insurance

By the sum m er o f 1949, the Legal A id and A dvice Act 1949 w as on the statute book; it was an im pressive and com prehensive piece o f legislation that aim ed to provide legal services to the poor It had been a product o f m uch careful thought, planning and discussion It had not generally becom e a m atter o f party politics It w as a national

m easure In essence the schem e represented the fact:

" that n o m an should be denied his rights to law for lack o f m eans : but to translate this into actuality it was necessary' to create a very considerable apparatus b o th on paper and in sheer organisation".1

In fact, in the w ords o f the Lord C hancellor in 1949, the A ct w as largely a peg on w hich

2

to hang regulations

The Act provided a fram ew ork o f basic principles leaving the detail to be created by regulations and an essential adm inistration schem e It w ould itse lf em ploy m any hundreds o f legally qualified personnel A dditionally, it w ould draw on the services o f

1 P o llo c k , S , L e g a l A i d th e F ir s t 2 5 Y e a rs, L o n d o n , O y e z , 1 9 7 5 at p 6.