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Part 1 Publicly Funded Legal Assistance on Civil Matters

1.1 Throughout this paper the term 'publicly funded legal assistance ( PFLA)' on civil matters means advice on justiciable problems - that is, advice on matters which raise a legal issue or which, if not resolved earlier, could result in legal action being taken. ²

1.2 Legal advice in this consultation paper therefore includes information and advice about the law and alternative means of resolving legal problems, help in preventing or resolving disputes about legal rights and obligations, and help in enforcing decisions. It is advice on rights and responsibilities, on resolutions and remedies. This includes advice which is provided by agencies other than lawyers: a fundamental issue underlying the thinking behind this paper is that 'legal' advice is advice on the law, but not necessarily formal legal advice in the usual sense.

1.3 Civil PFLA encompasses all forms of legal advice which are paid for from the public purse. It includes civil legal aid, A&A and ABWOR for civil matters paid for from the Legal Aid Fund, ³ and legal advice provided by advisers in advice agencies or advisers employed by public bodies such as local authorities. It also includes legal advice provided by voluntary sector organisations, irrespective of their exact funding arrangements, on the assumption that the vast majority of these will be in receipt of some form of public funding.

1.4 Civil PFLA covers the full range of assistance people may need to resolve their justiciable problems, such as information; advice on options for action; practical assistance such as letter writing; mediation; arbitration; or representation before a court or tribunal. It includes advice which is not always described as legal advice, - for instance, welfare rights advice, debt and money advice, housing rights advice or consumer advice.

1.5 The vision for the future and the proposals for change put forward in this paper relate also to initiatives and policies developed by the Executive for advice provision in specific areas. The most notable of these are developments in homelessness and housing advice, and in money advice. ⁴

(A) A national strategy for publicly funded legal assistance on civil matters

1.6 In Scotland today the civil justice system supports family and business relationships by establishing the rules which help us live and work together, by protecting legal rights and by helping us resolve legal problems. It relates to all the ways in which people manage their daily lives and sort out conflicts when they arise.

1.7 Publicly funded legal advice, information and representation are essential civil justice services, which need to ensure that those who need the law will not be excluded from using it, whether due to prohibitive costs, lack of knowledge or lack of available help.

1.8 But this is more than a matter of fairness and equality. If everyday legal problems are identified early and promptly, society benefits in many ways. Problems of any sort seldom come alone, and research confirms that this is no different for legal problems. ⁵ They come in clusters and are exacerbated when no action is taken to resolve them. The downward spiral of one problem leading to another can lead to social marginalisation and exclusion - at a huge social and financial cost to individuals and society as a whole.

1.9 Making sure that advice on problems which raise legal issues is available and accessible when and where people need it will therefore not only benefit the individuals involved and their families, but also the communities they live in.

Building a Strategy

1.10 In order to secure improvements in any area of public administration, we must first recognise the weaknesses which have to be addressed. The main weaknesses in the current system for the delivery of civil PFLA in Scotland are, as widely recognised: ⁶

• A lack of strategic vision and central direction on the provision of publicly funded legal advice, information and representation;
• The lack of a clear mechanism to relate the supply of services to assessment of need. Provision is either demand led (in the case of legal aid and advice and assistance) or has evolved piecemeal, resulting in varying levels of provision of and access to services;
• The lack of any clear means to ensure and maintain a supply base either of adequate numbers of solicitors for legal aid work, or sustainable provision by the not-for-profit sector of non-legally qualified advisers;
• Variable quality of information, advice and representation;
• The potential for different services and providers to complement each other is not maximised; and
• Financial eligibility tests for civil legal assistance (whether civil legal aid, A&A or ABWOR) which can be seen as restrictive and inconsistent.

1.11 A necessary first step in developing a national strategy for civil PFLA is therefore to set out clear purposes for the services and to communicate these to set direction for what we do now and in the short term, and to guide future development.

1.12 Within our overall objective for the provision of civil PFLA - to enable the resolution of justiciable problems - three specific aims can be identified. These clarify that objective and put the impact of the legal problem on an individual's life at the centre of future policy development.

1.13 Firstly, we want publicly funded legal assistance on civil matters to help with the early resolution of legal problems. The sooner problems are dealt with, the better. Early help and intervention are not only effective in preventing problems from escalating, but are also a very efficient means of providing help.

1.14 Secondly, we want civil PFLA to promote effective access where necessary - but only where necessary - to formal dispute resolution mechanisms such as courts and tribunals.

1.15 Thirdly, we want publicly funded civil PFLA to contribute to greater social inclusion and to help close the opportunity gap in Scotland. Recent research ⁷ shows that some groups in society are particularly vulnerable to the experience of justiciable problems, and that this can aggravate existing social, economic and health problems. Early availability of advice to help resolve these problems therefore makes an important contribution to tackling social exclusion.

1.16 In pursuit of these aims, strategic change in the delivery of civil PFLA needs to result in a system which is:

• Effective and efficient in handling the volume of business, which may be expected to grow;
• Accessible and user-friendly for those who have to use it;
• Fair where it most needs to be fair - fair for the vulnerable in our society, fair for honest, hardworking people, fair for communities trying to fight their way out of deprivation; and
• Relevant to Scottish society in the 21st century.

1.17 Above all, such a system needs to inspire public confidence and a sense of ownership by the public.

1.18 Against that background, modernisation of publicly funded legal assistance in civil matters must be based on the four core principles of:

• Service provision based on rational and transparent decision making, informed by needs assessment;
• Fair reward for work done by those delivering the service;
• The introduction of quality assurance where this is not already in place; and
• The best possible value for the public money invested.

1.19 Finally, both lawyers and non-lawyers have important contributions to make in providing civil PFLA, and these should be recognised and maximised. Our long term aim is that all those who provide publicly funded legal advice, help and representation on civil matters, whether solicitors or advocates in private practice, public sector advice workers or volunteers, see themselves as part of one, essential, public service.

A Framework for Change

1.20 We believe that the variety of service provision and its resulting flexibility are potentially a great strength of civil PFLA in Scotland, provided that a system for planning and co-ordination can be developed, covering the full range of provision in order to improve accessibility, quality and value for money. To underpin such a new planning framework we propose to develop and implement an overarching quality system for all forms of civil PFLA.

1.21 In developing such a framework we do not intend to bring forward sudden and sweeping change, but will seek to build on what works, to recognise and maximise the contributions made by all those involved in the delivery of civil PFLA, and to facilitate better joint working.

A Planning Framework

1.22 There are three parties which can and should be responsible for and contribute to the development and operation of a national and local framework for the planning of civil PFLA. These are the Scottish Executive; local authorities; and, in the longer term, a national co-ordinating body. These three parties, in delivering such a framework, should work with other funders and providers of legal advice services, including voluntary sector organisations and the legal profession.

Role of the Scottish Executive

1.23 The Scottish Executive has two overall roles to play in the planning and co-ordination of civil PFLA:

• Firstly, setting and articulating strategic policy direction on principles and priorities for the delivery of PFLA; and
• Secondly, the active co-ordination of the various strands of activity and policy initiatives involving (legal) advice provision, which may originate either from one or more portfolios within the Executive or from other UK Government departments.

Role of Local Authorities

1.24 Local authorities are significant existing providers of advice services such as welfare rights advice, debt and money advice, consumer advice and housing advice. They are also significant funders of provision of services by the voluntary sector.

1.25 Each local authority is therefore better placed than any other organisation or body to take on the function of planning and ensuring appropriate local civil PFLA provision in its area, taking account wherever possible of PFLA provided by solicitors. At present local authorities adopt very different approaches to this role, and show differing levels of commitment. Three strategies might be possible to ensure commitment to the provision of advice services and their planning and co-ordination, and to create appropriate consistency in service provision across local authorities.

1.26 The first would be to bring all funds currently being spent by local authorities on funding or directly providing advice services under central control, to ensure the implementation of centrally drawn up plans for local service delivery.

1.27 A second possibility would be to place a statutory duty on local authorities to ensure the planning and the provision of civil PFLA in their area. Such a duty would seek to ensure consistency of provision and protect PFLA from financial pressures on local government spending.

1.28 The third possible strategy would be a consensual approach to improving and developing PFLA based on close co-operation between local government, the Scottish Executive and a national co-ordinating body ( see 1.42) in order that the shared aims of promoting the resolution of justiciable problems and promoting social inclusion can be achieved. This approach would seek to allow local authorities flexibility in delivering national policy priorities at a local level.

1.29 We are not inclined to favour either the first or the second option. A high degree of central control is inappropriate for service delivery at local level. Our preferred policy is therefore strongly supportive of the idea that all the relevant interests should adopt a consensual and cooperative approach. The success of such an approach would however depend to some degree on the level of support and guidance available for local authorities, and the development of appropriate tools and systems to be used by local authorities in their planning and co-ordination of PFLA. Work on development of such tools is already underway, and the first toolkit, on undertaking needs assessment surveys, will be issued shortly.
The improved co-ordination of local delivery may best be achieved in the context of existing partnership working processes for local government such as Community Planning, and is an important theme in the Efficient Government programme.

1.30 The Scottish Executive will be able to support this approach through the provision of practical guidance and assistance to local authorities on the planning and co-ordination of advice provision. In the short to medium term we also see a role for SLAB in assisting local authorities in making essential links between solicitors providing legal aid and other local providers of advice services, often supported or run by local authorities, and in assisting the Scottish Executive in developing and providing practical assistance on planning to local authorities.

1.31 We will monitor the effectiveness of this approach over the coming years. We intend to make a full assessment of its success in the context of an in-depth review of the operation of the whole PFLA system in 2009/10. By this time we would expect to see the use of needs assessment in the majority of local authorities to inform better planning and co-ordination of all types of PFLA provision, evidence of greater cooperation between funders and between providers, for example through formal partnership structures, and greater clarity for advice seekers on what services are available in their area and relevant to their needs.

Role of a National Co-ordinating Body

1.32 To ensure greater planning and co-ordination of civil PFLA provision, we firmly believe that in the longer term there is a need for a national body with responsibility proactively to plan, co-ordinate, support and develop civil PFLA, in all its forms.

1.33 At present there is no such body in Scotland. SLAB has a narrower remit, the essence of which is to administer the operation of legal aid in Scotland, to advise Scottish Ministers on policy on the operation and development of legal aid provision, and to maintain and develop systems and support functions for the effective operation of the legal aid system. Those functions will continue to be necessary, but they need to be set in a wider context. Given this, we would envisage that a new body would take over the role currently performed by the Scottish Legal Aid Board, but with additional powers and a wider remit.

1.34 A national co-ordinating body would have several functions:

• National planning and co-ordination: to develop an overview of the adequacy of PFLA provision across Scotland and of what action may be necessary to improve it. This overview should be based on continuous assessment of the need for and availability of PFLA services;
• National development and research: to support local planning, including the provision of support to local partnerships of advice providers and funders and the development of planning tools, quality systems and best practice guidance; and
• Provision: actively to ensure provision of legal advice by lawyers as well as non-lawyer providers (particularly in relation to specialist services) where provision by the private sector and others is, for whatever reason, inadequate. The current Executive funding streams for advice provision, for example in respect of money advice and second tier advice provision may, in the long term, be transferred to a national co-ordinating body.

1.35 The establishment of a new national co-ordinating body would require primary legislation and would, we believe, call for a new legislative framework. The detail would require considerable further thought and consultation: for practical reasons, therefore, the establishment of such a body would be for the longer term, most likely in the next Parliamentary Session.

1.36 In the short to medium term our priority is to improve the civil PFLA system. Necessary and early improvements in the delivery of civil PFLA in the short to medium term can be achieved through a number of specific provisions giving SLAB more flexible powers and duties. Specific proposals to this end are set out in later sections of this consultation paper. Through these proposals SLAB will be able to develop a greater and more proactive role in the planning and delivery of civil PFLA in the short to medium term.

The Three Parties Working Together: Elements of a Planning Framework

1.37 The roles and responsibilities set out above for the key parties in the planning and co-ordination of civil PFLA provide a basic planning infrastructure. This needs to be underpinned by flexible, responsive, proportionate and robust processes which would encourage effective joint working. These processes would include the introduction of strategic, proactive funding and a match funding ⁸ capacity in the centre through the national co-ordinating body. They would also require:

• A strategic vision and statement of national priorities to be developed by the Scottish Executive;
• Local plans to be drawn up by local authorities (or clusters of local authorities), in consultation with the voluntary sector, the legal profession and other stakeholders, with input from partnerships of providers and funding bodies and based on assessment of need for legal services;
• The investment of centrally held funds (either from the Scottish Executive or from the national co-ordinating body) to be subject to an agreed and approved planning process (as above) and to an overarching quality assurance system;
• In demonstrating achievement of Best Value, local authorities to have regard to guidance on the provision of civil PFLA developed by the national co-ordinating body in consultation with Audit Scotland, the Scottish Executive, the Convention of Scottish Local Authorities, the voluntary sector and the legal profession;
• In the longer term, funding from a national co-ordinating body to be available to the full range of providers of civil PFLA (solicitors as well as non-legally qualified providers), in ways appropriate to the circumstances of the provider such as grant funding, contracts or direct employment.

Your Views

For the short-to-medium term:

Q1 Do you agree with the proposed consensual approach to developing better planning and co-ordination of advice services by local authorities, without any formal duty on local authorities in respect of the provision of PFLA services in their area?

Q2 What support activity do you believe would need to be provided to assist local authorities in developing their planning and co-ordination of PFLA at a local level? Who should provide this?

For the longer term:

Q3 Should a national body with a planning and co-ordination responsibility for the delivery of civil PFLA be established in Scotland?

Q4 What are your views on the suggested functions for a national co-ordinating body for civil PFLA (national planning and co-ordination; national development and research; responsibility to ensure provision of services where necessary, including second tier services such as training and information)?

Q5 Should a national co-ordinating body be able to fund provision by non-legally qualified providers as well as solicitors and advocates?

Q6 Should a national co-ordinating body have the ability to enter into matchfunding arrangements with other funders of PFLA?

Q7 (a) What are your views on the proposed outline planning framework for civil PFLA?
(b) How do you envisage the various elements of such a planning framework might work together to ensure better planning and co-ordination?

Quality Assurance Framework

1.38 As already mentioned, an overarching quality assurance system is an essential underpinning for a national strategy for PFLA. It can assist in addressing a number of strategic and operational issues:

• It underpins planning by providing the necessary information base as a result of asking providers to identify the nature and level of service they provide, thereby making consistent mapping of provision possible;
• It assists co-ordination, joint working and referral by establishing shared standards for services and a shared information base, thus establishing joint recognition and trust;
• It forms the basis for a quality improvement strategy as it makes it possible to see what additional training, information and other support is needed;
• It will improve quality of provision and ensure consistency by setting standards (at various levels, for various subjects) and requiring providers to operate within the level and area of expertise for which they are quality assured; and
• It can promote greater access and underpin public awareness campaigns, by directing people to a definitive list of assured providers.

1.39 The development of an overarching quality system for publicly funded legal assistance on civil matters is now being taken forward as a matter of urgency ⁹ by the Executive, in collaboration with Communities Scotland and SLAB.

1.40 Providers and funders of legal advice from all sectors as well as user interests will be invited over the coming months to contribute to this development process, which we expect may take up to two years. Once this work has resulted in specific and detailed proposals on what a generic quality framework may look like, and on what steps need to be taken to implement such a framework, we intend to consult separately on these matters.

Ensuring the Continued Provision of Civil PFLA

1.41 A framework for better planning and co-ordination of civil PFLA is particularly relevant in the context of concerns which have recently been expressed over the future supply of services. Judicare provision, whereby legal aid services are delivered by solicitors in private practice paid for by public funds, is and will continue to be, a primary mechanism for delivery of civil PFLA in Scotland. There is however consistent anecdotal, if little empirical, evidence that difficulties may arise in the medium to long term in civil judicare provision, because of a lack of solicitors in private practice who are willing and available to take on publicly funded work. At the same time funding arrangements for voluntary sector provision are often described by service providers as insecure, thus threatening continuity and development of services.

Any strategy to tackle such supply problems needs to be based on fuller knowledge of the extent of and reasons for any supply shortages. We have therefore embarked on research together with SLAB and the Law Society of Scotland to establish whether, to what extent and why there may be shortages of new entrants to legal aid work or some degree of withdrawal from legal aid work by existing practitioners.

1.42 In the long term we believe that a planning and co-ordination framework as set out above would create a structure in which issues of supply could be tackled. In the short to medium term we believe that recent and imminent increases in remuneration for civil legal aid and A&A work have started to address the issue. However, we do not think that further substantial increases in legal aid rates would fully address all possible future supply problems.

1.43 We wish to take action to ensure that there are and will be no problems with the provision of legal aid services and we therefore intend to enable SLAB to adopt measures not directly based on remuneration rates to encourage private practitioners to undertake legal aid work and to encourage new entrants into the system. These might include measures to improve the cash flow of legal aid firms, assistance in the repayment of student loans for trainees embarking on a 'legal aid traineeship', or assistance for firms providing such traineeships.

1.44 In the short to medium term we also need to have mechanisms in place to ensure adequate provision of solicitors' services. We propose that SLAB be given more flexible powers, within the context of its current role and functions, to be proactive in securing provision, such as:

• Direct employment of solicitors, based in public sector offices, private practices or voluntary sector agencies. Sections 26(1)(a) and (b) of the Legal Aid (Scotland) Act 1986 give SLAB powers to employ solicitors to provide legal aid services directly, subject to regulations. At present these powers are not used in the civil context and no appropriate regulations have been made; and
• The use of contracting with private practitioners to provide legal advice services. The current primary legislation does not provide for the use of contracting by SLAB in civil legal assistance.

Recovery of Enhanced Fees

1.45 A further method that has been suggested to maintain the provision of civil legal assistance by private practitioners and to encourage new entrants is to allow enhanced fees ( i.e. fees that are higher than the normal legal aid rate) to be recovered from property recovered or preserved at the end of the case: ¹⁰ such a system would introduce a higher rate to be paid if a substantial asset exists at the end of the action. This has been under discussion, but no detailed proposals have as yet been developed.

1.46 Although this would increase the profitability of some civil legal assistance work, we have some concerns that there may be a danger that it could give rise to incentives which run contrary to the delivery of a public service, and encourage practitioners to take on work in which there is a possibility or likelihood of an enhanced fee over that in which there is none.

Voluntary Sector and Public Sector Provision

1.47 The vulnerability of provision in the voluntary sector is a strategic issue which needs to be addressed, since stability and security of funding are essential in maintaining and developing quality provision. Better planning and co-ordination of civil PFLA within the framework set out above would, in the longer term, create greater stability and certainty for providers. The Scottish Compact ¹¹ between the Scottish Executive, its agencies, Non Departmental Public Bodies ( NDPBs) and the voluntary sector in Scotland exists already to encourage a closer and better working relationship between the Executive and the voluntary sector. The Scottish Compact is supported by Good Practice Guides covering, amongst other issues, funding and partnership working.

1.48 The Scottish Executive, SLAB and other major stakeholders for PFLA should, in the context of the proposed planning structure and building on the Scottish Compact, develop and share best practice on funding advice services to create greater consistency in funding arrangements. The proposed matchfunding capacity for a national co-ordinating body can also increase consistency and stability of funding over time.

Your Views

For the short to medium term:

Q8 In relation to the suggested non-remuneration based methods:

(a) Do you believe that the suggested non-remuneration based methods to encourage and maintain civil legal aid provision should be pursued?
(b) How effective do you think that such methods would be?
(c) Do you have any alternative suggestions?

Q9 In relation to securing the provision of civil PFLA services, do you believe that there should be:

(a) Greater use of salaried or employed solicitors for civil PFLA?
(b) Contracting with private practitioners to provide legal aid services?

Q10 Should legally assisted parties who at the end of their case are able to meet the full cost be asked to pay enhanced rates for civil legal assistance?

(B) Proposals for Specific Change in Civil Legal Assistance

1.49 In this section we will discuss proposals for change in the way various form of civil legal assistance are delivered. By civil legal assistance we mean publicly funded legal assistance administered by the Scottish Legal Aid Board, and delivered by solicitors and counsel: civil A&A, ABWOR and civil legal aid.

Reforming Civil Advice and Assistance

1.50 Significant changes have been made over the past few years to the operation of civil legal aid. These changes are consistent with the principles we have set out for the modernisation of publicly funded legal assistance: they provide for fair remuneration for work that is necessary to progress a case; through the staged reporting of progress on cases, they provide a degree of control over costs that was previously lacking, which should help ensure that cases are run both effectively and with continuing assessment of merits considerations; and they introduce quality assurance for all civil legal assistance.

1.51 Unlike civil legal aid, there has been no strategic reform of A&A for many years; indeed the scheme looks broadly as it did when first introduced over 30 years ago. However, the usage of A&A since that time has changed very considerably. It is no longer simply a scheme to provide quick and easy access to a lawyer for a limited amount of advice. It is possible for work under a single grant of A&A to be carried out over several months or even years and for substantial casework to be done over that time.

1.52 The reform of civil A&A is of strategic importance in improving the delivery of civil PFLA, as the type of work that may be carried out under civil A&A engages the full range of providers, from solicitors in private practice to law centre solicitors and to non-legally qualified advisers in advice agencies and other settings. Through reforms of civil A&A we intend, in the medium to long term, to achieve a greater integration of the services provided by solicitors and those provided by non-legally qualified advisers, so that it may become easier for those seeking legal advice to access this from the most appropriate adviser.

1.53 Proposals for a first stage of reform of civil A&A, developed by the Tripartite Consultation Group of the Scottish Executive, SLAB and the Law Society of Scotland, have now been consulted on. ¹² They involve a separation between civil and criminal A&A which will be crucial in the longer term for enabling the development of consistent, coherent and co-ordinated systems for civil PFLA on the one hand and criminal PFLA on the other. They provide for a revised process to clarify whether and when assistance from a solicitor is required; a more tailored assessment of financial eligibility; reduction in the inconsistencies in financial assessment, contributions and computation periods between civil legal aid and A&A; and a tiered system of remuneration including an increased rate for all substantive A&A work. Work is now underway to implement the changes over the coming months, in the light of the responses to the consultation.

1.54 Further reform of civil A&A will need to consider two issues in particular:

• The role of non-lawyers in the provision of advice and assistance type work; and
• The role and remuneration of specialist solicitors.

The Role of Non-Lawyers in the Provision of Advice and Assistance Type Work

1.55 At present only solicitors (or, where appropriate, counsel) may provide A&A under the Legal Aid (Scotland) Act 1986, and SLAB has no powers to pay other, non-legally qualified advisers for the provision of legal advice.

1.56 In Scotland a wide range of other, often non-legally qualified advisers are however also engaged in the provision of civil PFLA. To facilitate further integration of provision of legal advice by lawyers and non-lawyers we believe that in the longer term a national co-ordinating body would need to be able to fund services delivered by non-legally qualified providers, in particular specialist advisers ( see 1.37). A mechanism for the payment of outlays ¹³ incurred by (specialist) non-lawyer providers funded by the national co-ordinating body would also need to be developed.

1.57 To make progress in the short to medium term towards our goal of greater integration and co-ordination of services, we propose that SLAB should be empowered to fund provision by non-legally qualified providers, as well as to administer an outlays fund that can be accessed by non-lawyers. Any such system to fund non-lawyers or to administer an outlays fund (to be accessed by non-lawyers with no further engagement with the Board) could only function where an overarching quality assurance system is in place.

Your Views

For the short to medium term:

Q11 Should SLAB be able to fund provision by non-legally qualified advisers as well as solicitors and advocates?

Q12 Should SLAB be able to administer an outlays fund that could be accessed by non-legally qualified providers?

The Role and Remuneration of Specialist Solicitors

1.58 The first stage of reforms to civil A&A will introduce a tiered system of remuneration, and an aspect of further reform in the future will be the introduction of a further enhanced rate for solicitors undertaking A&A work which requires specialist knowledge and experience of a particular subject.

1.59 To allow an enhanced rate to be paid for specialist solicitors a system of accreditation would be needed. In the longer term this would need to be compatible with an overarching system for quality assurance for all civil PFLA.

1.60 We intend, by introducing an enhanced rate for solicitors undertaking A&A work which requires specialist skills, knowledge and experience, to improve the availability of high quality A&A provision by encouraging solicitors to develop the necessary expert skills and encourage those who have the skills to take on this type of work.

Your Views

For the short to medium term:

Q13 Do you agree that an enhanced rate for solicitors undertaking A&A work which requires specialist skills, knowledge and experience should be introduced?

Ability to Pay and Financial Eligibility: Possible Significant Changes

Extending Financial Eligibility for Civil Legal Aid

1.61 Concern has been expressed over a number of years that the existing financial eligibility arrangements for civil legal aid exclude many of those on relatively modest incomes who could not bear the risk of the potentially open-ended financial commitment of instructing a lawyer privately. ¹⁴ The existing system is argued to be particularly harsh for those who find themselves just outside the current eligibility criteria: a very small difference in disposable income can make the difference between being legally aided or not. These concerns need to be set against the background of long term downward trends in the number of applications for civil legal aid and in net expenditure on civil legal aid.

1.62 The number of grants for civil legal aid has been falling steadily for more than 10 years. In 1993/94 ¹⁵ the number of grants was 23,750, while in 2003/04 the number of grants was 12,322, representing a reduction of 48% over that period in the number of grants made. The downward trend in expenditure started later, largely due to the fact that accounts are paid when the case concludes, which is some time after the grant is made. Since 1996/97, when net expenditure on civil legal aid was £25.6 million expenditure has fallen to £18.6 million in 2003/04, a decrease of 27% over a 7 year period. Both downward trends look set to continue. ¹⁶

1.63 We are therefore giving serious consideration to a significant restructuring of financial eligibility to extend access to justice beyond the relatively narrow range of circumstances covered at present. We are considering with SLAB possible ways in which a system of extended and tapered financial eligibility might be designed, and what the implications for the coverage of legal aid and for public expenditure would be. Such a system might raise the eligibility threshold whilst increasing contributions for those higher up the income scale brought into eligibility for the first time. Those in the new upper ranges of eligibility might be asked to pay a higher rate of contribution than those who are currently eligible.

1.64 A tapered scheme could have several advantages:

• It would restrict newly eligible clients' costs to the level of their contribution, thus limiting financial risk as compared to that run by a client paying a solicitor privately;
• It would allow the client to pay the cost of contributions by interest free instalments over an extended period; and
• It would provide the client with some protection against the risk of having to meet their opponent's costs.

1.65 We believe that these advantages could be realised even in cases where the size of the contribution paid by those newly made eligible covered the full actual cost of the case. This would be likely to apply in many of the cases funded under an extended tapered scheme. In those cases, legal aid would facilitate access, rather than pay for it: the taxpayer would bear the risk which would otherwise be borne by individual litigants. On the other hand, it could be argued that the existence of such provisions might result in a higher number of expensive and arguably unnecessary cases being brought. However, the tests of probable cause and reasonableness are already in place to prevent unnecessary cases being brought, and these would continue to be rigorously applied.

1.66 We are at present developing, in close collaboration with SLAB, detailed models for new structures of financial eligibility based on the principles of tapering and higher proportionate contributions at higher income levels.

Your Views

In the longer term:

Q14 Should a system of extended and tapered financial eligibility be introduced for civil legal assistance?

Q15 Assuming that an extended and tapered scheme was affordable, what should be its main features?

Recovery of Costs at the End of the Case

1.67 At present, even a person who is legally aided may have to pay for their case in full, either because their assessed contribution exceeds the cost of the case, or because they are asked to pay for it out of property they have recovered or preserved as a result of the action (this is often referred to as 'clawback'). This arrangement is similar to charging arrangements for privately paying clients whereby a solicitor can obtain a charging order to secure his fees and outlays from property recovered or preserved. There are inconsistencies in the way the clawback provisions (and specific exemptions) apply as between A&A and civil legal aid: the rationale for these is not always clear.

1.68 In developing models for new structures of financial eligibility, we will review the range of exemptions available, with a view to encouraging greater consistency as between A&A and civil legal aid. We will also consider the test of 'grave hardship', which exempts some clients from making any contribution out of property recovered or preserved, and the fact that it only applies to A&A.

Your Views

In the longer term:

Q16 What detailed changes to the clawback arrangements might desirably be made?

Ability to Pay and Financial Eligibility: Other Changes

1.69 Access to civil legal assistance is and always has been subject to financial eligibility tests on the basis that legal aid should be restricted to those unable to fund their cases themselves. Accepting financial eligibility in principle as a criterion for determining access does not however of itself guarantee a transparent and fair system. Four specific issues which have arisen in relation to how financial eligibility currently operates, and proposals to address them, are set out below. We then go on to consider in general terms the wider issues of how the financial eligibility system and the system of cost recovery at the end of a case might be more radically changed to open up the system to a wider range of people and make it fairer. We will consider the development of policy further in the light of the views expressed on these wider issues.

Inconsistency in Financial Eligibility between Civil Legal Aid and A&A and ABWOR

1.70 In order to ensure that the financial eligibility system for civil legal assistance is transparent and fair, we propose to remove or reduce inconsistencies in the levels of financial eligibility between civil legal aid and civil A&A and in the ways in which eligibility is calculated. The proposals in the first stage of civil A&A reform ( see 1.53) included changes to financial assessment, contributions and computation periods to move the system in that direction. These changes will be implemented over the coming months, in the light of the responses to the earlier consultation.

1.71 We now also propose to extend to civil legal aid a system of disregards ¹⁷ for state benefits in financial assessment for eligibility, along the same lines as the disregards which currently apply to A&A. We are assessing the implications of this for the Legal Aid Fund.

Your Views

In the short to medium term:

Q17 Do you agree that state benefits should be disregarded in the financial assessment for civil legal aid, as they are for A&A?

Collecting Contributions for Civil Legal Aid

1.72 Depending on their level of disposable income and capital, applicants may be required to pay a contribution towards the costs of their civil legal aid. Where this contribution is to be paid from income, it may be paid in instalments. Contributions assessed against disposable capital could be substantial and are not subject to the same sort of instalment arrangements: payment of the contribution assessed against capital is made in one instalment.

1.73 Recent extensions in the repayment period for contributions based on the applicant's disposable income have resulted in increased take-up of offers of civil legal aid with no apparent increase in bad debt for SLAB. ¹⁸ Greater flexibility in the collection arrangements for contributions can ensure that more of those entitled to legal aid with a contribution feel able to proceed on that basis. We therefore propose to extend further the repayment period for contributions, and to allow SLAB greater flexibility in individual cases, including the possibility of payment of contributions from capital in instalments.

Your Views

In the short to medium term:

Q18 Do you agree that the Scottish Legal Aid Board should be able to:

(a) collect contributions over a longer period of time?
(b) make flexible arrangements for the repayment of contributions, including the use of instalments for contributions from capital?

Changes of Circumstances

1.74 Under civil legal aid a legally aided party has a duty to declare material changes in circumstances based on income only during the first twelve months of a case, regardless of how long it runs. If a person's income circumstances change more than one year after the original application, there can be no further change to their financial eligibility status or the level of contribution required. If there is a change in a person's financial circumstances in relation to capital, they must declare this regardless of whether it is out with the one year period, until the court case is finished.

1.75 To ensure proper targeting of resources on those unable to meet the costs of their own cases we propose that the duty to report changes in circumstances should continue for the life of the case in all forms of civil legal assistance. ¹⁹

Your Views

In the short to medium term:

Q19 Do you agree that the legally assisted person should be required to inform the Board of changes in their financial circumstances over the lifetime of their civil case?

Modification of Expenses and the Position of the Successful Opponent of a Legally Aided Party

1.76 The principle of 'modification' allows the court to decide whether and to what extent an unsuccessful legally aided party should be liable for their opponent's expenses. ²⁰ Where, as often happens, the court decides to limit costs in this way a successful non-legally aided opponent of a legally aided party is left to meet some or all of their own costs. Where however this would cause severe financial hardship and the successful opponent was defending an action, they may be able to recover their costs from the Legal Aid Fund under section 19 of the Legal Aid (Scotland) Act 1986.

1.77 These provisions can be harsh for a successful non-legally aided party. ²¹ We therefore propose to substitute a test of 'financial hardship' for the current test of 'severe financial hardship' in section 19 of the Legal Aid (Scotland) Act 1986.

Your Views

In the short to medium term:

Q20 Do you agree that the test of 'severe financial hardship' in section 19 of the Legal Aid (Scotland) Act 1986 should be changed to one of 'financial hardship'?

Q21 Would any further relaxation of the terms of section 19 of the Legal Aid (Scotland) Act 1986 be justified?

Q22 Should regulations be introduced to specify how the courts should determine the liability of the unsuccessful legally aided party (Section 18 of the Legal Aid (Scotland) Act, 1986)?

The Scope of Civil Legal Assistance

1.78 Currently, A&A can be obtained in relation to any matter of Scots law, but does not cover representation in court or at a tribunal. ABWOR and civil legal aid, which do cover representation, are only available in relation to certain proceedings, as specified in the legal aid legislation.

1.79 Civil legal assistance may not therefore be available for every type of assistance an individual may need. This raises the question of what the scope of different forms of civil legal assistance should be, both in terms of types of proceeding and categories of cases, and whether the current arrangements are appropriate in the Scottish civil justice system of the 21st century. In raising this question, it is not our intention to focus on whether any particular category of case, such as reparation, should be removed from the scope of civil legal assistance. Our primary focus is instead on whether any additional proceedings or types of case should be brought within scope and, if so, on what basis.

Advice and Assistance

1.80 The Executive's recent consultation on the first stage of reform to of civil A&A proposed that, while the essential scope of civil A&A as being any matter to which Scots law may apply should remain, there should be a mechanism by which the Board should be able to give consideration to whether advice from a solicitor is appropriate in cases where other advisers may be better placed to help. We are at present considering this point further in the light of the responses to consultation.

ABWOR and Civil Legal Aid

1.81 We believe it is appropriate that restrictions on proceedings for which publicly funded representation is available remain, as representation, whether by a lawyer or some other representative, is not automatically and always required wherever an individual is involved in formal dispute resolution proceedings.

1.82 The availability of publicly funded representation through ABWOR and civil legal aid has developed piecemeal over the years, largely in response to changes in the court and tribunal system and the kinds of cases heard in courts and tribunals, and also in response to the development of case law. As indicated above, at present the overriding criterion to determine whether or not representation may be made available by means of ABWOR or civil legal aid is the type of proceedings the individual is involved in.

1.83 It has been argued that a more coherent and clearer system could be achieved by a radical review aimed at restructuring ABWOR and civil legal aid. Such a review would reconsider in which types of proceeding as well as in what categories of case, representation will be funded by the public purse, by reference to a clear set of principles and criteria. The question arises of what these principles and criteria should be.

1.84 The Executive has not formed any firm view on whether it would be desirable to set out new principles or criteria in this context, but would welcome your views on this general point. An additional or alternative, possibly more flexible, approach might be to give SLAB power to fund individual cases which fall outside the current scope of legal aid, if exceptional circumstances applied. In that case, the expectation would be that cases funded in this way would raise questions of general public importance and interest. Clear guidelines would have to be drawn up for the application of such powers, with the assumption being that it would be used only in exceptional circumstances.

1.85 Publicly funded representation may also be available from lay advisers ²² in cases where the involvement of a solicitor is not strictly necessary. We would welcome your views on how this may be best taken account of when reconsidering the scope of ABWOR in particular.

Your Views

In the longer term:

Q23 In relation to a review of the number and types of proceedings or categories of cases under which ABWOR and civil legal aid are available:

(a) Should the number and types of proceedings or categories of case under which ABWOR and civil legal aid are available, be reviewed?
(b) If so, what general criteria or principles should be applied to determine what proceedings or categories of case might be included?

Q24 Would a provision allowing SLAB to fund individual cases which fell outside scope, where there were exceptional circumstances relating to the general importance of the case for public policy, be helpful?

Q25 How may publicly funded representation by non-lawyers best be taken account of when reconsidering the scope of ABWOR?

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