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Chapter 9: Ability to Pay and Financial Eligibility: Other Changes

The consultation stated:

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.

9.1 Inconsistency in Financial Eligibility Between Civil Legal Aid and A&A and ABWOR

The consultation stated:

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 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.

We now also propose to extend to civil legal aid a system of disregards ⁷ 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.

9.1.1 The consultation asked:

Q17: In the short to medium term, do you agree that state benefits should be disregarded in the financial assessement for civil legal aid, as they are for A&A?

Forty-one respondents (63%) addressed this question with 40 providing a clear view on the issue, and the remaining one consultee providing more general commentary. A summary of these responses is in Table 15 overleaf.

Table 15: Summary of views on whether state benefits should be disregarded in the financial assessment for civil legal aid

NB. Percentages may not total 100% exactly due to rounding

A large majority (92%) of those who responded was in favour of the disregarding of state benefits in the financial assessment for civil legal aid. Arguments in favour of the proposal focused largely around 2 key issues.

Firstly, many respondents representing a variety of sectors, highlighted what they saw as the purpose of state benefits as providing a safety net of basic living expenses, which, in their view, placed them outwith the scope of any consideration for civil legal aid.

A second recurring theme to emerge, again from consultees from different sectors, was that it made sense to achieve consistency between civil legal aid and A&A. One consultee described the current inconsistencies as " illogical" (Indiv). Others illustrated this point:

" If someone is in receipt of benefit because they are disabled, the fact that they are getting A&A as distinct from legal aid does not alter the fact that they remain disabled" (Oth)

" There is little point in a person obtaining A&A and having benefits disregarded, then being advised they have a good case but can't afford to raise this due the their benefits not being disregarded" ( LA)

Several respondents identified specific types of benefits which they highlighted as priorities for inclusion amongst those to be disregarded:

• Disability living allowance (Vol)
• Attendance allowance (Vol)
• Income tax credits (Leg, Vol)
• Pension credits (Vol)

However, in contrast to this clear enthusiasm for the proposal, a few words of caution were expressed. One consultee urged that the full resource implications of the plan should be considered prior to any decision being taken on implementation (Leg). Another respondent argued that as not all benefits are means tested then being in receipt of benefits did not necessarily indicate an inability to pay ( LA).

9.2 Collecting Contributions for Civil Legal Aid

The consultation stated:

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.

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. 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.

9.2.1 The consultation asked:

Q18a): In the short to medium term, do you agree that the Scottish Legal Aid Board should be able to collect contributions over a longer period of time?

Forty respondents (62%) addressed this question with 39 providing a clear view on the issue, and the remaining one consultee providing more general commentary. A summary of these responses is in Table 16 below.

Table 16: Summary of views on whether SLAB should be able to collect contributions over a longer period of time

NB. Percentages may not total 100% exactly due to rounding

All but one of those who provided a firm view expressed clearly their opinion that SLAB should be able to collect contributions over a longer time period. No respondent totally opposed the proposition.

A variety of reasons was given in support of the proposal. These are reported in Figure 1 below.

Figure 1: Reasons given by respondents in support of SLAB collecting contributions over a longer period of time

However, despite such support, some consultees qualified their responses with further issues to be considered in any operation of such a scheme. One concern was that monies due should not be diminished due to inflation over time ( LA). Another was that the level of contribution should not be adjusted upwards to capitalise on the longer time period over which the sum could be paid (Leg). One consultee requested reassurance that no interest would be charged on the contribution due (Oth). It was stressed that despite clients paying over time, solicitors should not have to wait to be paid (Leg). Another concern was that care should be taken not to request contributions from clients who were simply unable to pay, whether by instalment or any other way (Vol). One final comment was that the length of time over which instalments are set should, perhaps, depend on the complexity and length of the case, with longer payment schedules associated with longer and more complex cases (Vol).

9.2.2 The consultation asked:

Q18b): In the short to medium term, do you agree that the Scottish Legal Aid Board should be able to make flexible arrangements for the repayment of contributions, including the use of instalments for contributions from capital?

Thirty-nine respondents (60%) addressed this question. A summary of their responses is in Table 17 overleaf.

Table 17: Summary of views on whether SLAB should be able to make flexible arrangements for the repayment of contributions, including the use of instalments for contributions from capital

NB. Percentages may not total 100% exactly due to rounding

All but 2 of those who provided a firm view expressed clearly their opinion that SLAB should be able to make flexible arrangements for the repayment of contributions, including the use of instalments for contributions from capital. No respondent totally opposed the proposition.

A few reasons were given in support of the proposal but this question generated relatively little in the way of fresh commentary. One view was that flexible arrangements helped in cases where the client's assets were tied up. The proposals were also seen as advantageous in addressing what was described as the current anomalous situation in which the debt recovery unit can agree a revised payment schedule only after legal aid has been terminated due to non-payment of instalments, rather than when the client is still trying to make repayments while legal aid is in force (Leg).

Other consultees envisaged that the proposal would help to make contributions more affordable (Vol, LA) and help to relieve financial hardship (Vol). A call was made for implementing what was proposed sooner rather than over the longer term (Leg).

Only a few concerns were raised regarding the proposal. One respondent considered that operating such flexible arrangements could be expensive (Leg), whilst another expressed their support on the condition that the scheme did not generate an extra burden of administration for solicitors (Leg).

9.2.3 The consultation stated:

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.

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.

The consultation asked:

Q19: In the short to medium term, 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?

Thirty-nine respondents (60%) addressed this question with all providing a clear view on the issue. A summary of their responses is in Table 18 below.

Table 18: Summary of views on whether the legally assisted person should be required to inform the Board of changes in their financial circumstances over the lifetime of their civil case

NB. Percentages may not total 100% exactly due to rounding

The vast majority (90%) of respondents supported the proposal that a legally assisted person should be required to inform the Board of changes in their financial circumstances over the lifetime of their civil case.

Despite such overwhelming support, many consultees expressed concern regarding aspects of the proposal and made suggestions as to how these could be overcome. A common theme was that the rules governing the requirements should be clear, simple and straightforward, and articulated to clients from the start, perhaps in writing (Leg, Vol).

Many concerns were raised regarding what respondents envisaged could be a substantial increase in administration required to operate the scheme. It was suggested that a cut-off point should be established, below which minor changes in circumstances need not be notified ( LA, Leg). Likewise, one respondent argued that changes in state benefit levels should not require notification (Vol), and those whose circumstances had not changed at all should not have to complete a form to say so ( LA). Another suggestion was that changes should not be identified during the case, but circumstances at the date of conclusion of the case could be looked at for the purposes of identification of change from the position at the start (Leg). One exception to this was proposed as cases in which a person's financial circumstances had deteriorated during their case. A call was made for whatever rules were devised to be, " clearly and appropriately defined" (Leg).

It was commented that some recipients of legal aid may experience difficulties in dealing with such administrative tasks during their case (Leg). Suggestions were made that the notification of financial circumstances should be undertaken at regular intervals such as every 6 months (Oth) or annually (Vol, Leg) and prompted by the PFLA provider (Oth). Another idea was for the notification of changes or circumstances to form part of a service agreement or contract with a solicitor at the start of the case (Vol).

A few consultees stressed the importance of proportionality in operating the scheme. For example, one emphasised their view that clients should not be unduly penalised for a minor change in their circumstances (Leg). Another respondent argued that legal aid should not automatically terminate when a person crosses the set threshold for assistance as they may well have incurred debts over the previous months which need to be serviced (Leg).

A further concern raised that legal aid should not be terminated as a result in a change of client's circumstances at a late stage in proceedings. Such an event was seen as risking the investment of taxpayers' money already supporting the case (Leg).

The small minority of respondents who opposed the proposal presented a number of arguments. One advocated removing the duty altogether or making it very simple by setting one financial limit for both income and capital and requiring notification only if this is breached (Vol).

Another outlined their view that the system proposed would lead to uncertainty amongst solicitors as to whether and at what rate they will be paid, and uncertainty amongst clients as to whether legal aid may be withdrawn part way through their case (Leg). This respondent also considered that the system could serve as a disincentive to recipients of legal aid to accept employment or more remunerative employment.

Finally, one consultee argued that the proposal could disadvantage women in particular, who may be just managing to achieve some financial stability after fleeing from abuse (Vol).

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

The consultation stated:

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. 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.

These provisions can be harsh for a successful non-legally aided party. 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 1986.9.3.1 The consultation asked:

Q20: In the short to medium term, 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"?

Forty respondents (62%) addressed this question with all providing a clear view on the issue. A summary of their responses is in Table 19 below.

Table 19: Summary of views on whether the test of "severe financial hardship" should be changed to one of "financial hardship"

NB. Percentages may not total 100% exactly due to rounding

The vast majority (92%) of those who responded was in favour of changing the test of "severe financial hardship" in Section 19 of the Legal Aid (Scotland) Act 1986 to one of "financial hardship".

A recurring comment was that this change would bring about a greater fairness to the non-legally aided party (Indiv, LA, Leg) who may have had little choice in being taken to litigation (Indiv). The current test was seen as being too strict and rigid (Leg). One consultee remarked that it appeared to be unduly harsh that the state can fund one side of an action but require the other to show severe financial hardship before the state will take any responsibility for its costs, even if it has been successful (Leg).

Another common theme was to query the position of large bodies as defenders of cases, with a call made for example, for local authorities to be able to recover costs, " where substantial expenditure (has been) borne by a body supported by public funds" ( LA).

One respondent questioned the concept of "severe financial hardship", arguing that " financial hardship is financial hardship" with severity being a very subjective test ( LA).

A few consultees expressed their support for the proposal but cautioned that the longer term resource implications should be examined prior to any final decision (Leg, Vol).

Finally, one opposing view was that there should not be a change as the current system works well, and the proposal will not represent a sensible use of limited funds (Indiv).

9.3.2 The consultation asked:

Q21: In the short to medium term, would any further relaxation of the terms of Section 19 of the Legal Aid (Scotland) Act 1986 be justified?

Twenty-nine respondents (45%) addressed this question with 27 providing a firm response and the remaining 2 providing relevant commentary. A summary of the firm responses is in Table 20 below.

Table 20: Summary of views on whether any further relaxation of the terms of Section 19 of the Legal Aid (Scotland) Act 1986 is justified

NB. Percentages may not total 100% exactly due to rounding

This question split respondents almost evenly between those who saw justification for a further relaxation of the terms of Section 19, those who did not see any justification for this proposal and those who were unsure whether further relaxation was justified or not.

Very few substantive comments were submitted in response to this question. A few respondents highlighted principles which they considered to be important in any further changes. In essence, these were that the successful defender of a case should not be left out of pocket ( LA), and that any changes should be in line with the promotion of financial inclusion and social justice (Oth).

One view was that any further changes should be supported by a detailed analysis of the implications and impacts on behaviour and costs (Leg). Another consultee argued that there may be exceptional cases in future for which there should be exceptional powers applied with relaxation of the terms of Section 19 appropriate in these instances (Leg).

9.3.3 The consultation asked:

Q22: In the short to medium term, 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)?

Thirty-three respondents (51%) addressed this question with 32 providing a firm response and the remaining one respondent providing relevant commentary. A summary of the firm responses is in Table 21 overleaf.

Table 21: Summary of views on whether regulations should be introduced to specify how the courts should determine the liability of the unsuccessful legally aided party

NB. Percentages may not total 100% exactly due to rounding

Two-thirds (66%) of those who responded advocated introducing regulations to specify how the courts should determine the liability of the unsuccessful legally aided party. However, amongst these consultees were many who urged that such regulations should allow for some flexibility and discretion in application within individual courts.

The proposal was seen as introducing clarity to the process ( LA) and enabling people to be more aware of their potential liability on conclusion of their case ( LA, Vol, Leg). A recurring theme was that regulations would bring greater consistency (Oth, Leg, Vol) to what some saw as too subjective a current system (Leg).

Some opposers of the proposal stated that they were unaware of any problems with the status quo (Vol, Leg). A common view amongst this group was that regulations would curtail the discretion of the courts and introduce an unhelpful degree of inflexibility (Indiv, Leg).

9.4 Summary Points

• A large majority (92%) of those who responded was in favour of the disregarding of state benefits in the financial assessment for civil legal aid.
• Arguments in favour of their disregard focused on stressing that state benefits should be seen as a safety net of basic living expenses; and attempting to achieve a greater consistency between civil legal aid and A&A.
• All but one of the respondents who expressed a view favoured allowing SLAB to collect contributions for civil legal aid over a longer time period.
• Ninety-five percent of those who expressed a view favoured SLAB being able to make flexible arrangements for the repayment of contributions, including the use of instalments for contributions from capital.
• The vast majority (90%) of respondents supported the proposal that a legally assisted person should be required to inform the Board of changes in their financial circumstances over the lifetime of their civil case.
• Most (92%) of those who commented were in favour of changing the test of "severe financial hardship" in Section 19 of the Legal Aid (Scotland) Act 1986 to one of "financial hardship".
• A recurring comment was that this change would bring about a greater fairness to the non-legally aided party who may have had little choice in being taken to litigation.
• Respondents were almost evenly split between those who saw justification for further relaxation of the terms of Section 19, those who did not see any justification for this proposal, and those who were unsure whether further relaxation was justified or not.
• Two-thirds (66%) of those who responded advocated introducing regulations to specify how the courts should determine the liability of the unsuccessful legally aided party.

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