On Wednesday 16th September the Criminal Law Solicitors Association, London Criminal Court Solicitors Association and the ‘Big Firm Group’ met with the Lord Chancellor at his request. Mr Gove made a proposal which the LCCSA set out in their message to members on Friday 18th September as follows:
‘A suspension of the fee cut which would mean that the new fixed and standard fees being introduced on 11 January for police station attendance, magistrates’ court representation and Crown Court representation in cases with fewer than 501 pages of prosecution evidence (PPE) would be increased to reflect only the first 8.75% reduction for the three month period. Other fees, where the fee scheme structure remains unchanged (eg Crown Court cases with more than 501 PPE, Court of Appeal fees and fees for advice and assistance outside the police station) would revert to the fee levels that applied before the 1 July 2015 changes. The suspension would apply to all work on cases that begin in the three month window, even if a case concluded after 10 April 2016 (i.e. for the life of the case).’
In order to assess whether this proposal has any worth at all one needs to consider the structural changes to the fees under the new duty and own client contracts currently due to start on 11th January 2016.
Police station fees
Starting with the police station, there will be two fees only: a national fee and a London fee. In terms of London fees the proposed fee of £200.93 will replace the individual fees for each police station that were set when the fixed fee scheme was introduced (and subsequently reduced over time). The fees vary from police station to police station because they reflect the historical differences between the value of claims at the various police stations: some police stations have cases that take longer and are more expensive than others for instance. Now the fee will be the same for every police station in the 32 London areas and there will be a reduced fee nationwide for all police stations not within the London boundary.
The offer is to increase the London and national fee to off set the 8.75% cut from July. The actual fee has not been set out but it is likely to be either £218.51 (just increasing the new fee by 8.75%) or £222.24 (a more complex but fairer calculation to work out what the new fee would have been worth at March 2014 levels and then reducing by 8.75%). I would anticipate the lower of these two fees being used but I have prepared a schedule of calculations based on the fairer, higher fee.
What this demonstrates is that across London the rate of deduction from the original March 2014 figures varies considerably. The average reduction on March 2014 for the new temporary offered fee is about 9%, so not far off the 8.75% promised. However, the old adage of swings and roundabouts no longer applies to police station fees as it is of no consolation to a firm in Richmond with their temporary 15.82% cut (rising to 23.89% when the “good will” period ends) that firms in Woolwich and Greenwich are only being cut by 2.95% (rising to 12.26%).
The situation is much more serious out of London. Some areas will be seeing huge cuts of up to a third in particular in areas around the London borders. A modest temporary increased is going to make very little difference indeed to firms in these areas.
Download the full figures here.
Magistrates’ Court fees
The situation becomes rather more acute with Magistrates’ Court cases. The new fee structure will see the Higher Standard Fee disappear but the threshold to escape to Non Standard Fees remain the same. This means that any case which would previously have fallen within the Higher Standard Fee bracket will be subject to savage cuts of 43.3% for trials (category 2 claims) to 58.89% for claims in category 1B. However, the Lord Chancellor’s proposal to temporarily increase these fees by 8.75% will reduce the fee reduction from March 2014 rates to a mere 37.29% for trials and 54.53% for the category 1B cases.
The change in fee structure means that any case in the old HSF category will be savaged regardless of any temporary increase in the rate. By contrast for any firm undertaking very little work on cases such that it would have remained in the Lower Standard Fee category, the losses are not so significant (indeed the trial fee is actually increased under both the prosed fee and increased further with the temporary higher payment).
Download the full figures here.
Crown Court fees
In relation to the Crown Court cases with less than 501 pages of prosecution evidence (PPE), the new structure groups cases into PPE bands of 100 pages which replaces the current structure where the fee increases incrementally as the page count increases. This new structure again produces some startling results when compared with the pre-March 2014 fee structure. Some of the decreases will be as high as 55.62%. The offer from the Lord Chancellor would reduce this cut to 50.91% depending on how the calculated fee is increased. I have used a calculation to work out what the January 2016 fee would have been if it had existed at March 2014 and then taken 8.75% off to reflect the first cut in March 2014. Other calculations such as just increasing the proposed January fee by 8.75% may be used and will produce slightly different results.
My calculations are based on a case at the top end of each of the new bands, so a case where the PPE is 100, 200, 300, 400 or 500. The results reflect the worst case scenario. The average cut from March 2014 is 27.26% and the average cut under the temporary offer is 19.55%.
The offer temporarily to increase the fees under the new structure therefore does not, in my view, provide any compensation for the July cut. The only possible way to directly compensate for that cut is to start the increased rate while the fee structure remains the same: either to increase the rates from 1st October 2015 for three months or to delay the introduction of the new contracts for three months and increase the fees on the current structure in the meantime.
Download the full figures here.
Mr Gove’s offer is better than nothing at all. However, it is only marginally better than nothing at all and falls woefully short of any real compensation for the July cuts.
To say that this response is disappointing would be to grossly understate the position. It is clear that those who have been directly engaging in the discussions with the MOJ are not happy with the offer and do not see it as a victory for the profession’s pains during the recent action. Perhaps the best that can be said is that there is an engagement of sorts between Mr Gove and the profession which was absent under his predecessor. However, that engagement is only really useful if it is proper engagement by both sides – currently one feels the MOJ are only paying lip service to the process.
The Lord Chancellor remains wedded to his predecessor’s Two Tier contract scheme ‘in the absence of any viable alternative’. Any alternative, we are told, will have to involve some form of consolidation. The Associations represent a wide range of firms and finding a consensus on any alternative proposals involving some form of consolidation is not an easy task. Of course, other ways to save money in the criminal justice system have been proposed a number of times by the profession but never acted upon by Government.
The LCCSA remains resolutely opposed to Two Tier contracts. Most in the profession believe they will fail whether they have bid for the duty contracts or not. It is overwhelmingly likely that those firms who have bid for the duty contracts have not done so because they feel the contracts will work but more likely in order to remain operational for as long as possible. Firms will fail financially over the next 6 months to a year. Whilst this will start with firms who do not secure a duty contract, those who are ‘successful’ in the bid process will not be immune from severe financial hardship as the contracts continue. The Government has ignored all warnings from the profession.
For any firm that has bid for a duty contract but been unsuccessful, the only route may be to seek a review from the courts as to the process by which their bid did not lead to the award of a contract. According to leading public law firm Bindmans LLP, any claims lodged before the contract signature deadline will freeze the contracts in that area. If such applications are made up and down the country there will be bedlam and contract gridlock.
How will the Lord Chancellor react should this situation materialise? Apparently at the meeting last week he emphasised that ‘if the profession chooses to return to action in an attempt to derail Two Tier then it is likely that the offer of a suspension will be withdrawn and any constructive engagement will cease’.
If individual firms decide to take action to challenge the decisions not to award them a duty contact, it is not the same as the profession taking action in the way that action was taken from 1st July. It is not ‘an attempt to derail Two Tier’. It is a legitimate challenge by failed bidders in a procurement process. If such legal challenges are started, will the offer of a suspension be rescinded? If so, would it actually matter to anyone? It would certainly not be an attempt by the Associations to de-rail Two Tier as these decisions are taken on a commercial basis by individual firms free of any influence of the LCCSA, CLSA or BFG. There still seems a little way to go and things will no doubt hot up as the duty contract ‘winners’ are announced at the end of the month.
Steven Bird is the managing director of Birds Solicitors. He is a Committee member of the LCCSA but has not been involved directly in the negotiations with the MOJ. The views expressed are his own.