In October 2005 some barristers, incensed by low legal aid rates, took part in a campaign to refuse to take on legally-aided criminal cases The Department for Constitutional Affairs (DCA) had proposed cutbacks in the face of increasing criminal legal aid expenditure which had reached £1.2 billion by 2003/2004, with an estimated overspend of £130m in 2005/06. The unenviable task of tackling future management of legal aid procurement falls to Lord Carter, who is expected to tender his ‘wide-ranging’ report in early 2006.

In March 2005 we completed a report for the Legal Services Commission, which identified the factors, which have led to escalating criminal legal aid costs over the past decade. Our findings undermine the widespread perception that the legal profession is primarily responsible for this increase - the so-called supplier-induced demand thesis. Our research demonstrates that legislative and procedural changes resulting from largely uncosted criminal justice reforms are a significant part of the problem.

Crown Court Work

The largest increases in criminal legal expenditure are to be found in the Crown Court. These appear to be driven by substantial increases in volume of work and in a rising average cost per case. As is well known, a small number (2,000, just over 1%) of Crown Court cases account for a very significant proportion of the Crown Court budget (54%),

and the cost of these has been rising. What is less well known is that an increasing number of small cases has also contributed to growth in expenditure. This is largely due to committal decisions taken in magistrates’ courts, which are outside of the control of defence lawyers. There is also evidence that there has been an increase in the seriousness of cases, with the proportion of Class 4 cases decreasing from 1998 to 2003, and the proportion of Class 1 – 3 cases increasing over the same period. Many of these cases are likely to have attracted higher fees, contributing substantially to overall legal aid expenditure.

Police Station Work

Another area where costs have risen significantly is police station work, where expenditure grew from £67m in 1993/94 to £177m in 2003/4, amounting to a 164% increase in actual terms and well above inflation. As in the Crown Court, growth appears to be attributable to an increase in the number of cases and an increase in the average cost per claim, which we found to be largely explained by increases in disbursements, travel and waiting time, rather than in profit costs. If the supplier-induced demand thesis was correct, it is more likely that there would have been an increase in profit costs.

Our research demonstrated that there are a number of reasons why more suspects are requesting legal advice at the police station, and why average costs have increased. Whilst the number of persons arrested declined over the whole decade, the number has been creeping back up over the past few years, particularly for those types of offences where suspects are more likely to request advice. Furthermore, our evaluation of case outcomes suggests that suspected offences are becoming more serious (or perceived to be so). There has been an increase in the proportion (and number) of those arrested who are charged with a criminal offence or dealt with by way of caution, and of those charged, an increase in the proportion (and number) who are produced in court in custody rather than being given bail by the police.

In addition to those factors that we were able to consider empirically, we identified a range of factors relating to law and practice at the investigative stages that are likely to have contributed to upward pressure in defence costs. Technological advances such as DNA testing and CCTV are illustrative of a more complex approach to criminal investigation. Many legislative reforms such as those concerning inferences from silence, the Narey reforms, and increases in police powers have contributed to greater complexity at the investigative stage. At the same time, policies designed to improve the quality of police station advice, often led by the Legal Services Commission, have been shown to have added to time spent on advice and assistance at the police station.

Magistrates’ Court Work

Over the decade rises in magistrates’ court legal aid expenditure has more or less tracked inflation. There was a one off rise above inflation rise in 2001/2002, which is partly attributable to an increase in remuneration rates designed to sweeten the pill of contracting. However, the (DCA) attributed much of the rise to an increase in the number of representation orders granted by magistrates’ courts resulting from abolition of the means test. This argument must be seen in the context that it was put forward – as a rationale for re-introducing the means test and transferring responsibility for granting legal aid from the courts to the Legal Services Commission.

It is true that there was an apparent increase in volume of grants of about 200,000 cases following abolition of the means test. However, other changes taking place at the same time are also likely to have a large impact both on the number of grants of representation orders and on average cost per claim. The introduction of criminal legal aid contracting meant that pre-order costs had to be consolidated in the claim under the representation order, and abolition of ‘duty solicitor of choice’ was bound to lead to an increase in orders.

More generally, there have been a number of developments since 2001 which are particularly likely to have impacted on decisions to grant legal aid. During that time there has been a year-on-year increase in the number of defendants appearing in magistrates’ courts in custody (rather than on bail). Judicial attitudes to bail and to sentencing defendants who fail to surrender to bail have hardened, and the number of offenders sentenced to immediate custody has increased.

Underlying Causes

A striking element of our research concerns the government’s repeated failure to consider the implications for legal aid expenditure when new legislative and procedural initiatives are proposed and developed. Two examples demonstrate this point.

In July 2002 the government published its White Paper Justice for All, declaring an intention to produce a ‘root and branch’ reform of the criminal justice system. Most of these provisions were incorporated into the Criminal Justice Act 2003 including: greater investigative powers for the police; the introduction of new charging arrangements that may increase time spent by defence lawyers at police stations; the introduction of a sophisticated ‘conditional caution scheme’; complex new evidential provisions which are likely to contribute to more case preparation and longer trial times; new provisions on pre-trial disclosure that will entail more work for defence lawyers in all not guilty cases; prosecution appeals in certain cases; the possibility of re-trial for certain serious offences and increased powers of sentencing for magistrates’ courts. Such dynamic reform has clear implications for legal aid expenditure, but we found no indication in the White Paper that these were either considered or costed.

One of the most recent consultation documents issued by the Home Office is Policing: Modernising Police Powers to Meet Community Needs. This proposed a radical overhaul of police powers of arrest, increased powers to detain suspects at police stations for longer periods, expanding the ‘police type’ powers of civilian staff and increasing crime detection powers, and further increases in police powers related to identification. Most of these proposals were incorporated into the Serious Organised Crime and Police Act 2005. As we have demonstrated, increasing police investigative powers is likely to lead to an increase in average cost per police station claim, but the consultation paper completely failed to mention legal aid. Back of the envelope calculations at the legislative stage are no substitute for proper financial planning at the policy development stage.

Supplier-Induced Demand?

Our research thus challenges claims of supplier-induced demand by demonstrating that decisions taken beyond the remit and direct influence of defence lawyers and the LSC have had a significant impact on criminal legal expenditure and account for a significant proportion of the increase in expenditure over the past decade. In this context it is irresponsible for the Government to lay blame for increases in legal aid expenditure at the profession’s door whilst ignoring the extent to which legislative and procedural developments have led to an increase in claims and in the workload for lawyers.

Developments in criminal defence policy have led to an increase in the number and seriousness of cases being processed through the police stations and the courts as well as the amount of work which needs to be done on those cases. The increases in criminal legal aid expenditure are currently being met out of the civil legal aid budget and reductions in remuneration for private practitioners. There are strong arguments for separating the civil and criminal budgets and ensuring that mechanisms for predicting and managing the criminal budget take proper account of criminal justice reform. Until a measured and realistic cost analysis catches up with the frenetic approach to criminal justice policy, we are also concerned that the quality of service being provided to defendants will increasingly be under threat.

Ed Cape is Professor of Criminal Law and Practice at the University of the West of England, Bristol, and Richard Moorhead is Professor of Law at Cardiff Law School. They are the authors of Demand Induced Supply?

Identifying Cost Drivers in Criminal Defence Work, funded by the Legal Services Research Centre of the Legal Services Commission, and available at http://www.lsrc.org.uk/index2.htm.