Making crime pay
Changes to legal aid for high cost fraud cases will cut costs and put barristers on the same pay scale as solicitors. James Lumley says this will create a level playing field that all lawyers are going to have to embrace
Fraud is an expensive business. A reasonably complicated corporate crime trial will often go on for more than three months and can easily rack up defence costs in excess of £250,000.In theory at least, from the beginning of April, every alleged fraudster, from the bag snatcher who rips off £100 from a stolen credit card to the company director who siphons millions of pounds from his employees’ pension fund, is entitled to legal aid.Not only that, if the fraud is large or complicated, the Criminal Defence Service (CDS), a division of the Legal Services Commission, will give the defendant a list of firms to choose from, all of which have proven themselves to be of high quality. Leading crime specialists Burton Copeland, Peters & Peters, Kingsley Napley and Irwin Mitchell are all on the list. These changes to the state-provided defence service do not just apply to fraud. They apply to any crime where the defendant’s liberty is at stake.“I just cannot understand why the Daily Mail has not got hold of it,” a senior fraud solicitor says. “One of these days a tabloid will run a campaign against the changes alongside a picture of a fraudster facing trial jetting off to Cannes.”Nevertheless, this situation has existed for the last month and the legal profession will soon have to get used to it. Under the old regime, solicitors could charge £55 per hour with a 200% uplift, meaning that on all successful serious fraud cases a partner could expect to earn £165 per hour. At the end of the case the bills were sent to the National Taxing Office, a division of the Lord Chancellor’s Department, and after scrutiny, the solicitors received their money.Barristers did not have to bill per hour. They negotiated a brief fee when they took on the case and were able to ask for additional fees if the case proved more complex.Under the new system, high cost fraud cases will be managed differently from run-of-the-mill legal aid work. As of the beginning of last month, every firm that has picked up a case that looks likely to last for more than 25 days in court or cost more than £150,000 in defence fees must be referred to the CDS’ Very High Costs Cases (VHCC) unit.The VHCC unit is working on a pilot scheme for state-funded fraud trials. Solicitors and barristers on the defence team must come up with a case plan detailing the work they expect to do, breaking the case down into separate stages.The unit will decide which of three categories of seriousness the brief falls into and will supervise the running of the case. Upon completion of each stage the lawyers will get paid for what they have done, rather than wait until the case is completed, often years in the future.“It is basically a pay as you go system,” Kingsley Napley partner and fraud specialist John Harding explains. “It keeps borrowing down and, although the rates have gone down, we actually get paid for the hours we have done.”To do this sort of legal aid work solicitors firms must be accepted onto the VHCC unit’s high cost fraud panel, which is now made up of about 120 firms.As Harding points out, lawyers are not in theory going to be paid as much for their work as under the old system.For those firms on the panel, money comes in much earlier, which means that solicitors do not lose out to interest payments on loans that they take out to keep themselves afloat while awaiting payment. They get paid today at today’s prices.However the CDS has confirmed that for the most complicated of complicated fraud cases (Category One frauds) category ‘A’ lawyers, which means QCs and very experienced solicitors, can expect to receive no more than £180 an hour (see box). This is certain to change the nature of complicated fraud work.In a complex, privately-funded fraud case, solicitors would previously command charge-out rates of more than £250 per hour and barristers more than £300. Sometimes it can be even more.“The new rates are obviously lower, but on top of that there are few category one cases,” says Adam Cowell, a partner at Irwin Mitchell and assistant secretary of the London Criminal Courts Solicitors’ Association, which has been negotiating with the CDS over rates. “For the majority of serious cases, the fees will be fixed at £140 per hour, which is not enough, and on top of that there is no London weighting, so we are penalised for being in the capital.“Senior lawyers will be forced into a supervising position,” he adds.Burton Copeland partner Harry Travers echoes Cowell’s comments and adds that at those rates it will be difficult to get hold of the best barristers.“£140 to £180 an hour is just not worth my gentlemen’s time,” a senior clerk confirms. “It used to be the case that to do a Maxwell or something similar you got fair enough pay and were seen on a good case to be on. But now that sort of thing will not be worth the money.” Solicitors, while not happy about their rates of remuneration, are generally prepared to work with the system and can clearly see the benefits of the front loading of fees and efficient time costing. What is more important is their worry that they will not be able to attract decent QCs to their cases because, despite the cab-rank rule, the rates are not high enough.One senior clerk expresses a strong dislike of the fact that the CDS has abolished the idea of a brief fee. “Time costing just penalises the efficient workers and rewards the lazy,” he sniffs.Few solicitors would make such a comment. Like it or not, time costing is the way of the world. “If Jack Straw wants to get hold of some fat cat criminal lawyers who are milking the state to live in luxury then he does not want to point his finger at the solicitors, he should have a look at the barristers,” says one senior fraud lawyer, predictably a solicitor. “The new rules are in place to squeeze down on the barristers,” he adds.This is a point that CDS head Richard Collins accepts. “On some cases we paid the lawyers far too much and the old system was clearly unsatisfactory,” he says. “Over the last few years the rates have been pushed up and up by counsel.“We would not want to pay the most senior counsel any more than the most senior solicitors. We consider the solicitors who will be dealing with these cases to be at the very top of their profession, as are the QCs.”The Bar may not like being treated in the same way as solicitors, but barristers will have to get used to time costing and supervision. After all, now that legal aid is non-means tested, there may well be fewer privately-funded cases in which to charge astronomical rates for fraud cases.Critics will claim that the cost-conscious regime will create a lower quality of service, and there are some justifiable areas of concern. When the VHCC unit set up a panel to deal with complex fraud a year ago, it said that its purpose was to ensure high quality legal services.All the top crime firms say that to be considered for the panel, they had to show they had a considerable amount of experience. However, there are now more than 120 firms on the panel, the vast majority of which are not recognised leaders in the field.The CDS’ Collins agrees that many of the firms are not household names, but stresses that it is not a problem.“The firms that got on the panel did so because they demonstrated that they had enough experience,” he maintains.Fraud professionals find this difficult to believe despite Collins’ claims that any firm that does not remain up to standard will be thrown off the panel.“When we decided to set the panel up we knew from the start that it would not be practical for us to just have 10 or 20 firms on it, even though the top firms would like that,” Collins insists. “There must be choice available. About 100 or so firms nationwide is a good figure and one we are happy with.”Time will tell if the wide choice will damage quality of service, or whether the larger firms are underestimating the capabilities of their less high-profile colleagues. It is still too early to judge how the system is working. At the moment the VHCC unit is severely understaffed and overworked. Although it has the right to deal with every case it is forwarded, until April 2002, it does not have to take any case on at all. As such, the unit has come to a gentlemen’s agreement that no more than two cases per firm will be dealt with under the new rules. Any other cases that arise can be handled under the old uplift regime.The Bar may complain, but the vast majority of solicitors from the top firms down are guardedly happy with the new regime. “There is a lot of goodwill on both sides at the moment, but I do worry that when things get a bit more organised they will come down more heavily on us,” one solicitor says.Lawyers do question whether the reforms will actually save the public purse money in the long run. Rates may be lower, which will drive down the cost of individual trials, but the abolition of means testing for legal aid means that there will probably be a marked increase in legal aid funded cases. The flipside is that it increases access to justice – something lawyers are quick to point out as a necessity in a liberal society.Meanwhile, solicitors such as Burton Copeland, Kingsley Napley, Peters & Peters and Irwin Mitchell are willing to bite the bullet and reorganise themselves to work for less in return for prompt payment.It is time that counsel did the same.
This premium content is reserved for
Legal Week Subscribers.
Subscribe today and get 10% off.
A PREMIUM SUBSCRIPTION PROVIDES:
- Trusted insight, news and analysis from the UK and across the globe
- Connections to senior business lawyers within the leading law firms and legal departments
- Unique access to ALM's unrivalled, market-leading reporting in the US and Asia and cutting-edge research, including Legal Week's UK Top 50 and Global 100 rankings
- The Legal Week Daily News Alert, Editor's Highlights, and Breaking News digital newsletters and more, plus a choice of over 70 ALM newsletters
- Optimized access on all of your devices: desktop, tablet and mobile
- Complete access to the site's full archive of more than 56,000 articles
Already have an account? Sign In Now
For enterprise-wide or corporate enquiries, please contact Paul Reeves on Preeves@alm.com or call on +44 (0) 203 875 0651