News Release: Legal aid casework plummets in second year of LASPO

Publicly funded private family law cases fell by 83% between April and June 2014, according to new government figures.

Analysis of quarterly data published by Legal Aid Agency (LAA) by divorce and separation service Lawyer Supported Mediation will be a wake up call for the 1200 law firms offering publicly funded family law services.

Lawyer-Supported Mediation looked at data for the main categories of private family law casework being targeted by The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO). These were: Private law Children Act proceedings, Financial provision and Other family proceedings.

In first quarter of 2014/15 (April to June), the combined number of completed certificates for the aforementioned private family law categories, stood at 10,227. In sharp contrast, the number of certificates granted for the same period stood at 2366.

Lawyer-Supported Mediation points out that the ratio between the two totals underlines how LASPO will decimate casework levels in the years ahead. Total certificates granted for April to June 2014 amounted to just a quarter of number of corresponding cases completed in the same period.

The analysis also looked at the same quarter of 2012/13, the last full financial year before LASPO was enacted. In this period, the corresponding number of certificates logged as completed by the LAA stood at 14,168 while the number of certificates granted stood at 13,687. The difference between the two totals was a mere 3.3%.

More importantly, the year-on-year quarterly comparison shows the number of certificates granted by the LAA fell from 13,687 to 2366, a drop of 83%.

Marc Lopatin, trained mediator and founder of Lawyer Supported Mediation, said: “The plummeting number of certificates being awarded shows LASPO in motion. Law firms overly dependent on legal aid revenues will need to find ways of earning more private fees. They will have to attract new clientele by offering services that private law firms will not. This is all about offering price certainty and affordability while balancing risk and return.”

Lawyer-Supported Mediation warned that many law firms might still not be alive to the forthcoming drop in revenues. Costs met by the LAA for the aforementioned private family law services only dropped by 9% between April and June 2014, compared to the same period in 2013. This is because on average publicly funded private family cases take 84 weeks from the granting of a certificate to final payment.

Elsewhere, quarterly data released by the Ministry of Justice revealed that the number cases featuring ex-partners going to court over child arrangements or finances fell to 9,291 between April and June 2014. This is a drop of 40% compared to the same period in 2013. Meanwhile, the number of publicly funded mediations that got underway between April and June 2014 fell by over 50%, compared to the same period in 2012, when legal aid was still in place for referring solicitors.

News release: Family lawyers face £100m legal aid shortfall

Over 1200 high street law firms offering legal aid family services could face a £100 million shortfall in fees as publicly funded cases work their way through the family justice system without replacement.

The estimate was reached by divorce & separation service LawyerSupportedMediation.com (LSM) which analysed recently published Legal Aid Agency (LAA) data to calculate that the Ministry of Justice is on course to reduce its spend on solicitors’ fees by over £100m compared to 2012/13.

Shared across the 1208 law firms with a government contract for providing family law services, this represents a £90,000 black hole that will need to be filled by a corresponding increase in private fees to stave off redundancies and maintain lawyer numbers.

Marc Lopatin, trained mediator and founder of LawyerSupportedMediation.com, said: “This is actually an opportunity for impacted solicitors to innovate and bring down the cost of family law services. Research already shows that nearly half of the 250,000 plus people who separate each year don’t consult lawyers for advice. Hourly rates of more than £200 per hour put thousands off and divorce solicitors will need to find new ways of their fixing fees for a meaningful service if they’re going to attract new business and survive in their current numbers.”

Analysis revealed high street family solicitors have thus far shielded themselves from the cuts. When income from proceedings not being targeted by government is stripped out (ie care proceedings and domestic violence), the LAA paid family solicitors £132 million in 2013/14 compared to £143 million in 2012/13. This represents a year-on-year saving of just 7%.

But while the analysis showed solicitors were benefiting from “a post-LASPO lag”, family barristers were none so fortunate. Payments made to barristers by the LAA for impacted family law proceedings fell from £38 million in 2012/13 to £15 million in 2013/14. This is a drop of 61% and echoes the Bar Council’s recent warning of an exodus of its members after surveying them about falling caseload.

To calculate how much the LAA will save in 2014/15, LSM looked at the number of certificates for civil representation being granted by the LAA to family solicitors in 2013/14. The first half of the year showed a spike in the number of certificates granted as family solicitors rushed through legal aid casework before the April 1st funding deadline.

However, the second half of the year (October 2013 to March 2014) showed the true level of legal aid work now available as the number of certificates plummeted by 84% for disputes relating to child contact, residence and finance cases. Using this data, LSM estimated that the LAA would save £109 million on solicitors fees compared to 2012/13 – the last full year before the cuts were introduced.

LSM also predicted family barristers would also continue to suffer a fall in legal aid income as referrals from solicitors virtually dried up for impacted family proceedings. As a result, LSM estimated that barristers were likely to see income fall from £38 million in 2012/13 to £6 million in 2014/15.

LSM, which offers fixed legal advice in support of family mediation to bring down the cost of contested divorce, highlighted the shifting dynamic between solicitor and barrister as a source of muted friction that could yet go public should more family barristers start using a direct access scheme aimed at cutting out solicitors.

“How impacted barristers respond will go some way to defining how family law services will evolve. To survive, barristers may have little choice but to start competing with solicitors for divorcing clients. If they do, this will break the historic referral bond between the two professions and create the colourful spectacle of fixed fee barristers being hired by clients with the express purpose of keeping them both out of court,” added Marc Lopatin.

/ENDS

Year 1 LASPO: results are in

The post-LASPO impact on family mediation was finally laid bare with today’s publication of legal aid statistics for 2013/14.

For family law services, it’s a mixture of bad news with some obvious pointers for putting things right. First, the bad news: in 2013/14, the number of mediation starts plummeted by 38% following the removal of legal aid from family lawyers for most family law matters.

Practitioners will recall that in pre-LASPO times lawyers first had to make a compulsory referral to mediation before being allowed to access the next pot of legal aid. As a direct result, there were 13,609 mediation starts in 2012/13. With that requirement removed, this fell to 8,400 in 2013/14.

Not surprisingly, the fall in numbers gave way to a massive £16.8 million under spend by the MoJ on family mediation in 2013/14. One would imagine this to be extremely embarrassing for MoJ top brass given this is one saving they weren’t looking to make!

In 2012/13, the annual bill for family mediation stood at £14.3 million. In 2013/14, this dropped by almost half to £7.5million. On the eve of LASPO, the MoJ also put aside an additional £10 million to fund the surge in mediation that never was. So given the MoJ was happy to spend the 2012/13 budget plus another £10m to boot, total under spend for 2013/14 stands at almost £17 million. (higher than we thought)

Another illustration of policy failure is the paltry amount paid out to family lawyers for supporting clients at mediation with legal advice. The MoJ paid out a grand total of £17,040 to lawyers claiming “Help with Mediation”. That’s less than the price of going to court for many a private divorce client. And it should also be a cause for concern given decisions taken at mediation need to be informed.

The answer is simple: pay legal family lawyers an acceptable sum to support mediation as a legal adviser. At present, the LAA offers lawyers £150 to perform this function. No wonder unbundled services replaced referrals to mediation in 2013/14.

And finally some good news: over three-quarters (79%) of mediation starts led to agreement. This is very impressive and over 10% higher than previous years when most clients ended up in front of mediators as a result of compulsion.

This is also reflected in the stats for MIAMs. Almost two-thirds (63%) of MIAMs led to a mediation start in 2013/14. Again, very impressive given the figure for 2012/13 stood at 44%.

Taken as a whole, the data makes the clear case for voluntarism over compulsion when it comes to success at mediation. The only question in town is what can be done to help both members of a couple – but particularly the second party – see some self-interest in exploring mediation.

With mediation services continuing to close their doors across the country, and more parents at court without a lawyer than with one, lets hope the MoJ comes up with some answers soon

A saving too far for the MoJ?

Readers of this blog will know we campaign for family mediation to be better marketed and supported if it’s ever going to benefit larger numbers of separating families.

For us – at least – this means mediation being promoted and supported by commercially aligned family lawyers. It’s about breaking open the market for full service dispute resolution that most people can afford.

We’re currently piloting our approach with 50 law firms in four UK locations and hope to reach proof of concept by Spring 2015. In the meantime, we’d like to share some evidence about how not to build a market for family mediation. As ever, that evidence is provided by the Ministry of Justice (MoJ).

We already know that mediation starts across the UK have fallen by an average of 40% between May and December 2013 compared to the same period in 2012. But what is this costing the MoJ and how much money is being saved? The answer to the latter is somewhere in the region of £14 million.

Here’s how we worked it out:

Total spend in 2012/13: £13,723,272.97
Total spend for April 2013 to Dec 2013: £7,117,169.30

If we assume the final three months of 2013/14 were in keeping with the previous nine, then estimated total spend for 2013/14 will be £9,489,559.07. (It’s likely to be less since claims made by mediators in the opening three months of 2013/14 will reflect payment for higher volumes of pre-LASPO work)

Total spend in 2012/13: £13,723,272.97
Estimated spend in 2013/14: (£9,489,559.07)
Estimated underspend (2013/14): £4,233,713.90

In 2013/14, the MoJ also made available an additional £10 million to fund family mediation (presumably to cover the surge in demand it boldly predicted following the introduction of LAPSO).

Total estimated underspend in 2013/14: £14.2 million

So there you have it: instead of a predicted spend of around £24 million in 2013/14, it’s very likely the MoJ will have paid out just over £9 million. Well done, Mr Grayling.

But this is one saving the MoJ may come to regret with an ever-increasing number of litigants in person threatening to bring the new Single Family Court to a juddering halt. At last count, the number of unrepresented parties attending Children Act proceedings had risen by 57% compared to pre-LASPO times. And what of the tens of thousands of separating families that fell off the radar from April 2013 relative to the year before?

Are these former partners “working things out together”? Lets hope so. It’s more a comforting thought than non-resident parents giving up the ghost or separating couples cutting lopsided kitchen table deals selling one party short.

Putting the crystal ball to one side, there’s even something curious about the money that is being spent on publicly funded family mediation. In the same Freedom of Information response, the MoJ provided a breakdown of the annual budget between “MIAM” and “Full mediation”:

Breakdown of spend: 2012/13:
MIAM: £7,396,518.75
Full Mediation: £6,326,754.22

This shows how inefficient the pre-LASPO funding code referral system was. More money was spent on MIAMs than full mediation. This is because tens of thousands of parties bounced back to their referring lawyer to pursue lawyer-led options/litigation. Those couples that were converted to mediation effectively kept afloat a network of publicly funded mediation providers that became the unintended victims – rather than the predicted beneficiaries – of LASPO.

Breakdown of spend: April to Dec 2013:
MIAM: £3,438,013.79
Full Mediation: £3,679,155.51

This is a very similar breakdown to 2012/13 spend except there was no funding requirement imposed on lawyers to refer to mediation. (No legal aid for lawyers to claim!) Nevertheless, almost half of total spend is allocated to covering the cost of MIAMs. But why?

Since April 2013 legal aid family lawyers have effectively been in competition with legal aid family mediators for lower-income clients. Lawyers now sell small packets of advice/form filling (AKA unbundled services) while mediators petition the MoJ to fund mass advertising to “educate the public” about their skills.

So what does this tell us? We think it’s rather obvious: without commercially aligned lawyers promoting and supporting mediation, separating couples are unlikely to mediate in anything like the numbers the MoJ would like to see. As such, we don’t foresee a vast uplift in mediation starts now Applicants are required by the MoJ to meet with a mediator before being allowed to file papers at court.

Bottom line: if you want a sustainable market for family mediation, get the lawyers involved. Nothing else seems to be working.