Thursday, 16 October 2014

Our Response

Wainwright & Cummins Solicitors response to the MoJ Legal Aid Consultation


Dear Ms. Cower,

RE: MOJ consultation

Further to our various responses to Consultation papers from the MOJ concerning Legal Aid reform, we now enclose for your attention a copy of the recent Otterburn response which reflects this firm's views about the present Consultation. You will be aware that we spent a considerable amount of time working with Otterburn to assist his team in coming to their views. We very much now share his concerns that the MOJ did not fully take into account his and our observations when determining the question of whether to proceed with Dual Contracts (the two tier system) and further fee cuts:-

In particular we very much agree that:-

  1. The MOJ should not proceed further without proper research and analysis. It is our contention that the MOJ have not in any event factored in the cuts to date and the fall in volume in determining their present position.  Indeed our submission is that the MOJ already have their savings.
  1. The large size of some of the urban procurement areas would inevitably increase costs for firms, if they were to successfully tender, and this increase would not be justified by the dubious issue of greater volume.  We very much support the view that under the current proposals a significant number of good quality medium size and large suppliers will fail to secure duty contracts.  This will clearly lead to a weakened supply base and immense difficulties when the MOJ considers further tenders in four years time.  Indeed there is clear evidence (the PA Consulting Group) that only the smallest Firms who are fleet footed may be able to remain sustainable.  Volume at increased cost is not a panacea.
  1. We share the view that the projected gross fees for one fee earner of £83,000 per annum is unrealistic.  We agree that the base costs for any fee earner undertaking legal aid work will be around £40-£50,000, but at present it is an exceptional fee earner who achieves a target in excess of £75,000 pa.  To achieve true profitability, projected fee should be in excess of 83k per annum which suggests that appropriate rates and volume should be achieved.  Clearly this is unrealistic when volume is far from guaranteed and the rates of pay continue to fall. We agree that the way forward is to not impose an artificial fee target, but simply to ensure appropriate supervisor ratios and peer review to achieve quality. 
  1. We agree with Otterburn that the assumptions drawn by KPMG are erroneous.  On any view, should this firm be granted a duty contract, we would certainly not consider giving away own client work.  Moreover we cannot accept that a “break even figure” would enable us to invest appropriately to meet the requirements of a duty contract. 
  1. We also agree that the risk of managing a business in such constrained  circumstances is disproportionately high and the likelihood of access to appropriate levels of capital is and will continue to be very difficult.  Again we also agree that we have no control over projected volume increases.
  1. We agree with Otterburn that a minimum of a 5% profit margin is required and in reality it should be much nearer 10% if we are to attract appropriate levels of funding from our Lenders.  We agreed that the MOJ should take a more balanced and cautious view.  In our view the MOJ should not have imposed further cuts in March 2014 before allowing the Market to consolidate if indeed that is the way forward. 
In conclusion we would urge that the MOJ listen to the profession and abandon the concept of the Two Tier System. In any event the increase in bureaucracy and costs associated with Dual contracts does not sit comfortably with present Government policy.  We urge further research and if there is to be consolidation of the market, it must be undertaken with the full consent of the profession. The MOJ must fully recognise the fragility of the supplier base, and work with the Profession to ensure that the public have full confidence in our Criminal Justice system.

We look forward to working with you in the future. 

Yours sincerely,

Andrew Wainwright



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