Statement by MHLA Committee on new contracting regime


On the 10th June 2010 the Legal Services Commission introduced the results of much of their new contract for legal aid for some of the most vulnerable in our society. The contract was surprising in several ways:

1. It has cost much more to arrange than the original system of representation. The Commission has increased its administration costs generally from £60m to £140m, much of the increase being in backroom paperwork to fund supervision of this and similar new contracting schemes.

2. The new scheme severely reduces the ability of many of the most experienced lawyers’ to continue to represent clients with mental health problems; whilst allowing some firms with little or no experience in the field to take a large share of such representation.

The problem arises from the Commission’s scheme to “tender” for new work in the field of mental health. Patients who are detained, and subject to compulsory medication, are entitled to representation without charge in compliance with the European Convention on Human Rights. The only other two areas of “core rights” which have the right to such representation are for those subject to arrest in a police station and those whose children have been removed by a Local Authority.

It has long been recognised that such lawyers who do this work need to have special skills and knowledge; and it was in this area of law that the Law Society set up its first specialist panel. The danger of the improper application of a contract-based work in this area of this area of law was recognised in some detail by Lord Justice Brook in the “MacIntosh Duncan” case, referred to below, when the 2000 contract scheme was being introduced.

In reality the rationale behind the limitation of case starts on resource grounds which may apply in other areas of law does not apply for most mental health work. The Commission accepts that where a patient needs representation before a Tribunal, which comprises the overwhelming majority of our work, the Commission are under a legal obligation to provide funding in line with the Convention.

The latest version of contract scheme, planned to start in October 2010, is complex in its detail, however generally it is based on a series of zones created to mirror strategic health authority boundaries. The rules allow for new entrants to provide legal services in this area of law, or for existing firms to expand their work. The Association supports this; however the same rules set no limit to the number of future cases, known as “matters” by the Commission, for which a firm can bid. This can effectively force existing firms, with a long established record for quality, out of their ability to continue the work.

This fictional example, although based on the scheme, illustrates what has happened.

Firm A and Firm B, bid for matter starts in the area of Midshire Strategic Health Authority. A total of 8,000 “matter starts” are available.

Firm A has been representing clients for twenty years in this area. It has six members of the specialist Law Society Mental Health Tribunal, is headed by a recognised international authority in mental health law, and represented clients in 600 matters last year. Many clients have very longstanding complex mental health problems with a long history of representation by the firm over a range of legal issues, including detention and medication. It decides to bid for the same number this year.

Firm B has never represented mental health clients before. It decides to bid for the whole 8,000 matter starts. It has not employed anybody for this work yet, but is taking advantage of the rule that allows it to bid without having anyone in post. It knows that it only has to confirm the details 8 weeks before the contract start date.

A number of other firms bid, although none bid as high as 8,000.

When the bids are analysed by the LSC, there are considerably more bids than “matter starts” available. These are then apportioned down based on the amount of the bid. Firm A finds it now has only 250 matter starts and will have to lay off experienced staff, some of whom have known their clients for years, and the managing partner has said he is looking at closing the business as it is no longer economically viable. Firm B, however, finds it has been allocated 2,800 matter starts. It now starts to advertise for staff and consider setting up a mental health department.

Whilst this is a fictional example, it demonstrates how extreme “speculative” bidding can completely skew future business for established quality firms. It must be stressed that this is not competitive tendering, so Firm B has not in any way bid at a “lower rate”.

The Commission have indicated that it will look at some future re-allocation of matter starts, however there is no guarantee what will come from this review, or when it will take place or how far-reaching it will be.

These reassurances are insufficient for firm A from the example, which has to plan to make redundancies and closure plans now. The new contract is due to start on 15th October and there is little time left to plan for its business; profit margins have already been skimmed to the bone following recent legal aid changes.

On the other hand for firm B, even if they recruit staff to handle only 1800 matter starts, can return the “surplus” of 1,000 with no penalty from the Commission.

The Association is not claiming that firm B should not be allowed to enter the “market” however the mechanism used here, at considerable additional cost to the taxpayer, appears to drive away an existing, proven quality supplier, A, for the benefit of the unknown qualities of firm B. The Association has already had reports of new firms trying to poach staff from established firms and force proposed untrained supervisors through training programmes as soon as possible.

What is especially frustrating to some more experienced practitioners is that they felt encouraged to bid “responsibly” by the Commission; close to the work they were carrying out now. In reality, they should have bid much more extravagantly; closer to the practice employed by firm B.

Judicial View
As outlined above, the judiciary has had longstanding concerns about the view of the then Legal Aid Board applying a contracting regime properly to this area of law. Giving the judgement of the Court Lord Justice Brook stated:

“We are worried, however, that the Board (as the Legal Services Commission was then called) has not yet appreciated how difficult mental health law is, and how generalist solicitors cannot pick up the expertise needed to serve their clients effectively unless they have a strong educational and practical grounding in this field of law. We hope that the Board will now take urgent steps to identify the really skilled solicitors who are willing to serve their clients in this field at legal aid rates of pay, and once it has identified them by a transparently fair process, to ensure that they have the same freedom to serve their clients as the Board is willing to afford to solicitors in the equally complex field of clinical negligence……….[para 568]

Mental health law is difficult enough today. Reading the report of a psychiatrist, identifying its areas of weakness, commissioning evidence from the appropriate expert to challenge it, and representing a client at a tribunal requires expert professional skills born, as we have said, of education and practical experience. It is not like going down to the magistrates’ court as a duty solicitor, arduous though those duties are ………… [Para 571]

R v Legal Aid Board & LORD CHANCELLOR ex parte Duncan and MacIntosh [2000] EWHC Admin 294

It is worth noting in this context that the number of specialist Law Society Panel members was around 400 when this judgement was given: last year it was only a little over 300. Yet the number of people subject to the compulsory powers of the Mental Health Act and applying for a review of these has risen consistently since that time, with a rise of 10% last year following the Mental Health Act 2007. Nor do these figures count legal issues relating to the thousands of patients now effectively detained in residential facilities following the Capacity Act 2005 and European case-law.

Other problems
The detailed calculation of “offers” from the Commission is complex, and many members have claimed inaccuracies. This was partly confirmed when the Commission accepted that they had confused the East Midlands and the East of England calculations and have sent out “new offers” to the firms concerned.

What can be done?
Whilst the Association would certainly strongly approve of a fundamental reform of the contracting regime, a “quick solution” would be to reallocate the same number of matter starts to be established in a “regional bank” which could be drawn down by supplier firms over the year. This would allow clients to continue to be represented by existing firms, whilst allowing a choice of new firms which have entered the market.

It is also worth pointing out that work is already monitored extremely by the Commission with a myriad of forms and audits. Indeed the micro-management is a marvel to commercial colleagues, who whilst frequently earning ten times an hour of our legal aid members, justify their costs by the minimum of paperwork. This micro-management is expensive, excessive and inefficient. However, it does, often in duplicate, allow the Commission to monitor the use, or any potential abuse of the system. Monitoring of such a “bank” would therefore be reasonably simple as the year progressed.

The Association asks everyone concerned with the provision of proper legal assistance to those subject to detention and compulsory medication to support us in opposing this new scheme.

In particular:

1. Contact their local Member of Parliament. Many MPs are very sympathetic about the rights of those with mental health difficulties.

2. Contact local user groups such as MIND to ensure they know about the problem.

3. Ensure their “Relationship Manager” from the Commission is aware of their ongoing problems

Please let the Association know what you are doing.

It has been said in the Cold War that what divided the civilised west from an uncivilised Russia was the proper legal review of those detained in psychiatric hospitals. This soon may no longer be possible in the UK.