Official Report: Minutes of Evidence

The Chairperson (Mr Ross): I welcome Richard Cushnie to the table. Mark, you may brief us when you are ready, and we will open up to questions.

Mr Mark McGuckin (Department of Justice): Thank you again, Chairman. This will be a slightly shorter presentation, because I have already set out the wider context of the financial challenges that are faced by the Department and the legal aid fund. There is a real need to address the demand for legal aid services to bring those costs under control. Consequently, it has become necessary to consider restricting the range of issues for which legal aid is available and to prioritise the use of that resource.

This session is about money damages, and, at the outset, it is very important to recognise the significant amount of work that has already been done over a considerable period to identify an alternative approach to money damages that would reduce the burden on the legal aid fund. Most recently, the access to justice review recommended that most money damages cases be removed from legal aid if an alternative mechanism for securing access to justice could be found.

We consulted on a range of options and reported back to the Committee that the outcome had been inconclusive, in that no consensus had been reached. In addition, the alternatives would all have driven up the overall costs. It is important to be aware that legal aid is only accessed in around 5% of money damages cases. Introducing any of the alternatives, which included additional fee agreements with success fees, and perhaps after-the-event insurance, could result in costs increasing, not only for legally aided cases, but also for the 30,000 other cases that would be lodged each year. We have taken the approach, in the assessment, that such an approach would be a false economy.

That the issue is complex is evidenced by experience in other jurisdictions, which have also sought to identify a way forward. In England and Wales, a number of different approaches have been implemented over a period of years, but the same problem arises in respect of driving up costs for all of these types of cases.

In light of the high demand and limited budget for legal aid, the Minister has decided to proceed to remove the majority of money damages claims from the scope of legal aid. An alternative mechanism will not be put in place at this stage, although the issue will be kept under review.

We plan to retain in scope a number of categories of very serious, contentious and complex cases. These will include cases such as very serious clinical negligence cases, serious claims arising from the actions of agents of the state and, perhaps, claims related to industrial disease. The rationale is that these cases frequently require a significant up-front input to determine the merits and potential liability before a case can be progressed. The legal aid fund and the Legal Services Commission have developed a mechanism for processing those cases on a measured basis.

All the other categories of case would be removed from scope, and it would be for the claimant to determine whether or not to proceed with those claims and to seek alternative support through, for example, after-the-event insurance.

This decision has not been taken lightly but only after extensive consideration of the potential options and implications. The measure will save in the region of £1·5 million to £2 million per annum, which will help to address the budget shortfall. Further work will now be required to deliver this change. First, we will need to define precisely the types of cases that should be retained within scope. We will do this in consultation with the commission, the legal profession and other stakeholders. Once that has been established, we will bring forward the necessary legislation. This will be a regulation to amend schedule 2 to the Access to Justice (Northern Ireland) 2003 Order and would be brought forward using the draft affirmative procedure.

I would like to say that this is not the final word in relation to this issue. Although the proposal is to remove many categories of money damages from the scope of legal aid, we will continue to work to see if we can identify suitable alternative arrangements that could be implemented at a later date. The agenda document for the access to justice review part 2 includes a reference to money damages claims, and the issue will be addressed in that report. We will carefully consider any suggestions that emerge from that. The option is there to remove from scope the majority of money damages claims that currently receive legal aid support.

The Chairperson (Mr Ross): What do you expect will be the impact of not having an alternative in place? Is it the case that we will have more no win, no fee cases in Northern Ireland?

Mr McGuckin: No win, no fee is not currently an option. Under the Solicitors Order, that is not an approach that can be implemented, but it is something that could be looked at in the longer term. The conditional fee agreement, with success fees and so on, is an aspect of that, albeit with particular outcomes. Those are the sorts of thing that we can explore and how it could be limited to those types of cases.

With all of those things, where there is a success fee, whether that is recoverable either from the plaintiff or the defendant, it tends to drive up cost, and there are about 1,500 to 2,000 cases that are legally aided each year, out of a total of 30,000 cases. That is where the costs would drive up exponentially.

Mr Hazzard: Thank you again for the presentation. You said, if I am right, that 5% of the money damages cases proceed through the system with legal aid.

That suggests that the test for eligibility must be pretty accurate and worth saving. Am I right in thinking that?

Mr McGuckin: No, it means that 30,000 cases are funded through alternative mechanisms and do not come through legal aid at all.

Mr Hazzard: Some would argue that the eligibility and merit test that is applied is fairly accurate, and that 5% would represent the vulnerable and people from lower socio-economic backgrounds who cannot afford access to justice. If the proposals go through, it will create a two-tier system where those who cannot afford it will not be able to have the access to justice that they are entitled to. I just wonder what your thoughts are on that.

Mr McGuckin: The vast majority of cases are taken through insurance, through private means or through solicitors looking at it and saying, "That is a win-win case. I am prepared to take that on", and it does not involve legal aid at all. About two thirds of applications for legal aid receive funding. That is where the particular merits case would come into play.

Mr Hazzard: What percentage of cases funded through legal aid are successful?

Mr McGuckin: About 65% of cases that are funded through legal aid are successful.

Mr Hazzard: Thanks very much.

Mr McCartney: A number of questions. First of all, there is always that wee area of concern where the access to justice review says

if we get an alternative, and then we are told that there is no alternative, so we are going to move on.

Mr McGuckin: There are alternatives, and that is the issue.

Mr McCartney: That is the point that I am going to make. What options were explored, and how were they deemed to be dearer?

Mr McGuckin: Options were explored, a consultation document went out some time ago, and we reported back at the end of last year. Effectively, what you are talking about is a range of different types of conditional fee agreements so that if you win a case, there is a success fee attached to it. That success fee, then, is paid — this is where your options start to come in — either by the defendant or by the plaintiff, out of the damages that they have got. The success fee is the bit that drives up the costs for the defendant — in this case, public authorities, insurances companies and so on — or it drives up the cost for the plaintiff, in that the plaintiff has to meet that out of its damages. In England and Wales, they recognised upfront that that would increase, so they had an increase in the damages which were commensurate with it, which then go back to be funded by the public authorities.

The significant cost driver is that, because only 5% of cases that are lodged each year are funded through legal aid, if you introduce that type of system, those costs go out across all cases and not just the legally aided ones. Those are the sorts of issues that they have been wrestling with in England and Wales, and they have had different types of options — qualified one-way cost-shifting and all sorts of intricate measures now that they are in place. That is where the false economy comes in with our particular situation.

Mr McCartney: Was there direct contact with the authors of the access to justice review to ask what options they had in mind?

Mr McGuckin: Well, Jim Daniell set them up. We have talked to Jim about those as the consultation document was being prepared. It is also fair to say that Colin Stutt, who is taking over the delivery of the access to justice review part 2, has included this in his agenda document. He was involved previously in some of the arrangements that have been introduced in England and Wales, so he is actively going to address the options, but ultimately that will be "What can we do in the future in order to mop up any outfall from this?"

Mr Richard Cushnie (Department of Justice): It might be worth adding that the Jim Daniell review identified four options, and, at a later date, we consulted on six. We did a report on six options, and those were inconclusive. Nobody could agree on what was the best option, and there were various costs attached to each of them.

Mr McCartney: Again, 95% represents 30,000 cases?

Mr McGuckin: Yes.

Mr McCartney: And 65% of the 5% are successful?

Mr McGuckin: Yes.

Mr McCartney: That is about 1,000 cases.

Mr McGuckin: Roughly, yes, but it is demand-led and depends on what happens year to year.

Mr McCartney: Has there been any analysis of those 1,000 cases and what they brought back, say, to the Health Department?

Mr McGuckin: No, we have not gone into that level of detail.

Mr McCartney: Would that be worth doing? I will tell you the reason why. If some of these cases were excluded and, say, a person who would qualify for legal aid did not want to take the chance of taking on the health service or a big insurer and they walked away as a result, and the case was lost, you could be faced with a case that is winnable and that may have cost one of the health trusts, say, a lot of money. It could be a big insurance company that does not pay out and takes a calculated risk that the person is of modest means and is not going to chase them if they have state legal aid to assist them. They do not have the money to employ a solicitor who will say, "Unless you put money up front, I am not taking the case." That is particularly important when one estimate of what we are saving is £2·5 million and another estimate is £2 million. It is not to say that this is a big saving for a number of cases that you are taking, and nobody can tell you what the state will lose if you do not make it.

Mr McGuckin: You can do the rough calculation. This is for the compensation recovery unit (CRU). Overall, it is recovering about £16 million, so you are talking, potentially, about 5% of that, in broad terms, if you are looking at it from that perspective. And of course —

Mr McCartney: But out of the 1,000 cases that you have legal-aided, can you give a precise figure rather than a percentage or a guess? If those 1,000 cases are identifiable, you can say with precision how much money has been recovered by the CRU.

Mr McGuckin: There are two points on that. The first one is that, historically, potentially you could. It might involve a significant amount of work to bring out each of those individual cases and work it back. Presumably, historically, you could do that for those cases, but the structure and profile of those cases will change each year. The other point is that we are planning to retain within scope some of the most serious cases. Potentially, that will impact on the level involved as well, particularly if the cost recovery associated with those cases is higher than others. They will stay within the scope of legal aid.

Mr McCartney: I accept that, but that brings me to my third point. Even the language in the presentation today and some of the documents changes from "complex" and "clinical" to "more complex" and, today, "very serious". Someone has to make a decision. Are these decisions then open to judicial review? The one that seems to be at the top, and the most obvious one to keep, I agree, is clinical negligence. If a person wants to be legal-aided and it is refused, can that person judicially review that decision?

Mr McGuckin: Again, there are two things on that. First, we will want to set out the criteria very clearly so that people know what is in scope and what is out of scope. That is a piece of work that will need to be taken forward now and brought back to the Committee. The criteria will need to be set very carefully. You then go to the stage of applying for legal aid for that case, and a determination will need to be made by the Legal Services Agency — assuming that it is in place at that stage — as to whether that particular case falls within the scope that was envisaged in the new legislation. That will then be appealable, within the agency, to the independent appeals panel. The ultimate sanction is, clearly, a judicial review of that, but that appeals panel decision, as discussed in the Committee before, is independent of the other decisions and will be taken on the basis of that.

Mr McCartney: But a person could be legal-aided for the judicial review.

Mr McGuckin: At this point in time, yes.

Mr McCartney: That is a moot point. Out of 1,000 cases, if 10% of people decide on a judicial review, what will the cost of that be?

Mr McGuckin: I do not think there are that many very serious clinical negligence cases that come through every year — and you are assuming that the legal aid is refused.

Mr McCartney: What I am saying is that there are 1,000 cases at present. We do not know the breakdown — I accept that — but those are going to be taken out of the scope. That is a high number of cases — 1,000 successful cases, never mind the unsuccessful ones. Clinical negligence is a difficult thing to prove. We have seen, here and in other jurisdictions, something that does not look like clinical negligence on the surface but turns out to be so when there is an investigation. Someone is going to be faced with a very difficult decision if someone comes to them and says, "I believe that there was clinical negligence in this case," and you say "Well, it is not very serious." Quantify "very serious".

Mr McGuckin: They currently take that decision. That decision is already taken by the Legal Services Commission in clinical negligence cases that come through. Typically, what happens in those cases is that a limited certificate is awarded initially so that some investigations can be conducted in order to establish whether it was a genuine, unavoidable accident or whether there was clinical negligence. I envisage that that same approach will be adopted, but it will be restricted to those sorts of cases.

Mr McCartney: And the limited certificate will not be removed?

Mr McGuckin: No, I think that will be exactly the same approach that you would adopt. That is effectively to allow you to get expert opinion and so on to establish whether or not it is actually clinical negligence.

Mr McCartney: There seems to be a bit of an extension in relation to what are classed as agents of the state and industrial diseases, so that will cover asbestosis.

Mr McGuckin: That is the area that we are looking at, yes. We will have to define that clearly as we go forward.

Mr Cushnie: We may want to consult on the types; what "serious" means, to take your point about terminology; and the sort of threshold that would apply.

Mr McCartney: You would not want to give someone a very difficult, time-consuming piece of work, but it would be interesting to see what is recovered from the cases that have been legal-aided.

Mr McGuckin: We will certainly look to see how readily accessible that is.

Mr Douglas: Will you address this scenario in relation to how your proposals would impact? Let me just give you an example. My father was a former shipyard worker, and he died with chronic airways disease. They were never able to prove the case of negligence in Harland and Wolff. Since then, a number of his friends — in fact, over 2,000 people — have made successful claims against the Department of Enterprise, Trade and Investment. I think that is where the funding comes from. They are over 2,000 people who have contracted asbestosis. It is not just men who worked there but their families who were maybe washing their clothes and inhaled the asbestos. How would your proposals impact on people like that in the future? To my knowledge, right up until 2040, we are still going to have people who have come down with asbestosis over the past couple of years.

Mr Cushnie: Subject to the consultation, we expect that those types of cases would still retain legal aid, so there would not be a change in that scenario.

Mr Douglas: I think Raymond mentioned the seriousness of those cases of asbestosis.

Mr Cushnie: That is one of the things that we want to talk to the legal profession and the stakeholders about — obviously the Department of Health will have an informed view — to make sure that we get the level right.

Mr Douglas: Will your consultation also include the likes of DETI — the Department that has actually had to fund those compensation claims?

Mr Cushnie: The only point about that is that we are under time pressure to deliver the change as quickly as possible and make the savings which are driving it. However, within that time limit, we want to consult with anybody who has relevant information.

Mr A Maginness: Thank you very much for the presentation. I found it and the documentation very helpful. I am just surprised at the low rate of success for legal aid cases. In my experience, they are either settled or, alternatively, won. In my experience, and I am subject to contradiction here, it is rare enough for them to be a charge on the legal aid fund if they are money damages cases, ordinary negligence cases, road traffic accidents and that type of thing.

Mr McGuckin: Those are the statistics. That is the experience over a number of years. It varies, and it is demand-led.

Mr A Maginness: Is that an average that you have worked out, or is it just one year, or what?

Mr Cushnie: That is the most recent year, 2013-14.

Mr A Maginness: Is there any significant variation over the years?

Mr Cushnie: In 2012-13 it was 70%; 2011-12 was 85%.

Mr A Maginness: I am just making a personal point. I have done quite a number of legal aid cases but, very rarely — maybe half a dozen times — have those cases been a charge on the legal aid fund, because the cases are settled. Defendants are anxious to settle a legal aid case because they know that, at the end of the day

they can go ahead with the case, etc. There is an inducement, then, to settle a case. If a case is run, it is a 50:50 situation. You win in half the cases, and in the other half you lose. I suggest that only in a very limited number of cases is there is a charge on the legal aid fund.

Mr McGuckin: The figures come out at what we talked about. It depends on the demand in each year. It is interesting to note that the number of cases has increased significantly. There were 1,700 in 2010-11 — which I think is the first figure that Richard mentioned — up to 2,600 in 2013-14, and there is a lower success rate coming through. Those were the numbers of cases which were legally aided. So it varies from year to year, but we are concerned about the ones that are a charge on the legal aid fund.

Mr A Maginness: I appreciate the point. However, with 65% of cases, you are clear and there is no cost involved. There may be some administrative cost, but there is no significant cost.

Mr McGuckin: There is a fair bit of administration around these cases, apparently, and that is where an element of the saving is going to come from. It is not just all out of the legal aid costs.

Mr A Maginness: Have you looked at improving the administration aspect of legal aid?

Mr McGuckin: Absolutely. It is an ongoing commitment.

Mr A Maginness: Right. The other point is this: most people will not go for legal aid. If you are working in a factory and you get injured, liability is clear and you just take an action against your employer. If you are knocked down on a zebra crossing, it is also quite easy to take that sort of action. However, in cases where there is a margin of doubt, you will go for legal aid if you fulfil the eligibility criteria. The reason for that is, if you lose the case, you do not want to be encumbered with the defendant's costs. Is there any suggestion, in terms of your reform, that if you were to abandon legal aid for money damages cases in the main, you would reform that situation where a person is able to take an action and, if they fail in the action, costs do not follow that? In other words, they would not have to pay for the defendant's costs.

Mr McGuckin: That is a variation on one of the options considered in the consultation, but it is tied in with success fees and so on. There is also an element of after-the-event insurance involved there, which is also currently available, so you can protect yourself against the costs associated with the defendant if you lose.

Mr A Maginness: I welcome what you say, but it seems to me that it does not have to be tied up with contingency fees and that sort of thing. You could provide separately that an unsuccessful complainant does not have to pay the costs of the defendant.

Mr Mark McGuckin: That is an option, and there will no doubt be a number of views on the appropriateness of the plaintiff pursuing their case with relative impunity against a defendant who has done nothing wrong. The defendant, of course, has to meet the cost of protecting against that. There was an element of that in the qualified costs-shifting model, one of the latest variations in England and Wales, whereby — I need to get this right — unless the court deems the plaintiff to be unreasonable or vexatious, they do not have to meet the defendant's costs. That is an element in there —

Mr A Maginness: That would be a determination by the judge who heard the case.

Mr McGuckin: I think that is the way it works, yes.

Mr A Maginness: He could say: "This was a reasonable case. It was reasonably presented, there was evidence of substance and the case was properly brought. In those circumstances, I am not going to award costs against the plaintiff." That would mean, Mr McGuckin and Mr Cushnie, that in those circumstances a plaintiff who had some doubt in his case could make an arrangement with the solicitor about fees so that the case could be mounted, and the solicitor would take a chance in court with it. It might address the situation. You have come to a very brutal conclusion by stripping away legal aid for money damages cases, but it might at least ease the particular situation that we are faced with, where at least 2,000 people per annum are prevented from bringing cases covering a wide range of different issues, but principally accidents in the workplace or on the public highway.

Mr McGuckin: It is one of a range of options that was considered and included in the analysis that we did. There are, however, cost drivers associated with it, and it is not universally accepted as a way forward. I understand that it would help in some circumstances, and, clearly, it does not impact on the legal aid fund if these things are out of scope anyway. I expect that the access to justice review part 2 will consider these issues, because it is part of the solution in England and Wales. We are not precluded from coming back to it, and certainly we want to return to this issue in the future.

Mr A Maginness: If something like that does not come in — I am not supportive of what you are suggesting, incidentally — to give some protection for plaintiffs with bona fide cases, particularly people in work, people will be deprived of any right to compensation in those circumstances. They will not have access to justice; it is as simple as that.

Mr McGuckin: There is an option —

Mr A Maginness: Theoretically they will have access to justice, but in reality they will not.

Mr McGuckin: Of course, there are a number of things. They have access to after-the-event insurance, which would protect them from the costs of the plaintiff as well. That is currently available in Northern Ireland.

Mr A Maginness: I understand that.

Mr Cushnie: We want to bring in an alternative, if we can find one that is workable. What you are suggesting was consulted on as part of the Jackson proposals and did not find favour with any of the respondents to the consultation: the Law Society; the Bar Council; the insurers; and a lot of other stakeholders. The unintended consequence of making a change to one part is that it is very complicated to find the right answer.

Mr A Maginness: The Attorney General suggested that, Chair, in discussions with the Committee prior to your chairmanship. It is an idea that I think should be canvassed further.

Mr McGuckin: We will look at that as part of the ongoing work in the area, but this is about taking things out of the scope of legal aid at this point and then working with part 2 of the access to justice review and others to find something that is workable and deliverable.

The Chairperson (Mr Ross): No one else has indicated to ask questions. Thank you both very much. We got our money's worth out of you today. I appreciate your time.