Official Report: Minutes of Evidence

The Chairperson (Mr Frew): I remind members that, last week, the Committee heard oral evidence from the Bar of Northern Ireland on the Justice Minister's intention to table an amendment to insert new clause 27A into the Justice Bill. The Committee felt that it would be helpful to hear the views of the Law Society on the taxation reforms in the new clause.

I inform members that the witnesses providing evidence today on behalf of the Law Society are Eoghan McKenna and Janice Spence. You are very welcome, and thank you for your attendance. I am sorry that you had to wait. We will kick off with opening remarks from you.

Mr Eoghan McKenna (Law Society of Northern Ireland): Thank you, Chair. Good afternoon. Thank you for the invitation to attend the Committee. I am the junior vice president of the Law Society, chair of the access to justice committee and a legal aid practitioner. I am joined by Janice Spence, who is from the family law committee and is also a legal aid practitioner. Hopefully, everyone has had an opportunity to see the formal response from the Law Society, and that can be considered in due course, I imagine, at everyone's convenience.

I would like, if I may be permitted, please, to make some related remarks. I will focus my remarks on the taxation process and the hourly rate. Janice will speak about uplifts and some other angles.

When we appeared before the Committee last May to speak on the Justice Bill, we raised major concerns around clause 28. We therefore support the removal of that clause. By way of background, taxation in legal cases involves the independent assessment and determination of costs associated with those legal proceedings. Taxation applies in private paying cases and legal aid cases, and it is a well-established feature in the justice system.

In legal aid cases, the Legal Services Agency (LSA) considers applications and authorises specific steps to be taken by solicitors, barristers and experts through the grant of a legal aid certificate. Accordingly, any work undertaken will have been approved by the agency. At the conclusion of proceedings in the case, the judge makes an order for taxation, and the case is then referred to the taxing office for assessment. The current taxation process is governed by order 62 of the rules of the Court of Judicature. Within that process, solicitors are required to submit a comprehensive bill in respect of a case to the taxing master, who then assesses and determines the amount of legal aid costs to be paid.

The taxing master plays a central role in the taxation process. As an independent judicial officer, the taxing master is subject to established standards and court rules and is ultimately accountable to the Lady Chief Justice. Importantly, the taxing master has a legal duty to protect the legal aid fund, as do solicitors. Solicitors record all work and expenses as the case proceeds. When submitting a bill to the taxing master, solicitors prepare a detailed account of the work undertaken by them and any disbursements incurred. To assist with preparing the bill, solicitors often engage a specialist known as a cost drawer, who drafts a detailed bill of costs. The bill of costs details, on a line-by-line basis, every step taken in the case, including all attendances with clients and their witnesses, all correspondence, all telephone calls in and out, the instruction of experts, consultations and attendances at court. Each item listed relates back to the file. Vouching documentation is also required to be lodged in relation to any disbursements and court orders made.

In assessing the bill, the taxing master considers a range of relevant factors, including, for example, whether the hourly rates claimed are applicable, whether the work claim is covered under the certificate, whether the number of hours marked is proportionate and properly claimed and whether the costs claimed are reasonable. The taxing master also considers whether the complexity and seriousness of the case merit an uplift.

Therefore, the society considers that the assessment of solicitors' costs is a thorough, transparent and evidence-based process. The current system also contains other robust safeguards: for example, the Legal Services Agency retains the right to intervene and can make representations. The agency also has a process in place for the flagging of higher-cost cases and liaises regularly with the office of the taxing master. There is also an appeals mechanism in place: a possible review by a High Court judge. Moreover, the available data does not provide any strong evidential basis for reforming or restricting the current taxation framework for solicitors' fees in legal aid cases. Data held by the Department of Justice shows that solicitors' taxed remuneration, when adjusted for inflation, increased by only 7% between 2016-17 and 2023-24. In contrast, counsels' taxed remuneration increased by 200%, when adjusted for inflation, during the same period. Against that background, we consider that there is no need for the current system to be replaced or amended in relation to solicitors.

In new clause 27A, the proposal to set legal aid rates through secondary legislation for High Court and Court of Appeal proceedings and to require those rates to be applied by the taxing master represents a significant change. It would transfer the setting of the rate from the independent taxing master to an administrative function of the Department of Justice, thereby restricting the taxing master's role. There is limited information available currently on how rates would be set within proposed remuneration orders, including which factors would be considered in order to determine the rate. It is also unclear whether the current hourly rate — this was determined in 2005 by the recent working group on the solicitors' hourly rate, which was chaired by High Court judge Mr Justice McAlinden and which considered an expert report from BDO — would be respected.

If a revised framework is to be set by the Department, the fees to be applied within the taxation framework should be set at an appropriate level in order to reflect the real cost of providing legal aid services. That must include consideration of factors such as time, skill and the level of competence of persons providing those services. Furthermore, the rates that are set should be reviewed frequently, having regard to factors such as inflation, other statutory cost increases, economic conditions, increases in the cost of living and cost of doing business and changes in practice and procedure. It should also include consideration of ensuring reasonable remuneration for solicitors, given the growing costs of running a solicitor practice, as those solicitors try to ensure equal access to justice for all. It is important to note a consequence of the proposed change to the taxation process that risks creating a system in which two different hourly rates may apply. That would introduce inconsistency and uncertainty, and, in practice, it may discourage solicitors from undertaking legal aid work and may result in a two-tier system of access to justice.

I will now hand over to Janice Spence, who will speak about uplifts and some other issues.

Ms Janice Spence (Law Society of Northern Ireland): Good afternoon. I will start by saying that I am primarily a family law and matrimonial law solicitor. I have been doing legal aid work throughout my career. Now, however, because of the difficulties involved in undertaking that type of work, I probably do less than I have ever done. I am not unlike very many of my colleagues who find themselves in the same position. I wanted to set that out as the framework for what I want to say.

As Eoghan mentioned, part of the taxing master's assessment role is to consider whether the complexity and seriousness of the case merit an uplift. Uplifts are an essential mechanism for ensuring fair and reasonable remuneration in complex and serious cases. Family cases, which are the majority of cases that the taxing master will deal with, are serious cases. They are in the High Court for that very reason, so they fall into this space. A rigid, fixed-rate system does not accurately reflect the reality of legal practice. Cases can vary significantly in complexity, volume of documentation, novelty and the level of work required. Without the ability to apply the uplift, there is a real risk of under-compensating solicitors who are undertaking the most demanding and complex work for, often, the most vulnerable. That would have several consequences. For example, firms would struggle to recover the true cost of complex cases; practitioners would be disincentivised from undertaking those types of cases; and the sustainability of legal aid provision would be undermined.

Ultimately, that creates a real risk to access to justice. The cases that I do are for parents who are at real risk of loss of their family or children or, indeed, for children who are at real risk of loss of a parent. I deal with cases of adoption, freeing for adoption, where issues such as drug abuse, sex abuse, physical abuse, prostitution and alcohol misuse are often most prevalent.

It is also significant in the context of the solicitor profession in Northern Ireland. Local solicitor firms provide vital services to the public and are an essential part of the community. They enable access to justice for the most vulnerable. About 90% of solicitor firms in Northern Ireland have four or fewer solicitors, including just over half that are sole practitioners or sole principals. Like many other small businesses in Northern Ireland, solicitor practices have significant overheads, including, but not limited to, salaries, employer contributions, rent, rates, service charges, cleaning costs, accountant/bookkeeper fees, training costs, IT technology etc. A detailed list is in our submission.

I have my own firm as does Eoghan, and, like those solicitors, we do not have the capacity to absorb underpayments in complex cases. We have real-world issues. There is a lack of available staff in Northern Ireland. We pay higher compensatory rates for staff and have difficulties in recruiting. We have higher utilities this year with electricity, oil, petrol etc.

Any restriction on uplifts would therefore have a disproportionate impact on the viability of practices and would accelerate the emergence of legal aid deserts where individuals would be unable to access representation. We are already seeing that. We are seeing areas, particularly rural areas, where solicitors cannot do legal aid work and people are left without representation.

For those reasons, the society considers that enabling discretion by the taxing master to consider uplifts is an important and necessary feature of the current system and should be preserved.

It is unclear how the new proposals would improve accountability or cost predictability for legal aid cases . Legal aid is, unfortunately, a demand-led area. Costs fluctuate depending on the number of cases in the system. Structural changes to remuneration mechanisms do not alter that underlying reality and risk introducing unintended consequences in a situation where there does not appear to be a clearly identified problem.

That concludes our presentation. We are, of course, happy to take any questions.

The Chairperson (Mr Frew): Members, I am going to warn you. We had a really long previous session, so I ask you to be concise in your questions and for the witnesses to be concise in their answers, too. This is an important issue, but it is more technical than the previous session, so, please, no statements. We will leave those for the Chamber. Just questions.

Mr Kingston: I will get straight to it, Chair. Thank you for your attendance. We had the Bar Council before the Committee last week, raising similar issues. The point that I made to those witnesses was that clause 28 was quite long and difficult to understand, speaking for myself. New clause 27A is extremely brief, and essentially states that the Department may make provision for how the taxing master can determine remuneration.

You are obviously reading into that that this could result in a reduction. The Bar Council accepted that there are different scales for rates. At one stage, the representatives said that it might be just counting the number of hours. However, I think that they did accept that there were potentially different scales for different types of work.

What have you heard beyond what is in that brief clause 27A? Is it conjecture on your part? Do you just fear the worst or have you heard something definite? As I said last week, as elected representatives, we believe in accountability for public finances. There has to be some accountability and some system in place; we cannot have an unregulated system. That is a general principle for us. As with NHS dentistry, the service needs to be financially viable for the professionals who are delivering it.

Sorry, Chair, I have probably gone on too long. Have you heard something definite or do you simply fear the worst?

Ms Spence: From my point of view, it is conjecture based on having dealt with the Legal Services Agency for 20 years in relation to such issues. We can assume only that there is going to be some sort of cost-cutting exercise. There is a lot of discussion in the papers about why some control has to be taken over the costs that the taxing master is dealing with. Some 75% of his work is legal aid work.

It is clear to us that there has not been a massive rise in solicitor costs. In the periods that Eoghan set out, it is 7%. I have seen a bigger rise in costs in the likes of family brief fees for senior and junior counsel. It is proposed that we remain on the fee-based system that we have always been on — we charge an hourly rate, and that will continue — whereas the Bar will come off its brief fee scheme and move to an hourly rate, to which we say, "Why not? That's what we do". We have to account for every hour, every letter, every phone call and every consultation. It all has to be set out in a bill of costs.

Mr Kingston: Would that not still happen, though?

Ms Spence: It would still happen, but the fear is that the Department will set a fee that does not sit with the increased fee that we have recently received. Our basic fee has risen to £155 per hour. It was £102 per hour. It was raised after 11 years. There should have been incremental rises every year. That was taken into consideration. There seems to be a fear now that, because of that rise, there will be an upward trend in the claiming of legal aid costs. The reality is that all that the £155 takes into account is how difficult it is to run a practice. The £155 is the fee that you get paid in order to — I think that this is the phrase — "wipe your face". The uplift that I was talking about is where you —.

Mr Kingston: Obviously, that includes all your practice costs. It is not just —.

Ms Spence: Yes, that includes insurance and everything else. It is all set out. The uplift is to what we get in profit. Currently, the taxing master applies the uplift as he sees fit, based on the complexity of the case. The taxing master has the benefit of seeing your bill of costs, which very often runs to 15, 16 or 17 pages. As a judicial officer, and as a previous solicitor, he can assess the level and complexity of the work involved. He then applies the uplift, which starts at 50% and can go up to 100%.

Mr Kingston: I am still not persuaded that the clause will change any of that.

Ms Spence: We do not know what it will do.

Mr Kingston: There is uncertainty.

Mr McKenna: That is part of our complaint in the response and even today. Why do we not have the full picture for the Committee and the Assembly? At one of the previous Justice Committee meetings that I was at, it was described as a "power grab" on the part of the Department. It is the order of it that, objectively, does not look great.

There is an element of speculation about what will come next, but we have just lived through the criminal legal aid review. There is an accelerated review that has just reported. During the discussions in that area, the reform was, to an extent, poisoned by the refusal to accept the legitimacy of the hourly rate. The updated hourly rate is a break-even rate; it does not allow for any profit. It is the uplift that allows there to be a profit.

We have worked with the Department of Justice collaboratively and, largely, positively in very strained circumstances. Solicitors have to fight their corner and argue for remuneration levels that allow them to keep their doors open, employ staff, and help society and their clients. At the same time, the Department of Justice, and everyone else, has to look to value for money and accept that there is a lack of resources for all services.

It is a difficult circle to square, but part of our complaint is about the order of it. It also undermines the taxation process as is. On the basis of the clause, it is better than what was there before, but, even in your question today, there is an inherent criticism of the current system. As solicitors, we think that the system for solicitors is onerous; we also think that the role of taxing master is onerous on the individual holding it. If the system is working well for solicitors, why change it? Particularly as we do not know with any certainty what will come next.

Mr Kingston: OK. Thank you.

Ms Finnegan: I will be quick. The Law Society and the Bar have expressed serious concerns about the previously indicated legislative change under the now redundant clause 28. Do you have any concerns about the proposals on legal aid taxation in the newly drafted clause 27A?

Ms Spence: We have just set out those concerns. We do not know what clause 27A will do down the line. It is putting the horse before the cart, in effect. The dealings that we have had, as Eoghan said, give us cause for concern. The LSA is heavily audited and checked — there has to be accountability when you are spending public money — and we see the impact of that every day in practice.

Just this week, solicitors were told that they would no longer get a small 5% uplift in relation to travel and waiting time because the auditing of the system showed that that was never legislatively set out. We are very aware that, when cuts happen, they are at our door. In effect, my firm carries legal aid work. We carry it. We do it because we are a local firm in a local community and cannot turn legal aid work away, but I do that on the basis that, very often, I charge twice and sometimes three times the hourly rate in other cases and in other types of work that I do. I am in the privileged position of being able to do that, but a lot of my colleagues are not. As Eoghan says, we need to keep the doors open. The whole idea of access to justice is to keep it open for everyone.

I have another concern. Say, for example, the Department puts in a fee that is 20% lower than the fee that you get for doing the same type of work. I largely do matrimonial work. Proportionately, women use legal aid more in matrimonial cases than men do. If you have a system in which solicitors are saying, "I do not want to do legal aid matrimonial work any more", women will be indirectly discriminated against and will find it more difficult to find a solicitor who will act on their behalf in matrimonial matters and in matters of finance. There is already enough discrimination in that area without heaping that on as well.

Ms Finnegan: Thank you. That is very useful.

Ms Ferguson: I will make a quick point before I ask a question. You are questioning the need for change and saying that it could create a two-tier system, and you said that you do not see how it could improve accountability or cost predictability because it is demand-led. We need to be gravely concerned about creating a legal aid desert; we have been talking about that for a good few years. Particularly in small towns and villages, we are losing our solicitors. Young people are not going into the profession for that very reason. That is quite damning, particularly the point about the legal aid desert and ensuring that everyone has equal access to justice. That is critical.

We do not even know what these changes could be. We are all in limbo — everyone. The Department stated that the intention is to make the necessary remuneration orders by the end of the current mandate, which is less than a year from now, but no one — the taxing master, yourselves, the profession and members of the Committee — knows what it is being changed to. I have been asking that for two years, but none of us knows.

Based on the various relationships, consultations and engagements that you have had with the Department over the years, do you think that there is enough time — a year — to know what it is being replaced with?

Mr McKenna: I was involved in a starter, for want of a better word, in this world generally. The Department of Justice has a massive amount of information on how legal aid taxation cases have worked through the system. The majority of that information comes from solicitors' bills, as we have outlined. That has been analysed for many years. There was significant collaboration on some of the test areas, and we asked ourselves whether we could come up with a new remuneration scheme to replace the existing taxation world in that area. We got so far down the road on the minor elements, but it stopped before anything was agreed.

Solicitors in the Law Society would, I imagine, engage in any process that looked at everything in a rounded way, because we can always improve any system. However, there should not be as much criticism of this system as there seems to be at the root of the move. It is hard to imagine a better system for assessing legal aid remuneration, because a senior judicial figure manages the process from start to finish, which is after the case concludes. The process cannot be started until the legal aid body grants a certificate. The solicitor has to keep contemporaneous notes in between times, line by line and from minute to minute, so that data capture is ongoing.

When we worked through the criminal legal aid review with the Department of Justice and external bodies, everyone looked at solicitors' taxation and bills and said, "Wow. Look at the amount of information there; we understand what you're doing and why you're doing it". It is ironic that the new clause, in effect, nobbles that before we see what comes next.

Ms Ferguson: OK. That is fine. Thank you.

The Chairperson (Mr Frew): Thank you very much. I read your submission as you were talking, because it came to us late. You lay out your concerns very well and in detail, but you may have been a wee bit diplomatic in your conclusion. Would you vote, if you were to have that privilege, for 27A?

Mr McKenna: At this juncture, absolutely not.

Ms Spence: No.

The Chairperson (Mr Frew): OK.

Mr McKenna: If I were asked to vote on anything, I would want to understand the full repercussions of that vote.

The Chairperson (Mr Frew): That was my next question. Is it about the principle of the independence of the taxing master, or is it more about the fact that it is skeleton legislation?

Mr McKenna: We have to respect the role of the taxing master and previous taxing masters — the overall taxation system — and to champion what solicitors have been doing for years. We have lived through years, if not decades, of a debate about legal aid remuneration, particularly standard and time-based fees. We hear, "Time-based remuneration doesn't work. Let's have a composite fee; that is better". Down the line, however, the Department and the legal aid body do not seem to like that, and they then say, "Let's get a lot more data and information. Just giving a standard fee isn't working out". We keep going round in circles, when, ironically, solicitors' taxation seems to be effective on all fronts.

Ms Spence: I know that you spoke to the taxing master and that the Lady Chief Justice was present. The taxation process is onerous. We give our file to an independent cost drawer, whom we pay, and we do not get that money back from legal aid, so it is another outlay, often of £1,500 or £2,000, that is taken off our profit from a case. That independent person pulls your file apart and puts together the work that you have done. We all have case management systems, such as ALB, but we cannot print information from systems and hand that over: the physical file has to be shown to the cost drawer.

The truth of the matter is in the papers that we produce, so the taxing master gets the work that is done. That does not mean all the work, because, when I am lying in bed thinking about Mrs X, whom I am really troubled about, I do not write, "Consideration: 15 minutes" for that case. However, what you are getting is a snapshot of the work that is being done on that case on a contemporaneous basis. I think that that is the fairest way to assess how public money is being spent.

That is why paying us £155 for baseline costs is grand, but the taxing master, who has submitted his own tax cost basis before, because he is a solicitor, has the skill and ability to know that consideration would have been given to the case in a certain way, and he knows what percentage to apply to it.

We have the very onerous task of setting all that out. I think that it works. It also works in the private law sphere because we are subject to taxation if you disagree a bill with a private law client. It is a very vigorous system where someone can challenge your bill. I agree with Eoghan. Why fix what is not broken?

Mr McGlone: You are the legal professionals, so I will ask you. The wording states:

It goes on to talk about remuneration orders. You know the system, and you are saying that if it ain't broke, why fix it. However, I do not know about that because you are the people who are working on it. As elected representatives, we do not know what the potential remuneration order would be. Is it fair to say that we are being asked to buy a pig in a poke?

Mr McKenna: I certainly would not buy this product at the mart. [Laughter.]

Mr McGlone: Do you know what I mean by that?

Mr McKenna: Yes.

Mr McGlone: Is that a fair résumé?

Ms Spence: Yes.

The Chairperson (Mr Frew): Patsy, your use of judicial language is not to be trifled with.

Thank you very much for your presentation and for your time. Sorry for the wait.

Ms Spence: It was very interesting. I am a practitioner in the family proceedings court, so you probably saw me bristle a few times. [Laughter.]

Mr McKenna: You nearly got a double presentation.

Ms Spence: You very nearly did. I would be very happy to come back. I did a lot of work on the waiver, so I would be very happy to come back.