£100m legal aid shortfall for family lawyers

Over 1,200 high street law firms offering legal aid family services are at risk of losing £100m in fees as publicly funded cases move through the family justice system without replacement.

The figures were estimated by divorce and separation service Lawyer-Supported Mediation (LSM) which examined recently published data from the Legal Aid Agency (LAA) to calculate whether the Ministry of Justice (MoJ) is on course to reduce its spend on legal fees.

The analysis showed that the MoJ is indeed set to reduce its spend on solicitors' fees by over £100m compared to 2012/13.

Shared across the 1,208 law firms currently with government contracts to provide family law services, this figure of £100m represents a £90,000 black hole per firm which LSM say will need to be filled by a corresponding increase in private fees to stave off redundancies.

Innovate to survive

Marc Lopatin, founder of LSM, 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.

He continued: "Hourly rates of more than £200 per hour puts thousands [of people] 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."

An analysis by LSM has revealed high street family solicitors have managed to protect themselves from cuts to date. When income from proceedings not being targeted by government is removed, the LAA paid family solicitors £132m in 2013/14 compared to £143m in 2012/13 represents a year-on-year saving of just 7 per cent.

However, while the examination showed solicitors were benefiting from "a post-LASPO lag", family barristers have not been so fortunate. LAA payments made to barristers for impacted family law proceedings fell from £38m in 2012/13 to £15m in 2013/14. This represents a drop of 61 per cent and adds further weight to the Bar Council's recent warning that barristers are considering their long term futures within the profession.

LSM looked at the number of certificates for civil representation being granted by the LAA to family solicitors in 2013/14 to calculate what the agency expects to save in 2014/15. 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 1 April funding deadline.

The second half of the year, however, showed the number of certificates fell by 84 per cent for disputes relating to child contact, residence and finance cases. LSM has estimated that the LAA would save £109m on solicitors fees compared to 2012/13.

Breaking historic bonds

LSM has also predicted that family barristers will continue to see a decline in legal aid with an estimated fall from £38m in 2012/13 to £6m in 2014/15.

"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 Lopatin.