Filling the gap

To charge or not to charge, that is the question. Recently, many not-for-profit (nfp) agencies providing legal services have started to consider in earnest whether they should either start to charge clients for services, or set up a separate organisation to do so. The debate cuts across a range of organisations, working within very different communities.

All of us who are involved in this discussion believe that services which are free at the point of delivery are incredibly effective, and can transform the lives of some of the poorest communities. Most have chosen to work in the sector because we are committed to this model of service delivery. We know that a high percentage of our current client group will not be able to afford to pay for services, or would be paying for them out of income which is intended to meet basic living costs.

We also know that a number of high street firms are struggling and that this is not an ideal economic climate for risky small business start ups.

Many of us devote our spare time to campaigning to defend access to legal aid and to ensure that the rule of law is effective for both rich and poor. And yet, at meeting after meeting, people talk to me about what their plans are, about how our plans are coming along, and about how charging for services might work.

What underlies these discussions is a horror at watching communities being robbed of access to legal remedies, and subjected to real suffering which should not be taking place. People are seeking new solutions to the current problems, and are having to re-imagine the sector.

My organisation, a law centre in North London, has hundreds of people coming through the door each week, many of whom have legal problems which impact profoundly on their lives – for example, they have been sacked, or their benefits have been stopped, or they are about to lose their home.

We have worked hard to diversify our income streams and have more than 15 different sources of revenue. However, in January this year, we realised that virtually every one of these sources of funding was under review, and that we faced having to make significant cuts in service.

Along with many others in the sector, our local authority is under huge financial pressure – in our borough, they have made a real commitment to legal advice, but nonetheless they cannot restore funding lost elsewhere. Our local strategic partnership, which commissioned us, has been disbanded. Charitable trusts are watching their own income drop, while competition for their funds has increased significantly. We have generous support, both in terms of pro bono input and financial assistance, from a number of City firms, but, again, they cannot make up the scale of cuts elsewhere. Finally, legal aid funding, which covers not only some of the time that we spend with clients, but crucially the additional costs such as interpreters, doctors’ and experts’ reports and counsel’s fees is under great threat. On top of the changes to scope, the impact of the telephone gateway is likely to be profound, and to leave some of our core client groups without any real access to legal aid.

The loss to my organisation alone is likely to amount to hundreds of thousands of pounds, out of a total budget of £1.5m, and the only new funding on the table is the £20m which the government has announced. However, it is not clear what nor who this will fund, and it will not make up the massive projected cuts to the sector. The Law Centres Federation calculates that the proposed changes to legal aid would lead to £6.87m being lost from law centres alone, with London law centres losing an overall total of 61 per cent of local authority funding as well. The other networks report similar impacts. This is an unprecedented scale of cuts.

Uncharted territory

Of course, demand for services is increasing and much current need goes unmet. The gap between rising needs and shrinking resources grows wider daily and I fear it will reach staggering proportions.

So, many of us are exploring models of service delivery which would include a charge to the client. In my organisation, we feel strongly that the law centre should remain free, but we are exploring setting up a sister charity that can charge, and can attract funding in its own right. We know that the small elements of legal aid that will remain in scope in areas like immigration, employment and education will not be sufficient to fund a specialist unit, and that we will need to bring in other income if we want to retain a high level of expertise and sufficient capacity to offer a viable service. Other agencies are looking to set up community interest companies, with the aim of making a profit which will be covenanted back to support free services in the original charity.

The alternative business structure arrangements which will be coming in shortly mean that the whole landscape is changing around us, and at a pace which it is hard to keep up with. The sad loss of both RMJ last year and IAS this year confirms that the pressures on the nfp sector are enormous, and it is not at all clear that being larger makes agencies more sustainable nor that they can benefit from economies of scale. The closure of some legal aid firms, and legal aid teams in others, means that legal aid provision within private practice is also under threat.

Many nfps are currently wrestling with issues about how their charging arms would meet regulatory requirements within the new ABS structures, and how they will relate to existing private practice providers. There are significant technical issues in relation to the SRA, the Charity Commission and to the parent charity. They are also looking at business plans and how the start-up costs could be financed. There is debate about the ethics of charging for certain services and not others; for example, is it ok to charge in immigration but not welfare benefits?

We know that this route is not a panacea and that we will, at best, scratch the surface in relation to the hundreds of thousands of individuals who will no longer be entitled to legal aid.

We also know that it is vital that the campaign to defend legal aid in criminal, family and civil law grows and highlights not only the ways in which cuts will cost the public purse more, but the ways in which whole sections of society will be disenfranchised from understanding and exercising their legal rights.

However, many of us are taking the first tentative steps into a new way of working, into what feels like uncharted territory – the new agencies that will come into being over the coming year will not be like the old nfps, but nor will they be like private practice.

It will be interesting to see whether some of them really can make a significant contribution to meeting social need, while identifying and taking up policy issues, and being financially sustainable. Will they be the cutting-edge organisations of the early 21st century or simply a series of small organisations that have to focus on turnover to the exclusion of policy to survive? Will they be able to collaborate with high street firms, or will the new entrants to the ABS market mean that few of either group manage to survive?

We live in interesting times, and the coming year is likely to be more interesting than ever. We will be striving to do something innovative which makes a genuine attempt to fill the awful gap opening up between those who can afford good quality legal assistance and those who cannot. We are receiving a lot of support, and will test out whether this route can make a tangible impact for good.