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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Duncan & Anor, R (on the application of) v Legal Aid Board & Anor [2000] EWHC Admin 294 (16 February 2000) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2000/294.html Cite as: [2000] EWHC Admin 294

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QUEEN v. LEGAL AID BOARD and LORD CHANCELLOR ex parte IAN DUNCAN AND NICOLA MACKINTOSH [2000] EWHC Admin 294 (16th February, 2000)

Case No: CO/4807/99

IN THE SUPREME COURT OF JUDICATURE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday, 16th February 2000

(2) Complaint: Darwen Law Chambers is a specialist mental health firm in Darwen, Lancashire, It says its award fails to take account of the expansion in its work. The number of cases allowed it was significantly less than actual figures for the previous year (let alone any likely increase). Its schedule payment figures are wholly inadequate. It has used up its first month's contract allocation halfway through the first month. It will be laying off staff from 1^st February 2000.

Response: The firm says in its letter that its gross annual billing is £265,000, and that 80% of their business is accounted for by controlled work. The firm's controlled work billing, therefore, is equal to about £212,000 per annum, or £17,600 per month. We can confirm that this is the firm's current billing rate.
The firm's monthly contract payment commencing in January is £13,886. The first contract payment was made in mid-January, and further payments will be made at the beginning of each subsequent month. Payment for claims submitted by the end of December 1999 will be made separately from payments under the contract. This will result in payments during January and February which could significantly exceed the amount the firm would normally get.
The effect of this "extra" cash payment in January extends beyond Darwen Law Chambers; it will apply to the majority of contracted firms and will help them with any cash flow problems they may have in the early months of the contract.
Assuming that the firm submitted bills in December at its normal number and value, they will receive in January or early February a sum roughly equivalent to their current monthly billing rate (about £17,600). On this assumption, over the first three months of the contract, the firm will receive 3 contract payments of £13,886 and a further estimated £17,600. The total is more than £59,000, or £19,700 per month. This is more than £2,000 per month more than the firm's current rate of claims.
The firm has clearly expanded, and this will need to be considered in the review if its contract payments fall short of its claims. It is unlikely to fall into financial difficulty in the first three months of its contract, and this will give us time to discuss any necessary increases.
Darwen Law Chambers represents the high water mark of the Applicants' claim concerning the financial crisis allegedly induced by the contracts. It is a firm fully dependent on legal aid, mostly doing controlled work and operating without an overdraft facility. Yet on inspection of its figures, there is unlikely to be financial difficulty in the first three months. After that, if claim rates exceed the standard monthly payments, this can be met by an increase in the firm's Schedule Payment Limit.
Applicants' Rejoinder: The Board's view is that the firm's drastic financial difficulties will be alleviated by the extra funds injected in January and February 2000 to take account of "old" matters claimed. In fact, as can be seen from the letter from Darwen Law Chambers, their billing is so efficient and prompt that this will not, in reality, affect the severity of the firm's financial position post 1 January 2000. They cannot fund disbursements and will close within three months. They state "We have already had a number of crisis staff meetings - this is a team effort here to resolve the issue. We have already imposed short time working from 1 February 2000 for all staff in an effort to keep the firm alive. ...the team here is dedicated and committed but we appear to have been penalised....The rules therefore adversely affect specialist legal aid practices...."
In its letter the firm said that in January 2000 it received fees of £3,823 (net of VAT) plus £8,371 (net of disbursements of £4,050 on medical fees). The total of £12,194 compared badly with £17,000 per month in 1999. In February it would no longer receive any fees for 1999 claims because its billing system was so efficient, and it was likely to receive a total of £8,500 net, depending on the level of disbursements. On present form, their fees for the first three months would be £25,000 plus £4,000 for 1999 billings. [This] equals £29,500. "At that rate we close! ... If only...we could get payment on account of disbursements as before then we could survive. Without a resolution of the disbursements problem we effectively go under."
439. In our judgment, the general effect of all this evidence is that, for most of the market, the transition to the new controlled work contracts has gone smoothly, no doubt because most firms will have received plenty of family law matter starts, plus their extra tolerances, will receive a guaranteed monthly cash flow which represents actual baseline figures that are a good representation of their continuing level of work in a stable (or contracting) market, are not heavily dependent on the income from controlled work as a proportion of their total practice, and have nothing really to complain about, at any rate until the second quarter review comes along.
440. On the other hand, there are very serious difficulties in a few specialist corners of the market, which the Board is doing its best, within the discretions available to it, to resolve through a number of the different mechanisms we have described in this section. The bulk of the worries of reputable immigration practitioners must have been alleviated by the decisive steps the Board took, or was about to take, at the end of January. Very real hardship is likely to continue to be suffered, unless the Board acts equally decisively, by a few small specialist contracting firms in other fields which are new or which have recently grown in an expanding market. For them, their monthly payments (where they exist at all: new Section B firms like the applicants do not qualify until April 2000) are completely unrepresentative of the cost of their current work in progress.
441. Darwen Law Chambers, for instance, told the Board that in its last financial year they had been phenomenally successful at service delivery, showing a 100% increase against budget in 12 months which had resulted in a 100% increase in full time staff. They were finding that the reward for that success was that they were having to reduce staff suddenly because the contract they were offered was about 50% of their actual performance. They said that they were one of the most efficient and effective service providers in the field in the Manchester area, and they were totally committed to legal aid contracting and public service law. It appears to us that the Board needs to address the issues raised by that firm in its letters as a matter of real urgency.
442. Many of the severe transitional difficulties that have now come to light must have resulted from the fact that the Board's timetable was so seriously knocked off course last autumn, and it decided (or was not permitted: we do not know) not to change the fixed date for the start of the new scheme. It ill befits the representative body of the solicitors' profession to complain when the Board's plans were so badly affected by the fact that so many of the baseline figures submitted by firms of solicitors to this statutory body were inaccurate, incorrect, or possibly, in some cases, dishonest.
443. The Board was in the event unable to respond with the speed with which it would have wished to the worries raised by the small numbers of new or expanding specialist firms that were badly affected by the unrepresentative number of matter starts and schedule payment limits of which they complained. We were told that this slowness of response was caused, in no small measure, by the existence of these court proceedings. They have demanded the full-time attention of a number of the Board's most experienced headquarters personnel over a number of days. As a consequence, the timetable the Board had hoped to achieve for completing the initial contract award reviews was set back. These, however, are transitional problems (unless the Board is unable to respond with the swiftness the crisis demands to dedicated specialist firms which are in a real plight, like the firm in Darwen). Our principal task is to consider the robustness of the scheme as a whole, when considered against the standards required by public law. We turn therefore to consider the applicants' grounds for challenging the lawfulness of the scheme.
Part 22. The applicants' submissions: (i) The common law right of access to the courts
444. The applicants seek a declaration that the exclusive contracting regime which came into effect on the 1st January 2000 is, in its current form, unlawful. They also ask for an order of prohibition to restrain the Board from implementing the regime in its current form. Their first ground of challenge is that the regime is unlawful both because it infringes a fundamental common law right of access to the courts and because it is contrary to Section 32(1) of the 1988 Act.
445. In so far as the applicants' submissions on the illegality of the regime were founded on the infringement of fundamental common law rights, they have been refined as the case has progressed. These submissions arrived at their most compelling formulation in Mr Gordon's reply, when counsel and the applicants had had the advantage of having heard arguments presented by counsel for the respondents.
446. The submission is that every person in England and Wales is accorded by the common law a fundamental right of access to the courts, and that no impediment to that right will be lawful unless expressly and necessarily authorised by statute. The right of access to the courts will be assured by the state, with financial assistance where necessary; see R v The Lord Chancellor ex p Witham [1998] QB 575. In that case Article 3 of the Supreme Court Fees (Amendment) Order 1996 had purported to repeal provisions in the Supreme Court Fees Order 1980 which relieved litigants in person who were in receipt of income support of the obligation to pay fees for issuing legal process in the Supreme Court. This provision was held to be ultra vires Section 130 of the Supreme Court Act, 1981 and therefore unlawful. The decision means that such fees are waived by the state for those who cannot pay them, so that there is no impediment to their access to the courts.
447. One facet of the right of access to the courts is the ability to obtain advice and assistance, see R v Secretary of State for the Home Department ex p Anderson [1984] 1 QB 778. That was a case in which the simultaneous ventilation rule contained in Prison Standing Orders issued under the Prison Rules, 1964 imposed a restriction on the ability of a prisoner to consult his legal adviser on potential legal proceedings concerning his treatment in prison until he had lodged a complaint with the prison authorities. The Divisional Court held that the rule was ultra vires because access to the legal adviser to receive advice and guidance in connection with possible future legal proceedings in the courts was an inseparable part of the prisoner's right to unimpeded access to the courts. No issue arose in that case about the choice of legal adviser.
448. The importance of the right to advice and assistance from a legal representative is emphasised by the principles of "equality of arms" and "equality of treatment". Once the relationship of client and legal representative is established, then both the common law (in cases such as Self v Self [1954] P 480) and Parliament (in Section 31 of the 1988 Legal Aid Act) seek to place the legally aided litigant on the same footing as an unassisted litigant with reasonable means with which to pursue his remedies and defences. Consequently in Self v Self it was not lawful for a county court registrar to overrule an assisted party's choice of counsel where counsel had been selected by the assisted party from the appropriate panel. At common law a litigant who has reasonable means has the ability to choose his legal representative. This principle is stated in Halsbury's Laws of England 4th Edition Vol. 44 para 99 in this way:
"As a general rule, a person has the right to retain the solicitor of his choice, provided the solicitor is willing to act and is not precluded by the law or by professional rules from so doing."
449. Equality of arms and equality of treatment requires that a legally assisted party should likewise have the ability to choose his/her legal representative. If that is denied the legally assisted person, the result will be that the legally assisted person may well be forced to act through lawyers in whom he/she has no confidence and, for that reason, be at a grave disadvantage.
450. The second limb of the applicant's case on the illegality of the regime is based on Section 32 of the 1988 Act. Section 32(1) of the Act, as amended by the Courts and Legal Services Act 1990, reads:
"Subject to the provisions of this section a person entitled to receive advice or assistance or representation may select the legal representative to advise, assist or act for him from among the legal representatives willing to provide advice, assistance or representation under this Act."
451. Mr Gordon pointed out that Section 32 is contained in Part VII of the 1988 Act, that is to say it is one of those provisions which are general and supplementary. It must, therefore, apply to all the preceding parts of the Act, including Part II.
452. Mr Gordon relies in particular upon two of the sub-sections of Section 32. Section 32(2) provides:
"Where the Board limits a grant of representation under Part IV to representation in pursuance of a contract made by the Board, it may, as it thinks fit, assign to the legally assisted person one or more legal representatives or direct that he may only select a legal representative from among those with whom such a contract subsists."
453. Mr Gordon submits that this sub-section makes clear the scope of the right to select one's legal representative given by Section 32(1). He says that this right of selection cannot be limited to persons with whom the Board has a contract unless there is express provision to that end, as there is in relation to representation granted under Part IV of the Act. There is no such restriction laid down by the Act in respect of choice of legal representative to those who are contracted to the Board under Part II, in respect of advice, assistance and representation.
454. Finally, Mr Gordon drew our attention to Section 32(7) which enables regulations to be made limiting the right conferred on a legally assisted person by Section 32(1) to legal representatives who are for the time being members of a prescribed panel. Mr Gordon submits that that is the only way in which Parliament has allowed the right of assisted persons to choose their legal representatives to be limited. Moreover this sub-section makes clear Parliament's intention in Section 32(1) to confer a right to choose on legally assisted persons.
455. He accepts that Section 32 will be repealed on the 1st April 2000 by the 1999 Act which will not contain a similar provision. Nevertheless Section 32 is in force at the present time and, he submits, the regime is in conflict with the section.
456. Compelling though the submissions made on behalf of the applicants were, we cannot accept them, based, as we believe them to be, on fallacies both as to the nature and extent of the claimed common law rights and the nature and extent of the legal aid scheme. We accept that there is a common law right of access to the courts which is of fundamental importance in our legal system. We do not accept that that right is absolute or unlimited. Access to the courts can be and is limited by statute, for example by Section 42 of the Supreme Court Act 1981, which requires a vexatious litigant to obtain the permission of a high court judge to begin proceedings. Thus the act of the prison governor in Raymond v Honey [1983] AC 1 in stopping documents being sent to the Crown Office at the Royal Courts of Justice by a prisoner was a contempt of court because the court found nothing in the Prison Act 1952 that conferred powers to make regulations which would deny or impede a prisoner's right of access to the courts. Access to the courts, in the sense of being present at a hearing to present his case, in respect of a person serving a prison sentence can be limited by requiring that person to apply to the Home Office to be brought before the court. The Home Office may in an appropriate case refuse such an application, or grant it subject to the prisoner contributing towards the cost of his being brought, if necessary under guard, before the court to present his case, see R v Secretary of State for the Home Department, ex parte Wynne [1993] 1 WLR 115.
457. The position in the law of England and Wales is in line with the jurisprudence of the European Court of Human Rights, as is shown by the judgment of that court in Ashingdane v United Kingdom [1985] 7 EHRR 528 where the court said at p 546, para 57:
"Certainly, the right of access to the courts is not absolute but may be subject to limitations; these are permitted by implication since the right of access `by its very nature calls for regulation by the state, regulation which may vary in time and place according to the needs and resources of the community and of individuals'. In laying down such regulations, the contracting states enjoy a certain margin of appreciation. Whilst the final decision as to observance of the convention's requirements rests with the court, it is no part of the court's function to substitute for the assessment of the national authorities any other assessment of what might be the best policy in this field.
Nonetheless, the limitations applied must not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with Article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aims sought to be achieved."
458. As Laws J observed in R v Lord Chancellor ex p Witham at p 585B:
"As regards the ECHR jurisprudence I will say only that as it seems to me the common law provides no lesser protection of the right of access to the Queen's courts than might be vindicated in Strasbourg."
459. Equally, the right to choose a legal representative at common law is not and never has been absolute. It has always been limited in practice, amongst other things, by the client's ability to pay. The lawyer has never been obliged to give his/her services free. The nature of the right to choose a legal representative has been considered by Neuberger J in a recent case Maltez v Lewis [unreported: 27th April 1999]. This was an application by a plaintiff, who was to be represented by junior counsel of 7 years' call that the defendants be barred from instructing leading counsel. It would seem that both sides were legally aided and that the Legal Aid Board was considering whether to continue to assist the parties. Neuberger J declined to make the order sought on the ground that he did not have jurisdiction to make such an order. Alternatively he decided that if there was jurisdiction, then in his discretion he should refuse the application. In the course of his judgment the judge said:
"However, it has always been a fundamental right of any citizen to be represented by advocate and/or solicitors of his or her choice. That right is not of course absolute; circumstances may cut it down. Thus a person's chosen lawyer may be ill or engaged elsewhere or conflicted out. A legally aided party may find that the Legal Aid Board is not prepared to fund his or her particular selection of legal representative. Further it is clear that no party has the right to expect a hearing date to be fixed on the basis of the availability of his or her choice of advocate or solicitor. Subject to that type of consideration, it seems to me that there is a fundamental right to a choice of legal representative; indeed, I would go so far as to say it is an important feature of any free society."
460. We would agree that there is a right with which the courts will not interfere for a person to choose his/her legal representative if that person can afford to pay the legal representative he/she wishes to retain. There is no fundamental right to chose a legal representative whom the potential client cannot afford to pay, because there is no duty on the lawyer to give his/her services free of charge or at a fee at a level the potential client can afford. Still less is there any general duty on the tax payer to supplement the means of the potential client so that the potential client is able to meet the fees of the legal representative that he/she would wish to choose. As Neuberger J said:
"That right is not of course absolute. Circumstances may cut it down."
461. The judge was, in our view, correct to say that one of the circumstances that may limit the choice of the potential client is the fact that he/she is legally aided.
462. Whether the right is a fundamental right in the sense that the courts have held the right of access to the courts to be a fundamental right is doubtful. Neuberger J held that the court did not have jurisdiction to grant the plaintiff's application. We agree. That conclusion was sufficient to dispose of the matter that was before the judge on that occasion. If the right to choose a legal representative is a fundamental right, on whom is the correlative duty? No doubt a lawyer is under a duty to represent a person who wishes to retain him/her and who can pay for his/her services, if there is no proper reason for refusing to act for that person, such as a conflict of interest or unavailability. If the person cannot afford the fees of the lawyer he/she would choose, there is no duty on the lawyer to act, nor is there any duty on the state or the taxpayer to engage that lawyer for that person outside the legal aid legislation.
463. In R v Lord Chancellor ex p Witham Laws J adopted at p 585B the principles stated by the authors of de Smith, Woolf and Jowell, Judicial Review of Administrative Action, (5th Edition) at para 5-017:
"It is a common law presumption of legislative intent that access to the Queen's courts in respect of justiciable issues is not to be denied save by clear words in a statute."
464. Laws J then went on at p 586B to find that Section 130 of the Supreme Court Act 1981 contained nothing
"to alert the reader to any possibility that fees might be imposed in circumstances such as to deny absolutely the citizen's right of access to the Queen's courts."
465. He concluded at p 586D-E:
"[Counsel for the Lord Chancellor] submitted that it was for the Lord Chancellor's discretion to decide what litigation should be supported by tax payers' money and what should not. As regards the expenses of legal representation, I am sure that is right. Payment out of legal aid of lawyer's fees to conduct litigation is a subsidy by the state which is in general well within the power of the executive, subject to the relevant main legislation, to regulate. But the impost of court fees, is, to my mind, subject to wholly different considerations. They are the cost of going to the court at all, lawyers or no lawyers. They are not at the choice of the litigant, who may by contrast choose how much to spend on his lawyers."
466. Prior to 1949 and the coming into force of the Legal Aid and Advice Act, 1949, there was no state assistance for those with legal problems. The earliest statute, that of 1495, which admitted such persons as were poor to sue "in forma pauperis", provided that poor persons were not to be charged fees for the issue of writs. Lawyers were to be assigned by the Chancellor to prepare writs for poor persons without reward and, at the return of the writs, justices were to assign to the poor persons counsel who should act without reward. After that Act was repealed in 1883, the representation of poor persons was by solicitor or counsel to whom the poor person was referred and who were prepared to act for the poor person without fee. The poor person did not have the right to choose solicitor or counsel, although there were lists of those lawyers willing to act for poor persons. The solicitor or counsel was either one to whom the poor person was referred by one of the "prescribed officers" who constituted "a poor persons' department" or, if the matter reached a court, the solicitor or counsel assigned by the court to act for the poor person.
467. Since the 1949 Act came into force, the granting of state assistance to those with legal problems has been subject to limitations contained in the various legal aid schemes. We have described the essential features of these earlier in this judgment. We have shown that legal aid has never been accorded to a person coming within the legal aid scheme an unlimited ability to choose his/her lawyers, wherever they may practise. Those limitations have never been considered as impediments in the way of the impecunious individual's access to the courts. On the contrary, the impediment to such a person being represented before the courts was that person's lack of means. The legal aid schemes, albeit they contain limitations, have been a facility designed to help those to obtain legal services when they might otherwise be unable to obtain them on account of their means.
468. In our judgment, in so far as the applicants' case on the illegality of the new regime is based on the infringement of a fundamental common law right of those eligible for legal aid, it fails because there is no common law right to choose one's legal representative of the kind which the applicants would have to establish in order for this part of their case to succeed.
Part 23. The applicants' submissions: (ii) The right conferred by Section 32(1) of the Legal Aid Act 1988
469. We turn to consider the second limb of the first ground on which a declaration and an order of prohibition are sought, namely that the regime is unlawful because it is contrary to Section 32 of the 1988 Act. We have already set out the parts of that section on which Mr Gordon relied.
470 We have set out at the beginning of this judgment a description of the general structure of the 1988 Act.
471. As we have seen, the effect of the the Legal Advice and Assistance (Scope) Regulations 1989, as amended, including the amendments made by the Legal Advice and Assistance (Scope) (Amendment) Regulations 1999, is that regulations have now provided for all descriptions of advice and assistance (other than in criminal proceedings and personal injury and clinical negligence cases), together with ABWOR in MHRTs, to be excluded from Part III of the Act (see para 49 above).
472. It is against this background that we turn to Section 32(1) and to the submissions made on behalf of the respondents in answer to this part of the applicants' case. It is perhaps convenient to set out the sub-section again:
"Subject to the provisions of this section, a person entitled to receive advice, assistance or representation may select the legal representative to advise, assist or act for him from among the legal representatives willing to provide advice, assistance or representation under this Act."
473. "Legal representative" is defined in Section 43 of the Act by reference to Section 119(1) of the Courts and Legal Services Act 1990, which in turn refers to Section 28 of that Act. The term covers members of the Bar, solicitors and qualified legal executives.
474. The first submission made on behalf of the respondents is based on the phrase "a person entitled". The submission is that Parliament did not use the phrase "a person eligible". The only persons entitled to receive advice or assistance are those persons receiving advice or assistance under Part III of the Act who are eligible to receive such advice and assistance. That entitlement is based on Section 9(1) of the Act. Now that advice and assistance of all the descriptions with which we are concerned in this case have been excluded from Part III of the Act by regulations laid before both Houses of Parliament and approved by both Houses of Parliament, Part III of the Act no longer has effect in those respects (see Section 8(3)). It has to follow that Section 9(1) ceases to have effect in this context, and although there may now be persons eligible to seek advice or assistance in relation to the matters now excluded from Part III under the legal aid scheme, there is no longer any person entitled to such advice and assistance. Section 32(1) gives the power to select the legal representative to advise or assist, only to persons who are entitled to receive advice or assistance or representation, and not to those who are merely eligible under the Act to receive advice or assistance or representation on legal aid.
475. The second submission made on behalf of the respondents is that the power to select the legal representative to advise, assist or represent the legally assisted person is limited to those legal representatives "willing to provide advice, assistance or representation under this Act". The phrase "under this Act" means that the only legal representatives who are now capable of being willing to provide advice, assistance or representation under the 1988 Act, in the light of the new scheme, are those who have contracts with the Board to give such advice, assistance or representation and who still have case starts available to them, or can obtain further case starts from the Board.
476. In our judgment the first submission made on behalf of the respondents represents the correct interpretation of the Act. Section 32(1) has no application to Part II of the Act. That this is so is confirmed by the fact that it refers to the selection of legal representatives, whereas Section 2(6) provides that in the case of advice, assistance or representation being made available under Part II of the Act, those services may be provided by persons other than legal representatives.
477. In view of our conclusion on the first submission made by counsel for the respondents on the correct interpretation of the Act, the second point does not arise. Nevertheless, we would indicate that we accept that the expression "legal representatives willing to provide advice, assistance or representation under this Act" can only apply to legal representatives who are willing to provide those services under the new regime and are contractually able to do so.
Part 24. The applicants' submissions: (iii) The treatment of the not for profit sector
478. A further point concerning the legality of the proposed scheme was raised in Form 86A at paragraphs 65 and 66. The complaint is that the contracts with the nfp sector are significantly different from the contracts with solicitors in private practice in that they permit advice and assistance to be given by those working in the nfp sector to persons who may not be financially eligible for legal aid. The reference here is to the provisions in the General Civil (Not for profit) Contract Standard Terms which enable nfp organisations to provide "Initial one-off advice without establishing eligibility." These contracts permit work of that kind, subject to a total limit of 10% of contract time. The contracts provide that an eligibility test must be carried out in all matters after 20 minutes' work except in specified circumstances, and that further work may not be counted as contract work where the eligibility test is carried out and the client is not eligible for legal aid. The specified circumstances in which an eligibility test does not have to be carried out after 20 minutes' work are, first, where the matter can be resolved with a further 15 minutes or less advice; or secondly, where there are exceptional circumstances which justify more than 20 minutes being spent with the client prior to establishing eligibility, for example where the client is distressed or has learning or language difficulties.
479. On behalf of the applicants it is submitted that those terms in the nfp contracts breach Section 1 and 4 of the Legal Aid Act 1988 and are outside the scope of the direction given by the Lord Chancellor on 4th December 1999. They are said to be in breach of Section 1 of the Act in that they enable publicly funded advice or assistance to be given to those who do not come within the terms of the Act. Section 4, for its part, empowers the Board to do anything it considers necessary or desirable to provide or secure the provision of advice or assistance "under this Act". It is said that the giving of advice or assistance to those who are not eligible for legal aid under the Act cannot amount to the giving of advice and assistance "under this Act".
480. The applicants further submit that those terms in the nfp contracts are contrary to the direction given by the Lord Chancellor, which provides in paragraph 2(d):
"contracts for the provision of controlled work shall set financial eligibility for work provided at the same levels as financial eligibility is set under Part III of the Act."
481. Section 4(4) of the Act provides that powers to provide advice and assistance under Part II of the Act shall not be exercisable unless the Lord Chancellor so directs and then only to the extent specified in the direction and, if exercisable, shall be exercised in accordance with any directions given by the Lord Chancellor. The submission is that in paragraph 2(d) of his direction the Lord Chancellor has directed that the provision of controlled work shall be for those who are financially eligible for legal aid.
482. It is to be observed that even were the applicants to be correct in their submissions on this point, it would not be a ground for declaring the whole of the new regime illegal. The second observation is that the submission that these terms in the nfp contracts are contrary to sections 1 and 4 of the Legal Aid Act is surprising in view of the fact that, as we have already set out, no one has suggested that the provision that Legal Advice and Assistance (Amendment) Regulations 1994 were ultra vires the Act because they inserted into the Legal Advice and Assistance Regulations 1989 a new regulation 5A which provided that ABWOR in MHRTs "shall be available without reference to the client's financial resources,"
483. The practical justification for these terms in the nfp contracts is to be found in Mr Orchard's fourth statement at paragraphs 66 to 70. Mr Cogbill in paragraph 35 of his statement explains that the civil contract documentation for the nfp sector was available to the Lord Chancellor when he made his first direction on 4th December 1999. Paragraph 2(c) of that direction reads:
"Contracts may secure the provision of:
(i) controlled work (that is advice, assistance and representation under Part II of the Act, to which Part III of the Act does not apply); and
(ii) licensed work (that is representation under Parts III and IV of the Act); in accordance with the Board's general civil contract documentation."
484. In making this direction the Lord Chancellor must have had in mind the general civil contract documentation, including the provision by workers in the nfp sector of 20 minutes' advice before an eligibility check had to be made. Consequently, paragraph 2(d) of the direction, on which the applicants rely, if it is to be read consistently with paragraph 2(c), must be read so as to mean "where financial eligibility is set, it shall be set at the same levels as under Part III of the Act." It is not to be read, as the applicants would have it read, "No one can be given advice under the contracts unless they are financially eligible on the same terms as under Part III of the Act".
485. This was the reading of paragraph 2(d) of the Lord Chancellor's direction urged upon us by counsel for the Lord Chancellor and counsel for the Legal Aid Board. We consider that that reading of the direction is correct. We do not consider that the terms of the contracts in the nfp sector which contain the provisions for the giving of advice to certain persons prior to an eligibility check being made, render those contracts illegal. The drafting of those contracts in that way falls within the Board's powers under Section 4(1) of the 1988 Act, and the power it used was a power properly exercisable in that way because the Lord Chancellor had given the necessary direction.
Part 25. The applicants' submissions: (iv) Wednesbury irrationality
486. We turn finally to Mr Gordon's contention that the whole new scheme of controlled contracts was unlawful because it was irrational, or because those who framed it had failed to take into account relevant considerations. He was at pains to explain to us that this was not a challenge to the principle of a controlled budget or, indeed, to the need to prioritise resources. His clients' challenge was to the regime actually devised by the Board, and not to any other scheme which might have achieved the statutory purposes of the 1988 Act or the 1999 Act, while taking into account that principle and that need.
487. He complained that the vice underlying the present scheme was that - despite its stated objectives - it did not differentiate between (for example) a MHRT case on the one hand or a family dispute between a husband and wife over personal possessions on the other. It also failed completely to embrace the dynamic and fast-moving scene in particular fields of social welfare law, and the solicitors who, during the 1990s in particular, had achieved incomparable expertise and excellence in these fields. Fields of law like community care were being treated as add-ons, whereas, in order to achieve the express objectives of the Government and the Lord Chancellor, as well as the Board, social welfare legal services should have been the centrepiece of the regime. He said that this was not a question of political judgment immune from review, as Mr Pleming had argued, because the relevant political judgment had already been made in the December 1998 White Paper (see paras 9-10 above). Instead, it was a question of the reality failing to match the avowed policy.
488. He said that he was not arguing that the court should strike down the entire scheme because some of its component elements, such as tolerances, might possibly lead to the result that some citizens might possibly not be able to have a legal representative of their own choice and might possibly find it more difficult to seek legal assistance. Nor was he asking for the scheme to be struck down because they might receive publicly funded advice and assistance on, say, community care from a local solicitor rather than one of the few firms with acknowledged expertise like his clients' firm.
489. His submission in this context was that the scheme offended against elementary principles of public law. The reason for this was because it ran counter to the Board's own objectives. He described these objectives as transparency and fairness; achieving the greatest possible level of quality assurance by ensuring that as much work as possible was delivered through category specific contracts; and giving the greatest priority to social welfare cases, especially those engaging a public law element.
490. He added that the scheme was in conflict with the Lord Chancellor's objectives as set out in the White Paper. He said that pursuant to those objectives the highest priority had to be accorded to social welfare law, and to the rescuing of the disadvantaged and vulnerable from social exclusion (see paras 8 and 10 above).
491. He said that it was important for us to understand that the scheme itself had never received Parliamentary scrutiny. Parliament had merely considered the regulations which removed the relevant advice, assistance and ABWOR from the scope of Part III of the 1988 Act. It did not consider the directions or the contract documents, far less the detail of the scheme itself. Counsel for the Board and for the Lord Chancellor had suggested in the course of their submissions that it was not for the court to interfere with the will of Parliament and that the scheme had been approved by Parliament. This, Mr Gordon argued, was simply wrong. There was no constitutional impropriety whatever in the court determining whether, in fact, the scheme achieved the objectives set out in the White Paper.
492. He reminded us that the principles enunciated by Lord Greene MR in the Wednesbury case went far wider than mere perversity. He said that a decision would be irrational not merely if it was perverse but also if it failed to take relevant considerations into account, or if it took irrelevant considerations into account.
493. Mr Gordon said that the Board's first two relevant objectives appeared on the second page of its Guidance on Fund Allocation (see para 101 above). The first and fifth out of the eight objectives the Board had set out there for the allocation process were to provide a mechanism for determining the value of contracts which was efficient, transparent and fair; and to achieve the greatest possible level of quality assurance by ensuring that as much work as possible was delivered through category specific contracts. For the Board's third relevant objective he relied on the whole of the contents of paragraph 3.7 of the 1998 White Paper (see para 10 above).
494. Mr Gordon said that it was difficult to see how the first objective could, sensibly, be complied with if the Board deliberately refrained from disseminating its Guidance on Fund Allocation more widely on the grounds that it would be too confusing to practitioners, a matter which emerged from the evidence. Nor could it be thought to have been complied with if we were to conclude that the written attempt the Board had made to simplify the allocation process for our benefit had failed to demonstrate transparency. In any event, he submitted, the temporal touchstone for transparency to be achieved must be prior to the implementation of the new regime rather than subsequent to its introduction; and certainly not in outline submissions in contested judicial review proceedings brought to challenge the scheme's lack of transparency, or in evidence produced during the course of such a hearing.
495. Mr Gordon argued that the Board's second relevant objective was stifled at source if the regime failed to detect excellent quality providers and, indeed, virtually ignored the existence of such suppliers. Mr Hamilton had accepted that excellence was missed by the scheme at the meeting on 20th December (see para 233 above). Mr Gordon suggested that it appeared that the Board had no belief that it could foster expertise at all. We do not, however, accept that the passage of Mr Orchard's evidence on which he relied for this suggestion in fact supported it at all.
496. Mr Gordon argued that the difficulty was, of course, that if the Board failed to take into account the excellent provider in a niche area, such as community care (or education), it would, because of the scarcity of suppliers in those fields, seriously fail the client base in a new and dynamic area of law. It would thereby fail to meet its own quality objectives. He submitted that one of the very justifications for tolerances (the holistic treatment of clients) had a rather hollow ring when one examined the Board's attitude to a firm like the applicants which wished to expand its social welfare services by treating clients holistically. This was quite impossible without including realistic case-starts (and funds) in employment law. The firm could not invest the necessary time and resources in seeking to attract clients in disability discrimination cases in the absence of any prior commitment from the Board that they were permitted to undertake such cases.
497. He observed that the Board possessed virtually no data on a subject like community care, or on the holistic needs which it could help to serve in conjunction with other areas of law. He also said that the Board had used inadequate methods of inquiry (the questionnaire) to obtain information as to need. In such circumstances (and following its own policy of responding to bidders), the Board could not, sensibly, simply first shower case-starts on the franchised family firms under tolerances without more inquiry. To do so was to ignore the objective of securing access to quality providers, by treating access to any franchised supplier under a tolerance as being more important than securing access to an experienced solicitor under a category specific contract like community care.
498. Mr Gordon then argued that the importance of social welfare law had been undermined by the new regime. Mr Pleming had devoted much of his closing address to the importance placed by the Board on mental health because of the pivotal importance of liberty of the subject. It was for that reason, of course, that he had accepted as arguable the proposition that criminal law carried with it, in relation to any charge which might result in a custodial sentence, a positive funding obligation on the part of each member state of the Council of Europe.
499. But if mental health was so important (as it is) and deserved such priority (as it does), it was wholly inexplicable that the Board should have removed (if it has removed) entitlement to legal representation for detained psychiatric patients: all the more so when it seemed to be the case that eligibility levels for ABWOR was removed in consequence of this country's ECHR obligations: see the Megyeri case.
500. We were also reminded that the Code of Practice issued by the Secretary of State last year under section 118 of the Mental Health Act 1983 states at para 1.1:
" The detailed guidance in the Code needs to be read in the light of the following broad principles, that people to whom the Act applies (including those being assessed for possible admission) should receive recognition of their basic human rights under the European Convention of Human Rights ..."
501. Despite this, the Board's (and the Lord Chancellor's) position was both that all entitlement to ABWOR had been lawfully removed and also that there was no guarantee of funding under the legal aid system. Nothing in the evidence suggested that case-starts to mental health firms would automatically be increased throughout the contract to meet client need, or that there would be commensurate funding. Mr Pleming had said that the reason for the absence of any such guarantee was to discourage unmeritorious applications by patients, but Mr Gordon asked rhetorically: how could an application by a patient under ABWOR ever be unmeritorious? We would comment that he appears to have overlooked the fact that even under the old scheme the Board possessed a discretion to refuse ABWOR at a MHRT if it appeared unreasonable that approval should be granted, and that we have little difficulty in imagining a vexatious renewed application being made in circumstances that do not warrant public funding.
502. The applicants placed emphasis on the fact that until 31st December 1999 clients were entitled to state funding for ABWOR and for many other categories of advice and assistance relating to the vulnerable and disabled and to their problems of social exclusion. Now, less than nine months before the Human Rights Act 1998 was to come into force, and against the background of the Government's and the Board's own stated objectives of increasing socially excluded persons' access to justice, both respondents were contending that all entitlement to relevant legal advice, assistance and ABWOR had disappeared.
503. Mr Gordon also said that it was inexplicable that important areas of advice and assistance for formerly detained psychiatric patients should have been overlooked. Much of community care law is concerned with after-care services under section 117 of the Mental Health Act 1983 (being a "community care" service under section 46(3) of the National Health Service and Community Care Act 1990). He submitted that the provision of community care and health services was designed to ensure that vulnerable people (including discharged former psychiatric patients such as conditionally discharged restricted patients and former patients liable to after-care under supervision) were supported in the community. If they are not so supported, they are likely to end up being detained in hospital again, or being recalled to hospital by the Secretary of State under section 42 of the Mental Health Act 1983. The revolving door client is not just a "mental health problem"; the same client will raise important issues of community care law. Indeed, the Coughlan decision demonstrated that the borderline between health and social care is a fine one.
504. Mr Gordon then turned to his clients' complaint that overwhelming priority had been given to the whole of family law, contrary to the Lord Chancellor's and the Board's policy objectives. Mr Pleming had said that the new regime was concerned with the active direction of funds into areas and work that had been prioritised according to the needs of people. Mr Gordon maintained that no such exercise had been carried out. He said that the real vice of the Board's thinking on family law was that it had assumed that because a lot of money was currently spent on family cases, this led inexorably to the conclusion that the need for family law services was paramount and that it required a similar form of continuing expenditure. It appeared from the evidence that the RLSCs had never investigated the need for family law. Nor were any such investigations undertaken by the Board. The Board had simply directed the RLSCs to treat all family law as high priority nationwide, and guaranteed all franchised family firms a contract, with funds being allocated on the basis of current spend. We would comment that we are satisfied that this was, indeed, the effect of the evidence.
505. Mr Gordon submitted that this prioritisation of family law was antithetical to the regime's objectives. The Board had told us in its evidence that it "always knew" that the vast majority of contracts would be let in family law. It appeared to consider that large numbers of cases in family law were a necessary indicator of need, but that this was not the case in other areas of law. It was unclear why it adopted this approach. On this point, in our judgment, the reasons why the Board considered that it could not rely on the numbers of cases in fields of law other than family and mental health as an adequate indicator of need are comprehensively and satisfactorily explained in Mr Orchard's evidence.
506. Mr Gordon also submitted that it was unclear why previous high levels of expenditure were thought to be indicative of a high level of need for family, but not for other areas. He said that this was even more extraordinary given the Board's avowed intention to move from what it termed a "lawyer-led" system to a regime based on assessed priority and identified needs. The Board had said that family clients had adequate access to legal services, whereas it acknowledged that access to mental health and community care solicitors was insufficient. Why, then, Mr Gordon asked, was priority given to a well-served area of law such as family over other areas with a dearth of practitioners such as community care (or public law). On this point, Mr Orchard was, in fact, satisfied that there was a national network of mental health solicitors which ensured reasonable coverage and access (see para 341 above) Access to specialist advice in community care law, on the other hand, raised different issues, to which we will return later.
507. Mr Gordon argued that there was in fact no basis, in terms of the Government's and the Board's objectives, for regarding the predominance, or such predominance, of family law as an axiom. He said that certain areas of family law might assist with the prevention or reduction of social exclusion (the apparent object of much of the regime). However, it was, he claimed, self-evident that many areas of family law had no such obvious priority. There was no clear comparison that could be made between family law in terms of its relevant social welfare objectives and those of any other area of social welfare law (for example, community care). The Board recognised that the poor were more likely to suffer problems in relation to debt, housing, welfare benefits and employment. Mere numbers of practitioners in family law bore no necessary relationship to the need for services to prevent social exclusion.
508. One of the difficulties Mr Gordon and his clients faced was that as the hearing progressed, they showed that they had little real knowledge of the content of the caseload of a family law practitioner under the new controlled contract. The extent of their ignorance was displayed by their failing to appreciate that modern family law policy has encouraged clients to access the magistrates' court rather than the county court for many matters. Equivalent remedies are available in each, and the choice of venue should depend on whether the issues in a case are concerned principally with questions of fact, or with questions of law. It would therefore have been quite unreasonable, as the Board appreciated, for ABWOR in magistrates' courts and certificated (or licensed) work in county courts to have been dealt with in different parts of the new contracts.
509. There was also a failure to appreciate how much family work is concerned with easing the pain that is caused when relationships break up, protecting the vulnerable from violence in the home or from threatened homelessness, or protecting children from the fecklessness, irresponsibility or cruelty of adults. All these matters come fairly and squarely within the Lord Chancellor's and the Board's priority objectives. When one looks for the causes of crime and social exclusion, none of these matters are very far away from the minds of any responsible analyst. When we pressed Mr Gordon to identify the areas of family law that did not come within these priority objectives when the Board was concerned only with people who were so poor, both in income and capital, that they qualified for help under a controlled work contract, he referred in engagingly vague and general terms to disputes over the division of property. He did not have any statistics to support his contention that this formed any significant part of the Board's expenditure on green form family law work. At that level of poverty, there would not be much property to divide, and any unfairness in the division could bear heavily on the ability of a one-parent family to provide for itself adequately on income support in future.
510. Undeterred by the points we had put to him, Mr Gordon submitted that the prioritising of family law over and above other areas of legal aid service brought with it a heavy price in terms of the expertise permitted to be available to clients in other areas of law in which they should be allowed expert access. He said that this was particularly the case where there were few expert practitioners (for example, in mental health or community care), although these were services designed to assist the socially excluded. If family firms were given such priority, it meant that funds were not available at source for non-family work such as housing, community care and so on. He submitted that such a policy violated the Board's objectives of focusing funds on areas of priority need, such as social welfare law, to prevent social exclusion.
511. In those circumstances, he submitted that any discretion that might be exercised on a temporary basis by the Board over the next few weeks could not possibly cure these intrinsic defects, which would influence the scheme over the next three years and probably beyond, given the 80% guarantee of work under any new contract schedules. The priority afforded to family law, together with the mandatory provision of extra tolerances that were unique to firms undertaking family work, meant, he said, that most of the Board's money was committed from the very outset before the consideration of anything else.
512. Next, he summarised the applicants' challenge to the Board's chosen policy on tolerances. He said that if there were insufficient providers of specialist services, it made little sense to deny such specialist practitioners as did exist the volume of work which they wished to undertake, whilst, at the same time, allocating funds to non-specialists who might have no desire to undertake such work, and who were, by definition, not so expert in the area of law in question. He also said that there could be no justification, either, for the automatic allocation of tolerances to family firms in addition to their own case-starts across the board, whilst at the same time permitting non-family practitioners to undertake tolerance work only in place of existing case-starts.
513. He said that if the rationale behind the allocation of additional tolerance cases to family firms was that this ensured access, there was no justification for such a blanket policy (applied to cities and rural areas alike), since the need for such access had never been assessed. In any event, the amount of tolerance cases to be added to a family contract was dictated not by any kind of access requirement, but by the number of family cases that the firm had and the other areas in which it had a franchise. We would observe that this contention is not supported by the evidence. Although it is correct that a minimum 10% additional tolerance was awarded in respect of all family matter starts, the average figure for all tolerances was 13.5%, and the Board made it clear that tolerances only reached as high as 100% (or £20,000, whichever was the lesser amount) where there were problems about access (see paras 148-149 above).
514. Mr Gordon complained that the non-family firms were prohibited from ever being able to offer a holistic service unless they used up one of their available case-starts. Tolerances only allowed the development of new areas of practice within family franchised firms. Thus, for example, his clients might well wish to expand into public law or education law which, he said, was highly complementary to community care law. They might, however, on their present award, undertake a maximum of three cases under their inclusive tolerances and they would not achieve LAFQAS standard (350 hours). In order for the firm to achieve the 30 generic cases which the Board had indicated would justify a category-specific contract in education, the firm would have to be allocated 300 extra cases to achieve the 30 cases in education. We would comment that the Board's evidence showed that it had become less prescriptive during the course of 1999 towards an absolute requirement on the part of a specialist firm to show a track record of 30 cases before it could be awarded a category specific contract. Mr Pleming also made it clear during argument that there would be nothing to stop a firm like the applicants asking the Board to permit them to undertake a case start in education, say, outside the four corners of its existing contract schedule and outside its existing permitted tolerances, and the Board would then consider that application on its merits under Clause B17 which gave it a complete discretion.
515. Mr Gordon's next complaint was that in allocating both category-specific contracts and tolerances to Section A firms, the Board wholly ignored the existence of section B firms. He said that in relation to generic contracts, given that the emergence of a suitable bidder was the Board's preferred criterion for allocation, it was bizarre that the position of firms such as the applicants was overlooked at that initial stage. We would reject this criticism. As Sullivan J suggested in ex p Elton at pp 7-8, when it was concerned with reform on this massive scale, the imposition of a timetable of some kind was both necessary and reasonable. The Board was entitled to set deadlines and to consider first the allocation of funds and matter starts equitably between the firms that were able to meet the deadline. The appropriate treatment for firms which were unable to meet the deadline raises a quite different set of issues.
516. Mr Gordon rejected a point made in the course of argument which was to the effect that the tolerance system meant that fewer non-specialists would advise on generic categories. He said that this did not meet the reality of client demand in those areas of law. The Board accepted that solicitors in generic areas had a national client-base because of their expertise. The reality was, therefore, that by placing severe limits on the ability of those solicitors to maintain their client-base, the tolerance system allowed more non-specialists than before to advise in such subject areas. We would comment that it would be very easy for us to be distracted by the fact that the present application is made by an exceptional small firm which has attained a national reputation for its expertise and the quality of the services it provides. The evidence we received certainly did not support the proposition that all, or indeed many, community care firms had a reputation wider than their local region.
517. Mr Pleming had asserted that it was the Board's view that a family practitioner should be able to advise on community care, education and public law. Mr Gordon inferred from the scheme as it was constituted at present that it was also the Board's view that other practitioners should not be able so to advise on such topics (including the very specialists that had formerly advised). He said that this was absurd. A housing practitioner (or an education practitioner), for example, was far better equipped in expertise to advise on community care than a family practitioner. Again, we consider that this sweeping proposition is not supported by the evidence, or indeed by the court's wide knowledge of the ability of many non-specialist firms which provide a "general practitioner" service to their clients. The Board showed that it was right to be sceptical about the skills, and indeed in some cases the professional integrity, of a substantial number of practitioners holding themselves out as specialists in fields of social welfare law (see, for example, paras 58 and 103 above). There can of course be no doubt that some First Division specialist firms, of which Mr Gordon has personal knowledge, would be as good at advising on community care law (and in some cases better), when compared with the GPs of the system, but other specialist firms might well be worse. We use the word "First Division" to distinguish such firms from the Premier League firms like the applicants in their specialist fields of mental health and community care, and also from the bad non-league firms which the Board said it had little difficulty in identifying (see para 233 above).
518. Mr Gordon then turned to the position of new firms seeking to break into the controlled contract market in the second and subsequent years of contract awards. He said that although Mr Pleming had shown us the detailed provisions set out for such firms in Rule 6 in the Terracotta book, he had not addressed the practical problems raised by others in the course of the evidence, which had never been effectively rebutted. He forecast that few, if any, new firms would set up and make the necessary financial commitment without a prior commitment from the Board.
519. We agree with Mr Gordon that on the evidence before us there is a good deal of force in the anxieties raised by Ms Mackintosh and others (see paras 215-6, 368 and 416 above). If the Board does not address these issues successfully in the period now available to it before it embarks on inviting bids for awards in the second year of the scheme, the result is likely to be adverse to the public interest. We accept Mr Gordon's submission that the history of the last 20 years has been marked by solicitors (and, indeed, barristers) splitting off from larger units in order to provide a quality legal aid service to clients in specialist corners of the market. It would be a serious disadvantage if any avoidable rigidity in the new scheme inhibited these natural, and usually admirable, developments in the market for the supply of legal services. We do not consider, however, that this concern should lead us to declare now that the scheme as a whole is unlawful, and it would be useless to strike down the present Rule 6 (so far as it affects new firms) without replacement. So far as the detail of Rule 6 is concerned, these worries are at present hypothetical, but the Board would do well to address them more effectively before any of them become a reality.
520. So far as the 1999 round of contract awards is concerned, Mr Pleming had accepted, as indeed the evidence showed, that no account was taken of expansion (actual or planned) and that the Board looked only to the allocation to the bid zone and the base-line. Mr Gordon submitted that this constituted a failure to take account of self-evidently material considerations, especially in areas where it was already accepted that there were few quality suppliers and no relevant data, other than that produced by the emergence of such suppliers through the bidding system. We reject this submission. The Board's evidence shows that it is being astute to meet the needs of firms whose business has expanded since the baseline period, and to encourage firms in financial difficulties to contact it immediately so that they can talk through the causes of those difficulties. It has also said unequivocally (see para 433 above) that in relation to the period leading up to the second quarter review it will increase schedule payment limits, as appropriate, if it increases a firm's matter starts in order to respond to expanding demand since the baseline period, although it will only put adjusted schedules into place before the review if it is satisfied that a firm is in financial difficulty. Although we have made it clear that we consider that there are still unresolved difficulties in the way of new firms seeking to enter the market for controlled contracts, we see no reason to fault, as a matter of law, the approach the Board adopted in its first round of contract awards. It was certainly open to it to prefer to place more weight on the record of actual matter starts for firms during the first round of contract awards than to award more starts to a firm based on what it told them about its plans for expansion.
521. Mr Gordon then submitted that the contract awards were also flawed in two further critical respects. First, firms were only ever invited to bid for a 12 month period and their bid was the maximum that the firm could be awarded. Yet the contract was for 15 months. We were categorically assured by Mr Pleming, even if this did not appear clearly in the evidence (in which this point was never raised, so far as we can recall, as a serious issue), that the Board's calculations were always adjusted to take account of the contract period. A supplementary criticism was that firms were never being asked to estimate for more than the next 12 months, so that any adjustment could never encompass expansion since the historic monitoring period or any intention to expand to meet client demand in the future. Once again, we are satisfied that the Board's preference for historic records, coupled with a willingness to respond swiftly to evidence of increasing demand in relation to the first six months of the new contracts, cannot be assailed as a matter of law.
522. Mr Gordon then argued that if the bid numbers were ignored, there seemed to have been little point in asking firms for a maximum bid, save only to the extent that the Board intended to limit firms to that figure for years to come. The answer to this is that the bid numbers were not ignored. They formed a ceiling above which an award for the first schedule period could not be made. If a firm would have made a higher bid in the first contract round but for being misled by a suggestion that it was only being invited to bid for a 12-month period, we would respond that this has little to do with the applicants' case, and that the evidential basis for such a complaint has not in any event been made out.
523. Mr Gordon then mounted an attack on the contents of the note prepared by counsel which described the Board's approach to changes in controlled work contracts. He submitted, correctly, that the present application could only be determined on the basis of the evidence before the court, and we have already described how we refused an application by the Board to submit further evidence following the end of counsel's submissions (see para 268 above).
524. Mr Gordon accepted that the Board had always said that practitioners should not turn away clients (within the first six months of the contract) but should approach the Board first. Critically, however, the Board has never said what it would do if practitioners did approach it. What it did say, on page 6 of the Burgundy book, was that it would have the flexibility to increase the maximum number of case starts and the schedule payment limit if it could do so, given the financial allocation to the zone and the performance of other contractors. What it was now attempting to say, through counsel, was not clearly supported by its own contract documentation, and it was on the basis of that documentation that the Lord Chancellor had directed the Board to enter into contracts by his direction dated 4th December 1999.
525. Mr Gordon added that the status of the information contained in counsel's note was wholly unclear. When did the Board decide to exercise its discretion in this fashion? Why was this material not in the seven statements of evidence before the court? If guidance has been produced by the Board, why has that guidance not been exhibited to any of the statements? The issue to which the note was directed was hardly a new issue. He assumed that the note had not been sent to practitioners. He said it had not been seen by the Law Society. He asked whether it had even been circulated to the relevant regional offices. How, he asked rhetorically, could the Board's own objectives of efficiency, transparency and fairness even begin to be met when such information was presented for the first time in this fashion?
526. He went on to complain that the note offered little comfort to practitioners or to their clients for a number of reasons. First, there was the procedure which the Board proposed to go through in order to decide whether to give increased matter starts to an office. It would inevitably take time for the Board to obtain the information it required from the firm and from its own records before it was satisfied as to all the matters about which it needed to be satisfied. If a solicitor had a client in the office who needed advice and assistance, or representation before an MHRT, and needed that advice and assistance there and then, the procedure proposed by the Board did not allow for the kind of response that the solicitor and client required. Mr Gordon asked: what is the solicitor to say to his/her client, who may be vulnerable and in urgent need of help? Perhaps: "Previously I could have given you the advice and assistance you needed immediately, but now I have to wait for the Board to assess how many other clients I have seen, assess how I obtained those clients, and assess the nature of advice and assistance that I have been providing to them. Once it has done that it might let me help you."
527. Secondly, and critically, even if the Board increased the number of case starts for solicitors, it was not proposing to increase the schedule payment limits correspondingly or at all. This, he said, was clear both from the terms of the note, which significantly omitted any reference to schedule payment limits, and from the Board's own evidence, which evinced an intention to delay revising schedule payment limits until after the second quarter review. He submitted that an increase in the number of case starts was a hollow gesture in the absence of a revision to the schedule payment limits. To allow firms to undertake more cases without paying more money effectively required the firm to subsidise the Board, particularly in relation to any disbursements they had to pay. Moreover, firms were prohibited under the contract from exceeding the schedule payment limits, and exceeding the limit entitled the Board to reduce the number of case starts: see Clause B16(c) in the Burgundy book (for which see para 133 above).
528. If, by way of example, a firm was initially allocated 10 education cases with a total schedule payment limit of £1,000, there was little point in it being permitted to undertake a further 10 cases if the schedule payment limit was not correspondingly increased. If it did undertake all or any of those further cases, its work in progress and disbursements (which it has a duty to incur) would exceed the schedule payment limit and it might therefore have its future matter starts reduced.
529. Mr South had said in his second statement at paragraph 23 that even if the number of case-starts was increased in the first six months of the provisional award, the schedule payment limit would not be altered. He gave two reasons for this policy. The first was that any additional cases which were awarded were unlikely to be billed within a few months and would therefore have no impact on the firm's income during that period, and the second was that only a small minority of firms relied substantially for their income on advice and assistance cases. We would note that Mr South qualified his initial assertion by the use of the word "generally".
530. Mr Gordon argued that all the evidence showed that many types of advice and assistance cases were started and finished within a short period. This frequently happened within days: for example, an urgent community care case might start as an advice and assistance matter and then, following an unsatisfactory (if any) response to the letter before action, be followed by an application for full civil legal aid. In the area of mental health patients' applications for MHRTs under section 2 of the Mental Health Act 1983 must be listed within seven days. He said (although we do not remember this being in evidence) that the solicitor is often contacted at extremely short notice, sometimes even on the day of the tribunal hearing.
531. He said that the Board's second reason showed that it assumed that firms would be undertaking private work in order (effectively) to subsidise their legal aid work. He argued that this was an unjustified assumption in areas of social welfare law, since the clients were unlikely to have any money and the firm might well not combine such work with private client work.
532. The discretion to increase the schedule payment limits, to which Mr South referred in his evidence, only engages where a firm is in "serious financial difficulty". Even then he said that it was only "where appropriate" that any further funds would be awarded by way of an increase in the schedule payment limit to the firm. Extra cases should result in extra payment, since if they did not, a firm could not incur disbursements such as experts' reports, independent psychiatric reports for MHRTs or travel fares, and it would have difficulty in paying staff salaries.
533. Importantly, Mr Gordon said, the Board was not guaranteeing that solicitors will not have to turn clients away, and with its attitude to schedule payment limits it clearly could give no such guarantee. The Board's emphasis on the need to have regard to the capacity of other suppliers in the relevant zone diluted any assurance that might be given to practitioners seeking an increase in their case-starts.
534. In any event, what the Board was proposing in its note could not and would not cure the underlying defects in the regime. These arose from the flawed way in which the funds and case starts were allocated in the first place. The reason for this was that the vast majority of the Board's funds had already been allocated - to family contracts (based on the assumption that high spend for family equals high need), and to tolerances and so on, with no sensible or coherent or informed allocation for the specialist niche categories at all.
535. Mr Gordon submitted that it was essential that the Board got the allocations right (in terms of a rational and fair allocation of funds in accordance with its identified priorities and objectives) at the outset. He said that this was envisaged in the former Government's White Paper in 1987 and also in the 1999 Act, where funding was based on a prior assessment of need. Once the allocation has already taken place (as occurred in November-December 1999) only the reserve can be drawn on by the Board. The review in the second quarter of the year 2000 would not be a review of the Board's priorities or of its original allocations, nor of the overwhelming priority given to family firms, including the provision of mandatory tolerances, but merely a consideration of the work that had actually been done as against that which the contracts permitted. The outcome of the review would be dictated, therefore, by the allocation that has already been taken place. In turn that will dictate what will happen in the second and third years of the contract, and probably beyond. The contracts were therefore already largely determined for several years.
536. Mr Gordon said that it was important for us to note that the Board was not proposing that it would act to increase new matter starts to enable firms to take on new clients throughout the life of the contract, but only over the next few months. No long term assurances or guarantees were proposed. What, he asked, would happen in September or November or in January 2001? He said that it was significant that the Board did not even guarantee legal representation in MHRTs, but had merely noted that it should be accorded a priority. Although the Board had stated that it would spend more in 2000/2001 than in the previous year, the question as to the timing of the financial year remained unanswered, and Mr Gordon said that he and his clients did not know if the £13 million allocated for mental health was for 15 or 12 months. We can respond to that uncertainty immediately. Although the Board's evidence did not always explain very clearly the adjustments it was making in relation to the first period of contract schedules, it did make it clear that it was talking about an allocation of expenditure of £13 million for mental health in respect of the twelve month financial period which would start in April 2000. This related to payments to be made in that financial year, and not the cost of all the cases that might be started in it.
537. Mr Gordon invited us to remember Mr Hamilton's refusal on 20^th December 1999 to give any kind of guarantee to his clients that it would receive an adequate number of case starts during the term of the contract (see para 234 above). This was the more remarkable, he said, given that the Board had acknowledged the lack of adequate suppliers in the areas in which the applicant firm practised, and its own lack of information on those areas (particularly community care), and that it had also acknowledged the applicants' expertise in the field. It was, he submitted, striking that the Board was wholly unable to provide the applicants (or any other practitioner) with any kind of assurance that they would be able to continue meeting their clients' needs throughout the whole term of the contract.
538. It was argued that it was no answer to say that the regime was "flexible". The suggested flexibility of the scheme was irrelevant for two reasons, because the Board's contract discretion was open-ended, and because the only way in which Section B firms could receive extra money would be through firms dropping out, or from the £9 million reserve. The reserve, however, had to meet rather a lot of things, and no details had been provided as to how the Board's discretion to release funds from the reserve to cover all the matters mentioned by Mr Orchard would be exercised.
539. Mr Gordon complained, in effect, that the contract provided no guarantee whatsoever. It might be varied at any stage by the Board, even (apparently) to the extent of removing areas of work from the scope of contracts on a national basis. This was very different to the Parliamentary scrutiny which was required under Part III of the 1988 Act before the actual scope of the legal advice and assistance scheme could be restricted by a contract-led regime.
540. He added that nothing in the contract documentation suggested that any additional allocation, through discretion, which resulted in further case-starts being awarded could ever exceed a firm's maximum bid. For Section A firms the relevant date for the bid was July 1999, and for the 34 Section B firms invited to bid it was December 1999. The contract period would not end until March 2001. During that time firms might gain or lose departments; people might leave, people might join and so on. It was, therefore, unrealistic in the extreme for the Board to expect firms to provide an accurate estimate of the likely number of cases that they would undertake two years in advance. Even then, (as already submitted) the firm would only have bid for 12 months.
541. In addition, firms were, in any event, only given a guarantee that they would be awarded 80% of their Year 1 allocation when it came to Year 2. For Year 3, the guarantee was further diminished because the only assurance the Board has given to contracting firms is that they would receive 80% of the case-starts for year 2. It has also said (see page 10 of the Burgundy book) that after the first year of contracting it would only be making changes to case-starts and schedule payment limits where long-term trends were clear. From this was derived an argument that a firm's initial bid maximum as estimated in July 1999 would bind it for almost four years, as being the most that it could ever be awarded by the end of Year 1. Moreover, what it was awarded by the end of Year 1 would dictate what it would receive for the next two years. Mr Gordon described this as a flexibility which was, on analysis, a tourniquet.
542. Mr Gordon then addressed an argument he attributed to Mr Pleming which was to the effect that under the old regime firms still had to be authorised before they could take on cases and that there was therefore no material difference in this respect between the new regime and the old. This, he said, was simply wrong. Under the new regime, solicitors who run out of case-starts or reach their schedule payment limits must approach the Board for permission to take on another client. Under the old regime, any client could approach his/her solicitor and the solicitor did not have to go through further steps in order to be able to advise the client (at any rate for the first two hours, in non-family cases).
543. Mr Gordon was also anxious to stress the fact that it was client demand rather than lawyer demand that drove the old system. In the absence of fraud, solicitors simply gave advice and assistance to clients who came to them seeking such advice and assistance. (We would note that he has wholly overlooked the Board's evidence about firms touting for unmeritorious business on housing estates, which no doubt led to its prohibition on "cold calling" in the new contracts: see para 58 above). He said that when we considered the drastic change that has taken place, we should appreciate that (for the most part) lawyers who responded to client demand and to the franchise quality standards were committed to undertaking work for the disadvantaged in society at significantly lower rates of pay than the vast majority of firms doing private work. This was, indeed, recognised in the December 1998 White Paper.
544. He ended his submissions by saying that if the Board had transparency and fairness among its principal objectives, it followed that its new regime could not leave open and unanswered important questions that raised concerns as to the administration of justice and access to the court for all citizens without means. These questions included (but were not limited to) the following:
(1) Were baselines increased pro rata to 15 months?
(2) How many offices have been given a contract award in mental health (or any other subject area) that exceeds their baseline number of case-starts?
(3) What are the discretionary principles by which the Board departed from the Guidance in deciding which invitations to bid for generic contracts were issued?
(4) What are the discretionary principles by which the schedule payment limit may be increased or decreased?
(5) Has the guidance note now been sent to all regional directors and practitioners?
(6) Why were all firms undertaking community care or other generic work not invited to bid for a contract?
(7) For those invited to bid for a generic contract what were the discretionary principles by which decisions were made not to award the full bid given the absence of any relevant data and the dearth of practitioners?
(8) Are case-starts automatically increased upon application to the number of case-starts applied for?
(9) If and when case-starts are increased can they be increased to a figure exceeding the amount of case-starts originally bid for?
(10) Do firms like the applicants have a guarantee of increased case-starts and/or increased schedule payment limits to meet client-demand in: (i) the first 6 months of the contract award; (ii) thereafter?
(11) Do firms have to wait until the last case-start has evaporated before being able to approach the Board? If not, when should they approach the Board? How long will the Board take to process the claim? Will the Board guarantee that the request (if urgent) will be dealt with immediately?
(12) How do new firms of quality and aspiration to meet client-demand ever break into the system?
(13) Why were firms only invited to bid for one year rather than for the whole of the contract period?
(14) How do firms like the applicants develop new areas of law such as public law (human rights) and education when they must first have a contract in order to be able to take on clients in the first place?
545. Mr Gordon submitted that a regime that continued to raise such questions was hardly transparent, and that the questions remained unanswered despite seven witness statements from the Board in these proceedings.
546. For these reasons he encouraged us to quash the entire new regime of controlled contracts, or, in the alternative, to make a declaration that it was unlawful.
Part 26. The court's conclusions
547. We have set out Mr Gordon's arguments at length in order that they can be read and studied carefully by everyone, and in particular the Board and the Lord Chancellor, who is concerned about the future of this scheme. We do not, however, consider that it is necessary to set out our conclusions at equal length.
548. We have already explained why we do not regard this as a case concerned with an interference with what English judges are increasingly calling fundamental or constitutional rights. Mr Gordon's arguments were full of hypothetical worst case scenarios. In our judgment it would be wrong for this court on the present application by a firm of solicitors, which makes no suggestion that any of its own rights are being violated, to be distracted by the possibility of what might transpire if a worst case scenario did occur. If one of Ms Mackintosh's severely disabled potential clients (or former clients) made a complaint to the effect that he/she was quite incapable of accessing a court (or a MHRT) without competent help, that there were reasonable grounds for challenging some act or omission which significantly affected his/her interests (there are plenty of examples of these in Parts 16 and 17 of this judgment), and that the Board's new scheme meant that he/she (or a proxy, if capacity was lacking) could not find an adviser competent enough to protect his/her interests adequately with the degree of immediacy that the particular dilemma warranted, then the court would have the opportunity of considering a real situation by someone claiming to be a real victim. Each case would, of course turn on its own facts.
549. In this context the information services being prepared by the Board, which are in an embryo form at the moment, would appear to play a particularly important role in combating the danger of such a situation occurring, especially if they are capable, as a reliable electronic information kiosk would be, of giving immediate, accurate information about suitable firms or agencies with available case starts. The Foreword to the Government White Paper shows that it is an objective of Government that people must be confident that they can enforce the rights they have, if need be. Before January 2000 there were 11,000 solicitors' offices in this country bearing the familiar legal aid logo, and every financially eligible citizen was entitled as of right to up to two hours of free legal advice. If the problem was not within the solicitors' field of competence, or there was some good cause (see Legal Advice and Assistance Regulations 1999, regulation 18) why the solicitor should refuse to advise, the solicitor would refer the client to a list of other green form solicitors, none of whom would be inhibited from advising by esoteric problems like exhausted case starts or the possession of a licensed, as opposed to a controlled, contract.
550. There was, in our judgment, a good deal of force in Mr Gordon's argument that a vulnerable client of the type vividly described in Ms Mackintosh's evidence needs a good deal of courage to approach a solicitor with a legal problem, and particularly a problem of an intimate kind. The prospective client is likely to be bewildered if the solicitor has to say that he/she would like to advise, is willing and competent to advise, but cannot advise. We were told that there has already been one story published in the legal press by a solicitor who spent 35 minutes trying to explain to two clients of limited mental capacity why he could not advise them on the present occasion, much as he would like to do so. That solicitor would not necessarily know what other solicitor or nfp agency still had a case start (or a tolerance) available in the relevant field of law, particularly in the closing months of a legal year when the state of the Board's budget might not permit it to respond immediately to a solicitor's request for a new case start to be allocated.
551. These issues - and the likely response of a court of law if the current difficulties over the provision of information are not effectively resolved - lie, in our judgment in the future.
552. We have also explained why the continued presence of Section 32(1) of the 1988 Act on the statute book creates no impediment to the lawful introduction of the controlled work scheme, and why we do not consider the special rules for the initial period of advice by nfp agencies are ultra vires. For the sake of completeness, we would add that the applicants also advanced an argument based on Section 31 of the 1988 Act at the beginning of these proceedings. We believe that they no longer urged it on us at the end of the case, and they were right not to do so. The live issues in this part of the argument related to the client's alleged right to select the solicitor of his/her choice under the Legal Aid Act, and not to the nature of the client-solicitor relationship once it was created.
553. What is left for us to consider, therefore, is Mr Gordon's frontal challenge on the lawfulness of the scheme on the grounds that it is irrational. In the final version of their Form 86A the applicants picked out eight matters for specific attack (see paragraph 65-83). These were tolerances; the priority given to family work; the allocation of cash to bid zones on the basis of last year's spend; the same issue in relation to community care; the allocation of case starts in contract awards; funding levels; the effect of the new generic franchises; and transparency. The relief they sought was based on a global challenge to the lawfulness of the whole regime. They did not seek declarations that any individual parts of it were unlawful. Since they were challenging the whole regime, they also challenged the lawfulness of the directions that triggered off the scheme and the regulations, introduced in the wake of the Lord Chancellor's first direction, which excluded so much work from Part III of the Act with effect from 1st January 2000.
554. Mr Gordon reminded us of the way Lord Greene MR had set out the four corners of the court's powers in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at pp 233-4:
"The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it."
555. Because we are of the opinion that these proceedings are not concerned with fundamental rights, we do not need to apply the more rigorous test of anxious scrutiny (which Mr Gordon described as the "super-Wednesbury" test) which has been developed by the courts in recent years. Our attention was, however, also drawn to a recent dictum of Sedley LJ , giving the judgment of the Court of Appeal in R v North East Devon Health Authority ex p Coughlan [1999] 2 CCLR 285, when he said at pp 310A and 311C:
"One approach is to ask not whether the decision is ultra vires in the restricted Wednesbury sense but whether, for example through unfairness or arbitrariness, it amounts to an abuse of power.
This approach ... recognises the primacy of the public authority both in administration and policy development but insists, where these functions come into tension, upon the adjudicative role of the court to ensure fairness to the individual."
556. In considering any challenge on Wednesbury grounds, the court has to understand the subject-matter of the challenge. In the present case the applicants mounted this attack on the totality of a scheme which had been prepared over a two-year period and in which the Board had involved itself in substantial processes of consultation at every stage.
557. The Legal Aid Board is a statutory body which derives its funding from the Lord Chancellor and is obliged to follow the guidance given to it from time to time by the Lord Chancellor. In January 1998 the Lord Chancellor required it to prepare proposals for a new system for advice and assistance for all civil and family matters based exclusively on contracts which he wished to implement by the end of 1999. The Lord Chancellor approved the Board's proposals in October 1998 and requested it to implement them. He had, in the meantime, told Parliament in July 1998 that legal aid was in urgent need of reform. The Board was therefore bound to comply with his wish that the new scheme should be in place on 1st January 2000, unless insuperable and unforeseeable problems stood in its path.
558. Governments are entitled to govern. It is clear from the evidence that the present Government, like its predecessor, was deeply concerned about the uncontrolled and uncontrollable haemorrhaging of public money under the old green form arrangements, and wished the Board to complete all its preparatory work in connection with the new scheme within a two-year time frame. The Board therefore did not have an unlimited amount of time to prepare its scheme.
559. In the event it put its proposals out for consultation again and again during the two year period between January 1998 and January 2000. It listened to what it was being told, and from time to time it modified its proposals accordingly. Indeed, one of the criticisms made of it by the applicants and the Law Society was that it altered its proposals so much. We believe that they would have been even more critical if the Board had showed itself impervious to well-informed and constructive suggestions.
560. It will be obvious to anyone who reads this judgment that there are some significant weaknesses in the way the scheme is operating at present. We are sure that when the Board is able to consider the evidence in this case (and all the other evidence now available to it) dispassionately, at one remove from the forensic hothouse of these court proceedings, it would be the first to admit this. It is one of the strengths of good management to be self-critical, to be ready to recognise practical problems when they arise, and to take effective steps to resolve them once they have been identified and analysed and their nature properly understood.
561. Whatever Mr Gordon may say about the requirements of public law, some weaknesses were bound to become evident in the early days of a revolution in the provision of publicly funded legal services on this scale. It appears to us that the test we should apply to his clients' complaints is not to ask ourselves whether the Board ought to have obtained a better understanding more quickly of the nature of legal practice in one or two quite small corners of this very large market, and whether in that context it made errors of law in not taking into account the additional considerations Mr Gordon urged upon us. That would have required us to consider in detail the whole course of the consultation process, and nobody asked us to undertake that task. In our judgment the test we should apply in these circumstances is to ask ourselves whether, given the externally imposed time-frame, the scheme the Board devised is robust enough to accommodate the possibility of changes of tack once weaknesses in the scheme of the kind that are evident in this judgment are brought to its attention.
562. The management of major change is never easy. On the evidence before us, the Board appears until now to have managed this particular change with considerable skill. In particular, what the Board's regional offices told Mr Orchard in the fourth week of January about the way this part of the legal services market had adapted itself, on the whole, to these changes constitute a tribute to the Board's management expertise (see paras 252-4 above).
563. We do not consider that the Board was irrational in devising the system of tolerances which was so fiercely attacked by Mr Gordon, or the way in which those tolerances were first distributed. The Board was, in our judgment, entitled, if it saw fit, to take into account the evidence before it of past extravagance among some of the suppliers of social welfare law services, and to be cautious about the way it initially assessed need and distributed matter starts and tolerances in that area. Of course it would have been tidier if it had had more time before 1st January 2000 to identify the premier league and first division suppliers in specialist areas (which is what this case is all about), and to ensure that it made the best possible use of their skills. The simple fact is that it was not given sufficient time to iron out all the wrinkles before the scheme started. Government, as we have made clear, was entitled to impose the timetable it did.
564. One of the most powerful criticisms we received was that the Board did not make transparent from 1st January 2000 the principles on which it would be exercising its discretion when responding to applications by suppliers for increases in matter starts and payment limits under Clause B17. We also received the powerful criticism that as soon as the Board sanctioned any increase in matter starts it should have simultaneously sanctioned a corresponding increase in the supplier's schedule payment limit.
565. In our judgment the Board was entitled, if it saw fit, to adopt the more controlled, systematic approach it chose to adopt until it had had the chance to review the workings of the whole scheme carefully and to measure the way things were going so far against the budget it had been allowed.
566. The evidence shows that in these early days the Board is willing to move swiftly to accommodate any of its contracted suppliers who are experiencing difficulties. On the other hand, many of the early difficulties have been experienced by contractors who have not read the contract carefully.
567. We are satisfied on the evidence that the Board is prepared to move swiftly and decisively when it identifies a real problem. This is clear from the way in which it dealt with the crisis in the immigration law field when it became evident in January. We would hope that it will move with equal energy to address the problems which these proceedings have identified in the mental health and community care fields.
568. In mental health, the Board asserts, contrary to the beliefs of Ms Mackintosh and Mr Foster, that it has achieved good coverage throughout the country as a result of the initiatives it has taken over the last 18 months.
569. We are worried, however, that the Board 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. It may be that the Board will have to seek some middle path between affording all mental health solicitors that freedom (which could not possibly be justified by the evidence we have read) and affording it to none of them, but this task should be attempted.
570 As things stand at the moment, a solicitor with Ms Mackintosh's unquestioned skills in this field cannot travel for more than an hour from her office in Southwark to see a client in a psychiatric unit of a hospital without making a special case, and more than two hours travel is for all practical purposes out of the question (see paras 194-6 above). A circle drawn at one hour's travelling distance from the applicants' offices in Borough High Street would demonstrate the extent to which the Board is at present depriving mentally ill people of the services of one of the most skilled solicitors in the country. The obverse side of the coin, to set against the demand for her services from a much wider catchment area, is that because she understands mental health law so well, she will not be charging the Board the hours a less experienced lawyer would charge it in identifying the principles of law he/she should apply to a client's problems.
571. In this context we would also draw attention to an important part of Mr Foster's evidence. 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.
572. In the fairly near future the demands made on skilled solicitors in this field are going to increase exponentially. Professor Genevra Richardson's report on the reform of the Mental Health Act 1983, the Law Commission's long report on mental incapacity, and the Home Office's plans to detain people with dangerous severe personality disorders when they have not committed a criminal offence are all in senior civil servants' in-trays today and may all go to Parliament for approval in the next five years. In addition, the Human Rights Act 1998 becomes law next October and will also shine a bright light on this corner of the law. Everyone, including the mentally incapacitated, will have the Convention rights mentioned in Section 1(1) of that Act, and it will be unlawful for any public authority to act in a way which is incompatible with a Convention right (see Section 6(1). The rights and freedoms identified in the Convention may not be limited or restricted or interfered with except on one or more of a number of clearly defined grounds, and any such restriction or limitation or interference will have to be objectively justified (see Schedule 1, Article 8(2), 9(2), 10(2) etc). Unless the Lord Chancellor tells the Board that it need no longer concern itself with the provision of legal services of high quality to these socially disadvantaged people, a lot still needs to be done to empower premier league mental health solicitors to expand their practices and to make their skilled services more readily available without the present constraints whose existence these proceedings have illuminated.
573. In other words, the Board's present arrangements provide a good nationwide spread of solicitors with an acceptable level of competence in mental health law (as evidenced by their passing at least one level of the LAFQAS tests and being members of the Law Society's MHRT Panel). What the Board needs to devise now, unless it is permitted by some means to abandon the White Paper objective of providing high quality services that provide the best value for money (for which see para 9 above), are mechanisms for liberating the most skilful and experienced mental health solicitors in this field from the constraints that are so obviously needed for the generality of local practitioners.
574. Community care law poses a different set of challenges. The evidence shows that the Board simply did not have the time or resources in 1998-99 to study carefully what is happening in solicitors' practices in this field. We were not, for instance, shown how many of the 29 holders of community care contracts were solicitors' firms which provided advice in 30 community care matters a year as part of their much wider general practice or how many firms specialised in this field alone. The average cost of £136.10 per case speaks volumes for the average level of service, given Ms Mackintosh's unchallenged evidence of what her clients need and of what their problems are likely to consist (compare paras 142-7 with paras 375-7 and 387-9 above).
575. At one point in argument (although not in evidence) it was suggested that Ms Mackintosh was one of a handful of solicitors in the country today in this very specialist field who had the skill to handle a case a complex as the recent Court of Appeal case of Coughlan, where the client lived in Devonshire. The Board's present arrangements confine her availability, for all practical purposes, to clients who live within an hour's travelling distance of Borough High Street.
576. We considered many of Mr Gordon's arguments to be over-rigid in their challenges to the scheme. Of course, for the great majority of the local solicitors in the scheme, the availability of funds in their bid zone is bound to be a very important factor if they apply for more case starts. The Board's evidence, however, shows that the scheme has an inbuilt flexibility, and Ms Mackintosh has been told repeatedly that if she needs more case starts in the early months of the scheme, she has only to ask, and the Board will pay, on a proper assessment, for the work she does on each authorised case. She has also been told that the monitoring of firms' schedule payment limits will continue after 31^st March 2000, so that if there is a significant discrepancy between the rate of claims and the monthly payments which looks to be more than a temporary or minor disparity, the powers in the contract will be used to correct it. This unequivocal statement (see Mr Orchard's fourth statement, para 111) ought to allay her concern that the Board will be fixing her firm's schedule payment limit on the basis only of the matter starts achieved between 1st January and 31st March 2000 (when she is heavily engaged on this and other judicial review cases) but is willing to be more flexible. (See also, in this context, Mr Hamilton's statement at para 230 above).
577. In our judgment, this part of the litigation is not concerned with issues of law as much as it is with issues of management. We have already rejected Mr Gordon's attack on the scheme on the clearcut issues of pure law he argued before us.
578. This is not to say that a court would necessarily be disposed to be so charitable if similar complaints were made, say, in the autumn, and if there was evidence to show that the sort of matters of which Ms Mackintosh now makes complaint were still impeding her service to her clients. It is obvious in this context that the Board needs to consider carefully the need for skilled community care solicitors to have just as many tolerances available to them as a family lawyer, because they are just as likely to be called upon to provide a holistic service to their clients in the way Ms Mackintosh described. It would be absurd for a solicitor of her skill and experience to have to send one of her clients to another adviser for advice on housing or welfare benefits or debt, for fear of losing one of her precious hoard of permitted matter starts.
579. Given the flexibility which is inherent in the scheme, we can see nothing irrational in the Board's choice of the periods from which baseline figures were obtained, and the Board has made it clear that if it is satisfied that those figures are no longer reliable because a firm has expanded since May 1999, it will respond to requests for increased matter starts as soon as the need arises. We can also see nothing irrational about the priority given to family work, in the light of the Government's objectives in the White Paper. During the reviews it will undertake, the Board will no doubt look critically at the content of the family law cases it is funding, if there are competing challenges from other areas that profess a higher priority need. Cases involving children, or domestic violence, or the loss of a home, will obviously require priority, but analysis may show, for all we know, as Mr Gordon suggested without any evidence to support his argument, that there are parts of family law which should not always be accorded as high a priority as they are at present given.
580. So far as the new generic franchises are concerned, we have already expressed the opinion that the Board needs to take a long, careful look at the arrangements it is making for provision in community care law. We did not receive evidence about the other three categories. Education and actions against the police are fairly self-contained categories, but we would not be surprised if the late identification of a public law category has not caused practical difficulties, not apparent in the evidence in these proceedings, which will warrant very careful study during the forthcoming review.
581. Finally, we do not consider that it was irrational for the Board to have launched its scheme without spelling out even more clearly the principles on which it was going to exercise its discretion in one corner of this massive new contractual scheme. We agree with Mr Gordon that transparency in decision-making is always desirable, and under pressure from the court the Board had nearly completed a clear statement of the principles it intended to follow in the area of which he made complaint before time ran out and we could no longer receive any more evidence. It would be very desirable, in our judgment, for the Board to complete this process and to publish the principles which counsel endeavoured to explain to us, not always backed by evidential support, so that in these anxious early months everyone can know how the Board's policy in relation to requests for increases in matter starts will be operated across the country. We see no reason to criticise the Board's intention to review, refine and possibly change these principles in relation to the last nine months of the first contract period, when the scheme will have settled down and the Board will have a better idea of each contractor's current performance.
582. There is one final matter about which we would express anxiety. We have considerable sympathy for the points made by Ms Mackintosh and the President of the Law Society about the difficulties any new firm is likely to encounter if it seeks to enter the market of controlled contracts in the second or subsequent year of the scheme, and we were not wholly satisfied by Mr Orchard's current view that this would not be likely to cause difficulties in practice. Mr Gordon was correct when he described how the supply of specialist legal services has been revitalised in recent years by movements in the market and the emergence of skilled new specialist suppliers like the present applicants. Although we have not considered the issue in depth, we are not at present sure that paragraphs 6.4 and 6.5 of the Rules for Bidding in the Terracotta book are likely to resolve satisfactorily all the practical concerns voiced by Ms Mackintosh in her evidence. We note that on page 13 (paragraph 36) of that book the Board has made it clear that it will be revisiting those rules in the autumn of this year in advance of next year's contract awards, and we hope that it will be able to move a considerable way in providing a skilled would be new entrant into the market with the bankable assurances it will need before it can commit itself to the acquisition of offices and computers or the employment of staff.
583. This, however, is for the future. For the present, we are completely satisfied that there are no grounds for setting this scheme aside on grounds of irrationality, in the sense in which Mr Gordon used that word. It follows that we also dismiss the applicants' challenges to the Lord Chancellor's directions and to the December 1999 regulations.
584. For these reasons, while we believe that the applicants have performed a public service in exposing this new scheme to the intense public scrutiny these proceedings have demanded, we grant them leave to apply for judicial review - because the points they raise are clearly arguable and they themselves applied to the court as swiftly as they could - and dismiss their application.

"The applicants contended that this statement about the Board's policy was not contained in its evidence at all. We would comment that if this is indeed the Board's policy, it is a legitimate criticism that it has not been spelled out until it produced this statement by counsel, largely unsupported by evidence, on the fifth day of the hearing under pressure from the court. Merely to say, as Mr Orchard did in one of the Board's three cross-references on this topic, that extensions would be forthcoming in appropriate cases, does not advance matters at all..."

Then paragraph 563 near the end of the transcript my Lords we submit an important paragraph. I think it is now, in fact, 564 but your Lordships at 563 do indicate that:
"We do not consider that the Board was irrational in devising the system of tolerances..."
and to be cautious about the way it expressed its assessed need. Then at 564 your Lordships will see:
"One of the most powerful criticisms we received was that the Board did not make transparent from 1st January 2000 the principles on which it would be exercising its discretion... We also received the powerful criticism that as soon as the Board sanctioned any increase in matter starts it should have simultaneously sanctioned a corresponding increase in the supplier's schedule payment limit."
The last paragraph is 581. It is really the second sentence. Of course I accept we lost on irrationality at the end of the day, but in that second sentence your Lordships say:
"We agree with Mr Gordon that transparency in decision-making is always desirable..."
And then this:
"... and under pressure from the court the Board had nearly completed a clear statement of the principles it intended to follow in the area of which he made complaint before time ran out and we could no longer receive any more evidence."
This is not a question of forensic point scoring. We have lost but we have raised matters which, in our submission, it is not right that these Applicants, or indeed the Law Society, should have to pay for in its entirety at least because the public service which has been produced will actually benefit the public.
So my Lords in terms of how we respectfully submit that this Court should look at costs, we raise four suggestions: first of all, we do respectfully submit that the Applicants in this case should not be ordered to pay any of the Respondents' costs. Secondly, we submit that there should be an apportionment. We do not suggest that the note should be determinative. We do accept that we have lost, but we do say there should be an apportionment to reflect the fact that we did perform a public service, that there will be financial prejudice to the Applicant, in any event, and that unless the Respondent had produced this note the Court's extreme disquiet would not have been allayed. As a matter of fact we now know, because of this note, and practitioners will know that they can go to the Board and that they will get extra case notes. That emerged really right at the end of the hearing and that is important.
Therefore we do submit, and I prefaced it in the begining, that in the highly unusual circumstances of this case the Applicants should receive some costs from the First Respondent, discounted, of course. Either they should receive a percentage, and your Lordships see how we have put a suggested percentage, or we should receive a percentage with an equivalent percentage of costs in the First Respondent's favour. Your Lordships see at page 3 of the note the effect in terms of the Applicants being recompensed for some of the effort that they have put into this challenge. At the end of the day whatever your Lordships' decide I simply invite the Court to put the point that Mr Pleming put before the Court: 'We say the taxpayer should not have to pay' but I say, with the greatest respect, 'Why not?' Those are our submissions on costs.
MR CROW: Can I just make two short points in answer? The first is simply this, my learned friend, with respect, has drawn your Lordships' attention to nothing to support his proposition that the public benefit that has been derived from this case could not have been derived without litigation. Can I just remind your Lordships what you said in paragraph 560 of the judgment where we would gratefully adopt this in this context:
"It will be obvious to anyone who reads this judgment that there are some significant weaknesses in the way the scheme is operating at present. We are sure that when the Board is able to consider the evidence in this case... dispassionately, at one remove from the forensic hothouse of these court proceedings, it would be the first to admit this. It is one of the strengths of good management to be self-critical, to be ready to recognise practical problems when they arise, and to take effective steps to resolve them once they have been identified and analsyed and their nature properly understood."
In my submission there is absolutely nothing that has been deployed before you to suggest that the Board would have shut its eyes to the points that have been made in Court if they had been made by way of submission to it without the need for litigation. In our submission the fact that there may have been an incidental public benefit does not mean that any unusual Costs Order should be made. The second is the simply in relation to Coughlan (1999 2 CCLR 285). In our submission this is not an authority that supports my learned friend at all. Indeed it is apparent that it does not support his position from the sentence just after when he stopped reading on page 22 on the last 4 lines of the penultimate paragraph, because what Lord Woolf said there was:
"In general it can be said that Miss Coughlan was right to bring the proceedings and right to contest the appeal."
The case had been substantially won. The issue that was being debated there was: should there be a severance on the costs order to reflect the fact that some issues had been lost? Overall Miss Coughlan had been substantially won. That was the context of that judgment. It has no impact on this case whether it has been outright lost in relation to all issues which are deplored before you. I am grateful.
MR PLEMING: Can I deal with the three cases very briefly? The New Zealand case is strikingly different. Of course there are public issues here, this is page 485 of the Appeal Cases, page 20 of the bundle. We have not to suggest otherwise. There is a commercial element in this case and that reflects in the Law Society's intervention. Also there are special circumstances where it was necessary to go to the higher court because of uncertainty in the decision of the Court of Appeal. Coughlan is a particular case in what was being debated there, although what does not clearly come out from page 22, is that Miss Coughlan who had won was concerned that if she did not receive the costs of dealing with the expense incurred by interventions, including the intervention by the Secretary of State who had won on his argument as to nursing in care, then she might be out of pocket. There were special circumstances which do not impact on this case.
Could I then turn to the question of the note we put in in the course of submission? As I said, Mr Gordon's note was handed to me very late in the day. If it had been handed in earlier I would have produced a response paragraph by paragraph. However if one goes through 3D and the paragraph there selected from your Lordships' judgment, without inviting your Lordships to read your Lordships' judgment again, the selection is indeed selective. Your Lordships have been taken to some passages from some paragraphs. The flavour of your Lordships' judgment is, however, reflected in other paragraphs, not just 267, for example, you get double asterisk 269 which follows.
Let me give your Lordships' another example without spending too much time on it. Paragraph 560 has been drawn to your attention by my learned friend, Mr Crow. Would your Lordships kindly read on to 561 which emphasises that in a scheme such as this: a revolution in the provision of legal aid:
"... some weaknesses were bound to become evident in the early days of a revolution in the provision of publicly funded legal services on this scale."
You go on in that paragraph, I am now using the draft not the approved version:
"In our judgment the test we should apply in these circumstances is to ask ourselves whether, given the externally imposed time-frame, the scheme the Board devised is robust enough to accommodate the possibility of changes of tack once weaknesses in the scheme of the kind that are evident in this judgment are brought to its attention."
You then say:
"The management of major change is never easy. On the evidence before us, the Board appears until now to have managed this particular change with considerable skill. In particular, what the Board's regional offices told
Mr Orchard in the fourth week of January about the way this part of the legal services market had adapted itself, on the whole, to these changes constitute a tribute to the Board's management expertise."
The significance of that passage which comes immediately before the paragraph upon which my learned friend,
Mr Gordon, relies is that we were here dealing with a changing state of affairs, a scheme which is only just being introduced and that there were inevitably teething difficulties which we described. The final paragraph is 581, and again I will not deal with it in detail. It was read by my learned friend as being an asterisk star paragraph. He only read the first sentence. If your Lordships read it (I am sure you know it well) and if you continue to the end of the paragraph:
"We see no reason to criticise the Board's intention to review, refine and possibly change these principles [those are the principles which we attempted to put together in response for your Lordship's concerns] in relation to the last nine months of the first contract period, when the scheme will have settled down and the Board will have a better idea of each contractor's current performance."
We emphasise paragraph 583:
"This, however, is for the future. For the present, we are completely satisfied that there are no grounds for setting this scheme aside on the grounds of irrationality, in the sense in which Mr Gordon used that word. It follows that we also dismiss the applicants' challenges..."
Going back to my learned friend's, Mr Gordon's note, when he comes to his suggestive solution for the costs, you are being asked to depart from what is the normal provision on costs: whether it be for one Respondent or to be shared between them. We say that it cannot be right that in a case such as this the Applicant should be awarded its own costs, be it 50 per cent or some other proportion. The question really is how much of a contribution should be made towards the Respondents' costs which at the end of the day we emphasise will not be paid by the firm but by the Law Society. Those are the submissions we make. I have not made separate submissions on the adjourned hearing. We had those on 12th January.
LORD JUSTICE ROCH: Thank you. We will retire.