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Inquiry into the Australian Legal Aid System

Legal aid commissions

2.30 Legal aid commissions are established as independent statutory authorities in each State and Territory. During the course of this inquiry, the Committee has heard evidence from each of these organisations. They are the major providers of legal aid in Australia, and it is their future structures and responsibilities which are being most directly affected by the renegotiation of legal aid provision arrangements.

2.31 Legal aid commissions provide a range of legal services through salaried lawyers within the commissions and through referral out to private practitioners. Most legal aid commissions also use para-legals to provide legal information and education.

2.32 Commonwealth funding for the State and Territory legal aid commissions until 30 June 1997 was set out in the agreements with each State and Territory made in the late 1980s which were described above. The majority of applicants for legal aid are in receipt of Commonwealth benefits. In 1994-95, 66.9 per cent of applicants nationally were Commonwealth beneficiaries, and of these 98 per cent were on a social security benefit other than the aged pension. People who are on low incomes, but who have assets, are less likely to be approved for legal aid, as assets are considered in the application of a means test. [23]

2.33 Mr Michael Raper of the Sydney Welfare Rights Centre gave evidence about the numbers of people who live in poverty in Australia. Mr Raper's evidence provides a useful context for the statistics provided in the previous paragraph.

There are 1.8 million Australians in poverty today, at least, and that includes some 630,000 children. ... Approximately five million people in all are relying on social security in Australia. [24]

2.34 Mr Don Fleming and Mr Francis Regan provided the Committee with a national study that they have been preparing for presentation at a conference later this year. Mr Fleming said that the study showed that legal aid in Australia is only available "to the lower 18 per cent of the population, and that trend, I suspect, is continuing". [25]

2.35 Legal aid commissions also provide non-means tested legal assistance including:

• advice (both face-to-face and telephone advice services);
• advocacy and other litigation services;
• duty lawyer services (immediate advocacy services in local courts);
• mediation services; and,
• community legal education. [26]

Table 2.3: Number of Commission services provided in 1994-95 (per thousand head of population)

Source: Attorney-General's Department, Draft of "Legal Aid in Australia 1994-95 Statistical Yearbook"

2.36 Legal Aid in Australia 1994-95 Statistical Yearbook, produced by the Attorney-General's Department, was provided for the Committee's information, in draft form. It shows that 637,985 people (ie. only 3.6 per cent of the Australian population) received services through legal aid commissions in 1994-95. These included 175,028 applications for legal aid and 135,903 approvals for applications: 37,158 applications for legal aid were refused. While the national approval rate for applications of legal aid was 78 per cent, this varied significantly from 58 per cent in Western Australia to 83.5 per cent in Victoria. The national approval rate for legal aid in criminal matters was 88 per cent, for family law was 64.8 per cent and for civil law was 62.7 per cent.

2.37 The average costs (exclusive of any client contributions or costs recovered) of cases referred to private practitioners which were finalised during 1994-95 were $1,353.10 for criminal law cases, $1,775.80 for family law cases and $3,311.78 for civil law cases. These compare to $1,015.57, $1,691.71 and $3,488.17 respectively in 1993-94.

2.38 The median costs (exclusive of any client contributions or costs recovered) of cases referred to private practitioners which were finalised during 1994-95 were $480.00 for criminal law cases, $814.55 for family law cases and $700.70 for civil law cases. This compares to $453.67, $780.16 and $1,152.50 respectively in 1993-94.

2.39 The majority of referred cases finalised in 1993-94 cost less than $1,000 (56,166 cases or 73.4 per cent) with only 1.6 per cent costing $10,000 or more (all costs exclusive of any client contributions or costs recovered).

Table 2.4: The Commissions in Profile: 1994-95

Source: Attorney-General's Department, Draft of "Legal Aid in Australia 1994-95 Statistical Yearbook"

Funding

2.40 Commonwealth funding for the State and Territory legal aid commissions until 30 June 1997 was set out in the agreements with each State and Territory made in the late 1980s which were described above.

2.41 Most legal aid commissions undertake some cost-recovery by requiring an initial contribution from the client when a legal aid grant is made in the majority of circumstances. Legal aid commissions also recover the costs of providing assistance in successful cases, wherever possible. In 1994-95, the income collected by legal aid commissions from contributions made by clients and recovered costs was $32,134,000 compared with $38,788,545 collected in 1993-94.

Table 2.5: Income and expenditure of legal aid commissions for the period 1994-95

Source: Submission No. 127A, Attorney-General's Department, p. 2608

2.42 In order to maximise the effect of limited funding legal aid commissions apply various tests to assess the relative suitability of applicants for grants of aid. The Attorney-General's Department told the Committee that legal aid commissions have regard to the following factors in assessing applications for aid:

• means - an assessment of an applicant's ability to pay for legal services;
• prospects of success - whether the applicant's case has reasonable prospects of success; and
• legal aid commission guidelines which indicate the sorts of cases that have been accorded priority for funding. [27]

2.43 Each legal aid commission has its own version of these tests, stemming from the fact that under an Australian federal system the commissions are established under their own State or Territory legislation.

2.44 The Commonwealth has stated its intention to continue to pursue national equity through promotion of a national approach to legal aid access guidelines. It is encouraging legal aid commissions to apply more uniform methods for determining eligibility for grants of aid. The Committee notes that, as new arrangements for legal aid provision are currently being negotiated, this provides an opportunity to further these important goals. [28]

Alternative approaches to reduce legal aid costs

2.45 The Committee has received evidence that, as the cost of delivering legal services increases and available resources decrease, legal aid commissions have been exploring alternative approaches to service delivery such as tendering to private legal firms and setting up civil law contingency schemes. The Committee heard differing views about the likely success, and appropriateness of these approaches.

2.46 In Queensland, Mr Michael Baumann, Chairperson of the Queensland Legal Aid Commission, explained that his organisation was the first legal aid commission to introduce tendering of legal aid services. The organisation has completed and evaluated a trial tendering project. The evaluation report is a resource available to all legal aid commissions.

We have had that reviewed recently and I can say that, whilst there were some difficulties in some geographical areas, we believe that a number of practitioners have found it to be a useful exercise. As a trial it was piloted in three areas for 12 months. We are still assessing all the ramifications of it, but we certainly believe it is one of the areas that we can continue to develop in certain areas; it did not work in some, but it worked in others. [29]

2.47 The New South Wales Legal Aid Commission is also exploring the introduction of tendering, but considers that it will be some months before it is able to do so. [30] Mr Rob Cornall of Victoria Legal Aid discussed the approach that his organisation was intending to introduce this year.

Our view is that, if you have a fixed fee limit per case, there obviously will be cases where that fee limit could be unfair to the practitioner. One way to overcome that potential unfairness is to contract with a practitioner that you will, for example, allocate to him or her 30 matters of a particular type in a year. We would expect that practitioner to look at their return on that work, not on a case-by-case basis, but as a delivery of a service in 30 matters for a set or predetermined fee structure. We think that will start to even out some of the highs and lows of individual cases. Our general attitude ... is that we are quite keen about tendering groups of cases. [31]

2.48 Mr Anthony McMahon of the Tasmanian Law Society told the Committee that he had reservations about tendering and was concerned that legal service standards should not be dropped and equity and justice compromised by such processes.

Tendering sounds a good answer from the point of view of limiting the amount of money. I think the real difficulty facing legal aid is the quality of service that legal aid recipients receive. What we do not want to happen in Tasmania, let alone in the country, is to have two different qualities of legal service: one for those who can afford their own legal representation and a lesser quality of service for those who cannot afford legal representation and a grant at legal aid. The danger with lump sum tendering, where a firm says, “We will represent every person referred to us by the Commonwealth for X thousand dollars for this next year”, is the quality of service that they might get. It is like an accountant who says, “I will liquidate this company and I'll bring in the liquidation under X thousand dollars”. They make sure that they do not spend any more time on it than necessary. That is contrary to the whole ethos of the legal profession. I think tendering should be treated with a lot of care, otherwise we will find a lot of dangers there. [32]

2.49 The Committee was also given evidence about the value of providing seeding funds for self-funding initiatives to expand access to civil law assistance. For example, in Queensland the funds available from the Public Trustee are used to establish a civil law aid scheme. [33] In Melbourne, the Hon Jan Wade MP, the Victorian Attorney-General, alerted the Committee to her intention to establish a Victorian law aid scheme, which has since been launched.

We are about to set up a law aid scheme. That has been foreshadowed. We have had a few difficulties getting it up and running. The Victorian government, in addition to our legal aid funding responsibilities, has put aside $1.8 million to fund a legal law aid scheme which is similar to these funds for civil cases that are operating in some of the other states. [34]

2.50 Mr Peter Semmler of the Australian Plaintiff Lawyers Association told the Committee his views on alternative means to funding civil law assistance, particularly in relation to personal injury cases.

Our principal submission is that the community demand is a lot greater than what is there at the moment by way of assistance, which is nothing in terms of civil personal injury cases. If I were asked whether I could run a civil legal aid scheme for personal injury cases and make it work, my answer would be yes. The way you would do it would be to have a big take-out of successful plaintiffs' verdicts – a percentage of money to fund the other cases. It is as simple as that. There are many, many people who have no way of accessing the justice system. They have catastrophic injuries. They have a meritorious – perhaps difficult, but arguable – case, where if they win it, they get a lot of money. But if they cannot fund it against some multinational corporation, they have got no chance. They will never have access to the system; they will never have the chance of getting that money.

... It is like, in a sense, the American system of contingency fees. Perhaps you could have a 30 per cent take-out or whatever, but the difference is – and contingency fees are not highly regarded by a lot of people in Australia – it is in the public interest that there be this large deduction from the verdict. By that means, you could successfully fund civil litigation. You could have a successful system of legal aid in civil cases which would not cost the taxpayer a cent. [35]

2.51 Ms Catherine Henry, also of the Australian Plaintiff Lawyers Association, explained that:

it is really an augmentation of what has, in fact, been occurring anyway in relation to civil legal aid matters, that is that there is this 20 per cent rule – 20 per cent of the costs go back to the fund. By developing that notion of a component from the solicitor's cost being put back into the fund for administration purposes, it becomes a self-funding body. [36]

Management

2.52 The overall management of each legal aid commission is supervised by a board of commissioners and the day to day management is undertaken by a director or chief executive officer. The board comprises: a chairperson; the director or chief executive officer; nominees of the State/Territory Attorney General and the Commonwealth Attorney-General. Most Boards also draw members from the State/Territory bar association and law society and at least one community representative. The Committee received evidence that Victorian Legal Aid is set up without legal profession or community representation on the board. [37] The Committee also notes that the new entity to be known as Legal Aid Queensland has a smaller board without community or profession representation. The Committee has heard that there are differing views about introduction of smaller boards to manage legal aid entities. The Commonwealth Attorney-General's Department told the Committee that a number of Commonwealth and State reviews have highlighted the need to improve the management performance of legal aid commissions. The Department said it regards the amendments to the Victorian legal aid legislation as providing a suitable model for other State and Territory legal aid commissions:

• legal aid commission boards would be much smaller – Victorian Legal Aid now has five board members – with an emphasis on the financial and management skills of board members; and
• a consultative committee would be established - bringing together a number of organisations which were formerly part of the Commission - to advise the Board of management on legal aid issues and have some input into Commission decisions. [38]

2.53 At the Committee's hearings in Melbourne various witnesses commented on the new management arrangements for Victoria Legal Aid, particularly expressing their concern that as stakeholders (community legal centres, the private profession, and groups representing the interests of legal aid clients), they were no longer in a position to influence directions or decisions of the organisation.

2.54 Mr John McLoughlin, of the Community and Public Sector Union told the Committee that "it is a board totally devoid of experience in the field of legal practice, which comprises 86 per cent of the work of Victoria Legal Aid - criminal law 63 per cent and family law 23 per cent". [39] Ms Marianne Noone told the Committee she was concerned about the broader implications of the move to a small unrepresentative board in Victoria.

That partnership has been threatened, in particular, by the changes to the management structures but also in the reduction of funding. That is a real threat to Australia's unique legal aid system. Australia has been a leader internationally, I think, in the delivery of legal aid. That is from my experience, basically, observing systems overseas and also from the research that I have done. The partnership that existed was a unique one and it was generally a productive one. It facilitated innovations, it provided a variety of modes of service delivery and it also gave the opportunity for the consequences of changes in policy to be considered as they affected the individuals that are the recipients of legal aid. Those consequences are no longer considered from that point of view by these changed management structures. [40]

2.55 The Hon Jan Wade told the Committee why she believed that a smaller board was necessary:

I asked the Auditor-General to do a performance audit of the legal aid commission and that showed that there were some quite serious deficiencies. In order that we could then put into place the most efficient system, we asked a former senior partner of one of our leading law firms to do a report on the management and operations of the commission. That led us to restructuring the commission, which is now called Victoria Legal Aid, with a much smaller board. There was a restructuring of the organisation in order that the money can be directed at actually providing the services as opposed to be being used in administration. [41]

Footnotes

[23] Attorney-General's Department, Draft of Legal Aid in Australia 1994-95 Statistical Yearbook, p. 61.

[24] Evidence, Mr M Raper, p. 988.

[25] Evidence, Mr D Fleming, p. 230.

[26] Submission No. 127, Attorney-General's Department, p. 1828.

[27] Submission No. 127, Attorney-General's Department, p. 1830.

[28] Submission No. 127, Attorney-General's Department, p. 1811.

[29] Evidence, Mr M Baumann, p. 240.

[30] Evidence, Mr T Murphy, p. 527.

[31] Evidence, Mr R Cornall, p. 433.

[32] Evidence, Mr A McMahon, p. 618.

[33] Evidence, Mr M Baumann, p. 239.

[34] Evidence, The Hon Jan Wade MP, p. 383.

[35] Evidence, Mr P Semmler, pp. 1060-61.

[36] Evidence, Ms C Henry, p. 1061.

[37] Evidence, Mr D Bunn, p. 478.

[38] Submission No. 127, Attorney-General's Department, p. 1830.

[39] Evidence, Mr J McLoughlin, p. 475.

[40] Evidence, Ms M Noone, p. 483.

[41] Evidence, The Hon Jan Wade MP, p. 381.

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