Recent guidance has been issued by the Law Society in order to provide criminal legal aid practitioners with guidance on adapting current business models and ways of working in light of potential changes to the criminal legal aid market.
We recognise that every local law society should be addressing the issues highlighted in the documents and we will be liaising with the firms affected over the coming weeks and months.
In the meantime if you would like to get in touch with BLS President, Ben Tarrant, to discuss what you would like to see Bristol Law Society do to assist members please do so. Contact him via email@example.com
Albion Chambers has commented on the guidance as follows:-
The Law Society has issued a new and comprehensive document to solicitors, advising them on how to change their business model to remain competitive in the changed market. The document is long and full of jargon, but represents a significant sign of the times ahead.
The document has been drafted by the Law Society in order to provide criminal legal aid practitioners with guidance on adapting current business models and ways of working in light of potential changes to the criminal legal aid market.
There is a high level of practical detail contained in the document on how to identify potential mergers, and how to comply with regulatory requirements. This is the next logical step in the plans expressed by senior members of the Law Society Executive when they visited Bristol earlier this year.
It also includes a whole section on how to exit the criminal legal aid market, including how to put your criminal legal aid firm/department into insolvency…
Purpose of the Guidance
This guidance provides details on:
‒ The ways of working and business models that are said to be the most likely to be sustainable over the long-term. It also provides detailed and practical guidance on how to manage transition routes to new business models
‒ The compatibility of new ways of working with SRA regulations and code of conduct
• While the main focus of the guidance is on providing details on how firms could adapt ways of working to respond to the potential proposed Legal Aid reforms, it is plainly also designed to be read in light of declining volume of work, reduced fees generally and the shadow of yet further cuts in future.
• “This guidance is not intended to be prescriptive or comprehensive. Rather it is intended to provide you with options and some ideas of how you can respond to potential market change.”
Potential Business Models
The guidance envisages three main ‘models’ which are likely to be sustainable and successful in light of huge various reforms:
1) Independent firms: Firms that continue supplying criminal legal services (and may also offer additional legal services) and do not have formal collaboration arrangements with other firms (apart from agents). These firms are likely to be larger than most firms today and this scale could have been achieved through M&A, recruitment or, alternatively, the firm may have already been large
2) Joint Ventures (JV): Where a number of practitioner firms come together to establish a new legal entity to procure and deliver criminal (and other) legal services. Lawyers and assets from individual firms will transfer to the Joint Venture which will then deliver criminal legal aid services
3) Lead Contractor Collaborations: Where practitioners come together to bid for and deliver duty contracts through a formal collaboration but without creating a new entity. The delivery of legal aid work is performed by each individual law firm. A Lead Contractor is chosen who directly contracts with the LAA and is responsible for delivery on the terms of the contract.
The Risks to Firms
The guidance recognises that the process of transformation into one of these three models will not be easy. It is expressly acknowledged that a firm might undertake this process and yet still not obtain an LAA contract in the next round of bidding.
The specific risks identified are that the current timetable for obtaining legal aid contracts is “challenging” (i.e utterly ridiculous?).
‘Own client’ work (ie any work done under a representation order) must be bid for within the next month.
Police station duty work must be bid for in summer (current proposed deadline is in July).
It is practically impossible for any firms to adopt one of the proposed models by then – except the Lead Contractor Collaboration model, which relies on a particular firm in each area taking on a contract without the resources to fulfil it, then relying on other local firms to assist in delivering the obligations.
Further risks include the inherent difficulty in entering into negotiations with a traditional competitor, and being sufficiently confident in their transparency that a merger or some looser form of collaboration can be agreed. The document also acknowledges the time and expense involved, with no guarantee that any new venture will actually secure an LAA contract.
The ‘risks’ section closes with this observation: “These challenges should not be underestimated. However, standing still is unlikely to be a viable option for most practitioners.”