Casualty of law

These two statements sum up the fundamental differences in the way the Legal Services Commission (LSC) and the not-for-profit sector view the delivery of housing advice in the 2010 bid round.

The LSC has long talked about wanting providers to deliver a ‘seamless service to their clients from advice to representation’, but it was only in the consultation response issued in June 2009 that the LSC made plain its plan to disadvantage housing advice providers who do not employ litigators. Not-for-profit providers largely intended to use established referral networks to local solicitor forms.

In the 2010 bid round, all 134 procurement areas will be divided into two categories. ‘A’ areas require all housing advice providers to employ a litigator (who does not need to be a housing lawyer). In ‘B’ areas, preference will be given to providers who employ a litigator.

The fallout is that ‘B’ area providers are watching each other (and especially who they are hiring) like hawks, since taking on a lawyer could give organisations an advantage in bidding for contracts. This is against a background in which agencies are pledged to working together in consortia to provide housing, debt and welfare benefits – the commissioned bundle of social welfare law.

There is also nervousness about new agencies who might bid, who are not currently providing a service in the area. The arrival of a new agency that employs a lawyer may put existing local services out of business.

As Steve Hynes pointed out, the number of housing law firms has dropped from 799 in 2001/02 to 362 in 2008. And there are too few housing lawyers for agencies to successfully recruit in the time frame. Carolyn Regan says, ‘Steve’s view that legal aid is in jeopardy is clearly an exaggeration. Every year trainees still want to do this work.’ A throughput of trainees is essential, but what we have been losing are experienced housing practitioners who are needed to supervise and develop the skills of trainees. It will take years to rebuild this base.

A cap on the number of cases per adviser will make providing housing service unaffordable

The LSC intends to cap the maximum number of client cases at 250 per full-time housing adviser. Providers who have been delivering 300 or more cases per adviser will face an automatic £8,700 reduction in income (50 cases at £174). Two hundred and fifty new cases produce an income of £43,000, which is not enough to employ a full-time adviser with all the overheads, even on very low wages.

Lawyers do not immediately cover their costs. Taking the LSC data on the conversion rates from legal help to certificated cases as a base line, providers can expect to run at a loss in years one and two while they build up cases and income, and break even in year three.

The question facing many providers in this bid round is not the usual ‘can we afford not to bid?’ that comes up at re-tenders. It is a more fundamental ‘can we afford to bid?’ Housing advice providers face a reduction in income per adviser and a deficit in employing a lawyer for at least two thirds of the three-year contract.

The LSC will re-tender all civil bid contracts. This means a total of 113,067 housing matters across 1,083 housing advice providers. The amount of work required from both parties is enormous, on top of the work needed to maintain the current service.

But alarm bells have been ringing. At the end of July, the LSC website announced that planning for the 2010 bid round was delayed, but no revised timeline was issued beyond ‘late 2009 or early 2010’.

Providers are in discussions with the LSC over a number of difficulties. These include consortia working, permanent and part-time premises, whether a procurement area is an ‘A’ area with a higher specification, or a ‘B’ area with a lower specification, the allocation of matter starts in different areas and the access points needed.

The 2010 bid round is the first time the LSC has imposed a maximum number of clients or new matter starts (NMS) to a full-time adviser. The LSC is already talking about best value tendering and this latest move must be seen in that context. Commissioners will usually specify a maximum or guide price, and will state how much weighting will be given to price and how much to the service model.

It is highly unusual for procurement to specify both a fixed price and a detailed service specification. This gives providers little room to adapt the service to meet client need and clearly differentiate between providers. The only way best value tendering can work with a fixed fee and a prescriptive specification is to reduce cost by reducing quality.

The imposed NMS number takes no account of staff skills and experience or of the operating model the organisation is using. The suggestion is that a full-time adviser can deliver up to 300 matters in debt or welfare benefits, but only 250 in housing. This would suggest that housing cases are more complex and take longer.

The LSC does not publish average case lengths, however we can calculate this by using LSC data of the old style 1,100 hours contracts and the current fixed fee. This breakdown quickly puts paid to the assumption that housing cases are longer.

In response to a letter from Shelter and Citizens Advice on this issue, Carolyn Regan said that the maximum level of NMS in housing ‘takes into account our requirement for providers to deliver services across the entire range of housing cases including representation’.  In short, the LSC is forcing a delivery model where solicitor income makes up the deficit on adviser income – yet this was never spelled out in the 2010 consultation.

There are several problems: ‘B’ procurement areas do not need providers ‘to deliver services across the entire range of housing cases including representation’ themselves. Effective referral is adequate. Now it is clear that the LSC wants all housing providers to have solicitors, the alleged difference between tendering in ‘A’ and ‘B’ areas seems a nonsense. In short, despite being classified as area ‘B’, providers in the areas of less competition will still need to employ a solicitor, if only to make ends meet.

The tender specification already states that providers can deliver the ‘entire range’ by employing advisers and solicitors who work together. The LSC should therefore not be dictating how this is to be delivered in a fixed fee regime. Advisers can deliver up to 300 NMS and solicitors deliver the certificated (full legal aid) work. This is broadly what happens now in many not-for-profit agencies employing solicitors and is the model where cases are referred out.

The LSC position, as Regan told ROOF, is that ‘it could mean that people are having their problems resolved at an earlier stage’. Why then force a model where more court action is undertaken? If people are receiving the level of advice they need why impose changes?

Many not-for-profit agencies would agree with both Steve Hynes and the LSC that the disparity between the number of advice-only cases and the number of certificated cases is disproportionate. There is agreement on the need for an increase in providers delivering representation, whether in-house or through referral. Where the LSC and the sector disagree is how this is achieved and in what time frame.

Legal aid itself may not be in jeopardy but housing advice provision certainly is.

Joanne Marks is the head of services strategy and development at Shelter.