Funding Judicial Review: a perfect storm?
One of the biggest issues that public lawyers are going to face over the foreseeable future is how to fund judicial review cases. Two contributory factors are already in place: the coming into force of the new legal aid regulations under the regime of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (‘LASPO') and the effective abolition of conditional fee agreements as a result of Lord Justice Jackson's proposals to change the Civil Procedure Rules.
A third factor is prospective - a new consultation is underway regarding legal aid entitled Transforming Legal Aid which would create significant practical barriers to those who are seeking to bring judicial review cases funded by legal aid.
(1) The initial legal aid regulations
The relevant regulations made under LASPO are the Civil Legal Aid (Merits Criteria) Regulations 2013. These have been subject to a previous article on Public Law Online. In brief, the regulations provide legal aid for judicial review in cases that have at least a moderate prospect of success (see regulations 53 - 56).
The most difficult regulation was regulation 53(b), which provided that all alternative procedures must be exhausted before legal aid would be granted. This created problems because this was undefined and may have included avenues such as complaints procedures and the ombudsmen, which can be lengthy and not provide the remedy sought after.
However, following an intervention in the House of Lords by Lord Pannick, the government conceded that the regulation should be re-worded and has recently been amended to read:
‘(b) there are no alternative proceedings before a court or tribunal which are available to challenge the act, omission or other matter, except where the Director considers that such proceedings would not be effective in providing the remedy that the individual requires.'
The overall effect of these initial regulations is better than many hoped for as it maintains legal aid in judicial review claims - for the time being (see below).
(2) Jackson changes
Of course, many people are not eligible for legal aid as they fall outside the means criteria. For most of these people the best alternative method of funding a case in an affordable manner was to rely on a conditional fee agreement (CFA). The use of CFAs (or ‘no win, no fee' agreements) has traditionally been common in areas of civil law such as personal injury. However, they are frequently used in public law: this was the method used in Medical Justice v Secretary of State for the Home Department  EWHC 1925 (Admin), in conjunction with a protective costs order (see below).
CFAs used to provide for a ‘success fee' which meant that if a case was successful the lawyers were able to claim an uplifted rate in their professional fees. This is on the basis that the lawyers are taking a risk, because if the case is unsuccessful the CFA provides that the client will not pay any fees and the lawyers would not be paid.
However, from April 2013 success fees are no longer recoverable from defendants. This is due to the implementation of the reforms suggested by Lord Justice Jackson. The suggested alternative is damage-based agreements (DBAs), whereby the successful lawyers take their fees from the damages won by the claimant. The problem in judicial review cases is that damages are rarely the remedy being sought. It was hoped that Jackson LJ's suggestion of ‘Qualified One Way Costs Shifting' (whereby the defendant might pay the claimants costs even if the claimant lost) would provide an alternative. However, this has only been implemented in personal injury cases.
The effect of this is that the alternative to funding judicial review cases has now fallen away. If a client falls outside the legal aid scheme, and many do, they will probably not be a position to fund their case.
(3) Further proposed changes to legal aid
As noted above, the LASPO changes have left judicial review largely unaffected (although other areas of public law such as housing, social welfare and immigration have been severely cut). However, on 9 April 2013 the Ministry of Justice published a consultation paper called Transforming Legal Aid. *This proposes a seismic shift in the way legal aid would operate in judicial review cases.
The rationale behind the proposals is to ‘transfer the financial risk...to the provider' (ie the lawyers). The proposal is that lawyers should only get paid if a case gets permission to bring the judicial review (see paragraph 3.69). This would mean that even if a case settles in the run up to a permission hearing, and the claimant has been successful, the lawyers would not be reimbursed at all. As a result, only the strongest cases would be granted legal aid - but as practitioners will be well aware, cases that appear to be borderline at the outset are often successful, and the result is difficult to predict with certainty.
This proposal appears to rest on a supposition that claimant solicitors have previously rated cases as strong in order to get legal aid funding, whilst the cases have actually been weak. Further, the same solicitors have then recorded that there has been ‘substantial benefit' to the client when there may not have been (see paragraphs 3.72 and 3.74).
The suggestion is that if cases settle the claimant solicitors can then pursue cost orders. This would invite unnecessary satellite litigation. After M v London Borough of Croydon  EWCA Civ 595, the court would have to engage in a hypothetical exercise to try and determine who would have won if the case had been fully argued. This is both an expensive and uncertain process.
It appears quite plain that if these proposals were to become law, many solicitors would be forced to look elsewhere for a viable source of income. No business can run sensibly on the levels risk that the consultation paper contemplates.
The role of claimant solicitors undertaking public interest litigation via judicial review has been recognised at the highest levels. In E v JFS  UKSC 1, Lord Hope said:
‘It is one thing for solicitors who do a substantial amount of publicly funded work, and who have to fund the substantial overheads that sustaining a legal practice involves, to take the risk of being paid at lower rates if a publicly funded case turns out to be unsuccessful. It is quite another for them to be unable to recover remuneration at inter partes rates in the event that their case is successful. If that were to become the practice, their businesses would very soon become financially unsustainable. The system of public funding would be gravely disadvantaged in its turn, as it depends upon there being a pool of reputable solicitors who are willing to undertake this work.'
This observation applies with particular force in relation to the Ministry of Justice's recent proposals. It is hoped that the idea is shelved. However, if it remains, judicial review litigants will be the victims of a pincer movement - no more solicitors willing to act on CFAs, and no more solicitors willing to act on legal aid. In short, no more solicitors providing representation in what is currently the vast majority of judicial review cases. Given the importance of judicial review as a check on the government, this cannot be good for the rule of law.
*Ministry of Justice, Transforming Legal Aid: Delivering a more credible and efficient system (CP14/2013) is available here: https://consult.justice.gov.uk/digital-communications/transforming-legal-aid/supporting_documents/transforminglegalaid.pdf. The consultation closes on 4 June 2013.