Productivity Commission's report on improving access to justice ... Lawyers are like mechanics ... The power of selling "credence goods" ... Large number of recommendations to give greater choice to consumers, to improve the court system and to enhance community legal centres ... Nina Ubaldi combs through the report and locates the juicy bits
Private solicitors' hourly rates in Australia commonly range between $350 and $600. Yet the average full time employee earns $34 per hour. As one senior lawyer quipped, "I couldn't afford my own services."
Last Wednesday (Dec. 3) the Productivity Commission released its report on access to the civil justice system in Australia. It concluded that unmet legal need is prevalent in the community - 17 percent of the population are burdened by legal problems that have a moderate or severe impact on their everyday lives.
Troublingly, unmet legal need is concentrated in particular demographics. Survey data relied on by the commission revealed that women, Indigenous Australians, single parents, and people living with a disability are more likely to have unresolved legal disputes.
The commission said that barriers to justice must be addressed from multiple angles. To this end, it proposes measures to empower consumers in a complex legal services market. Reforms to court fees and costs orders seek to improve the efficiency and fairness of the formal legal system.
Additionally, the commission advocates a $200 million budget increase and more generous means testing to improve access to public legal services.
Information and choice for consumers
Lawyers, the commission observed, are much like mechanics. In what are termed "credence goods", clients are aware they have a problem but are poorly placed to evaluate the fix proposed by their lawyers.
Therefore, a significant aspect of the commission's plan to improve access to justice is to facilitate the flow of information to consumers.
LawAccess NSW demonstrates the important of a portal through which consumers can more easily evaluate the options available to address disputes.
The report further recommends that State and Territory governments establish online databases of typical fees for common legal problems by the end of 2016.
The commission also advocates for greater consumer choice. It recommends the expansion of "unbundled" legal assistance, allowing for the selection of discrete services over the expense of full representation.
Although the Productivity Commission recognised unbundling may be inappropriate for complex legal issues, in many cases "unbundled legal services can mean the difference between some level of level assistance, or none at all".
Access to the legal market could be further supported by reforms to fee arrangements. The commission supports lifting the current ban on lawyers receiving an agreed percentage of the amount recovered by the client.
Damages-based billing, also known as a contingent agreement, would facilitate legal representation for clients with worthy claims, but little ability to pay up front.
The commission rejects concerns that damages-based billing would generate perverse incentives for premature settlement. This, it argues, mitigates incentives for drawn-out trials under time-based billing.
In situations where time-based billing leads to accusations of overcharging, the commission proposes that legal complaint bodies should be able to compel lawyers to produce the billing records of their other clients.
This would allow the Legal Services Commissioner to determine whether overcharging was part of a lawyer's systemic billing pattern.
Responding to concerns from the legal profession, the commission indicates any confidential information could only be used for the purpose of investigating a lawyer's conduct.
The commission supports the introduction of "limited licences" to allow non-lawyers to provide some legal services. This would initially be confined to family law. The report points to the recent introduction of legal "technicians" in Washington State and similar proposals on foot in California.
The commission says that this would not detract from the work of lawyers. Rather, it would expand access for those currently locked out of the market. As one member of the California State Bar remarked, for some sectors of the community "we have simply priced ourselves into oblivion".
Improving the court system
Formal court mechanisms are also the subject of significant proposals for reform.
Costs in lower courts could be awarded on a fixed basis, taking into account the type of dispute, the stage of the trial and the amount of money in issue.
This, the commission argues, would address accessibility issues arising from uncertain costs orders.
Kingsford Legal Centre client Darren, for example, accepted an inadequate settlement offer to avoid an adverse costs order and the risk of losing his house. According to his lawyer, "he wanted to seek justice but felt the risks just seemed too great".
In higher courts, parties could be encouraged to agree upon budgets, and courts would have discretionary powers to cap costs.
This approach has been adopted in England and Wales. The potential for unpredictability in costs could be addressed by varying capped amounts where unforeseen circumstances arise.
However, the commission did acknowledge that the recent nature of reforms overseas may mean that there is "merit in waiting for the English and Welsh reforms to be fully implemented before evaluating whether such a regime is warranted in Australia".
The proposal to reform court fees is likely to cause a deal of angst. Unlike the United Kingdom, which is heading towards full cost recovery by the end of 2014-2015, Australian courts currently recover between 20 and 30 percent of their costs.
The commission recommends that users of the court system should contribute more to the cost of the court's "services".
It argues that these costs should fall on those with both the capacity to pay and significant private interests at stake. The Bell Group litigation between banks and an insurer, for example, ran for almost 20 years in the Western Australian courts. Even after approximately $750,000 in court fees, the case ended up costing taxpayers just under $14 million.
Concerns relating to equitable access should be addressed through a differential pricing model. This would consider the nature of the dispute, the identity of the parties and the length of the proceeding.
Additionally, automatic fee relief should be extended to legal aid clients, some community legal centres and Aboriginal and Torres Strait Islander legal services, and people with government concession cards.
The commission's proposal is already under attack by the legal profession. Just one day after the report was released, the President of the Judicial Conference for Australia, Justice Steven Rares declared:
"Access to the courts is a basic human right - it is not, and never has been, a 'service'."
The Productivity Commission, he said, had failed to understand the role of judiciary as one of the three arms of government.
Government-funded legal assistance
The commission recommends that $200 million is needed to protect access to civil legal assistance.
Current "means tests are too mean", pointing to a "missing middle" who lack the financial resources to access legal services, but do not satisfy stringent income and assets requirements.
Legal Aid NSW, for example, has not raised means tests thresholds since 2008, leading to a decrease in the income limit in real terms.
Budgetary constraints have seen civil law become the "poor cousin" of its criminal counterpart. Civil law concerns can severely impact upon quality of life and escalate into criminal issues. The commission therefore suggests that additional funding should be earmarked for important civil (including family) matters.
Community legal centres face additional budgetary constraints due to high administrative costs. The commission says that increases in scale could improve efficiency and free-up resources for front line services.
The amalgamation of several CLCs in Victoria has been somewhat successful in achieving in this goal. The commission emphasises that "a voluntary approach, rather than one dictated as part of a funding agreement" is "preferable". The importance of maintaining specialist and culturally appropriate services for Aboriginal and Torres Strait Islander people is also stressed in the report.
At just short of 1,000 pages, the Access to Justice Report canvasses an array of possible reforms to the legal services market. At the end of the report, it is clear that there is a pressing need for greater access to civil justice.
The pivotal issue is whether the Productivity Commission's vision of a more flexible and open legal market can persuade the legal profession of the pressing need for change.
Productivity Commission. Access to Justice Arrangements: Overview and Report