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    « Fresh disruption | Main | Dot and the dinosaurs »
    Thursday
    May242018

    The wide and deep "missing middle"

    Funding models and costs for legal services ... A voice from deep within Victoria Legal Aid ... Bare-boned applicants for legal aid ... Federal funding the lowest for 20 years ... Peach Melba on the barricades 

    Amid all its fanfare about tax relief, the federal government's budget shows that it is not spending on under-resourced public services. The crisis in funding for the public legal sector is so great that on May 10, the Senate passed a motion calling on the government "to reverse the downward trend in legal aid funding". 

    Senator Stirling Griff (Centre Alliance, SA), who moved the motion on National Pro Bono Day, said that the federal government's contribution to legal aid has fallen to its lowest level in 20 years.  

    The structure of the community legal system means that when there's a shortfall from the top, the ripple spreads wide. 

    State legal aid services provide legal assistance not only through their own lawyers, they also provide short and long-term funding to community legal centres, such as Melbourne's Fitzroy Legal Service. 

    Fortunately, in Victoria the state budget has allocated an extra $37.3 million to Victoria Legal Aid over four years. This is to enable VLA to meet the increased need for legal services resulting from the government's injection of $97 million for police prosecutors.

    Nonetheless, legal need in Victoria far outstrips the resources of community legal services. The eligibility requirements for a VLA grant of aid are very difficult to meet - based on an income and assets means test. 

    An applicant will qualify for a grant if they, and any financially associated person, have a net disposable income of $360, or less, a week. 

    Any more than that, and the applicant is required to pay an initial contribution from their income towards their legal costs. 

    For the purposes of the assets test, VLA does not count equity of up to $500,000 in a principal home. This means that an individual with property, but low income, may be eligible for funding, while an applicant who does not own a house, but has more cash flow, may not. 

    Such strict requirements result in a "missing middle" - individuals who aren't eligible for legal aid funding, but do not have the resources to retain a lawyer for the entirety or a part of their legal matter. 

    National Legal Aid, in its submission to the Productivity Commission's Access to Justice paper stated that the difference in the cost of a lawyer at market rate is significantly higher than the legal aid rate, resulting in a "significant justice gap".

    When it comes to financial barriers to access to justice, two factors feed in. 

    Legal aid is underfunded, which in turn means community legal centres are underfunded. The private legal sector operates on a user pays business model, underscored by a significant tension - firms want their lawyers to notch up as many billable hours as possible, whereas the interest of the client is to pay as little as possible for the legal work.  

    Predictably, disagreements between lawyers and clients over costs gives rise to many disputes, at a high enough volume that the Supreme Court of Victoria deals with them at the Costs Court.

    The Legal Profession Uniform Law stipulates that "law practices must not charge more than fair and reasonable amounts for legal costs". 

    However, fair and reasonable hourly rates for lawyers are determined by the market, which is a creature of convention, supply and demand. 

    At this tier of the legal system, clients are viewed as consumers who are charged what they will bear. 

    The market reality of the distribution of legal services, and the "missing middle" it creates, is so entrenched in the legal system that the federal funds required to fix it are beyond reasonable expectation. 

    Nonetheless, funding cuts directly affect access for those who might otherwise currently qualify for aid. 

    From Elif Sekercioglu, who is an intern at Victoria Legal Aid and a volunteer at Fitzroy Legal Service 

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