Thinking differently about funding social welfare legal advice
As a UK wide funder solely focused on improving access to justice, we have a keen interest in the exploration and development of additional funding models. Since 2008 we have been raising funds to enable more people to resolve their social welfare legal problems. Since then we have seen huge cuts in other funding sources, increased used of digital solutions, a global pandemic and unprecedented increase in demand due to the ongoing cost of living crisis.
Legal advice charities are expert at pulling together a wide range of funding sources to enable them to serve the legal needs of the most vulnerable people in our society. The complicated cocktail of legal aid, local authority funding, and funding from philanthropic funders unfortunately goes nowhere near to meeting presenting need or underpinning demand.
Each year we ask our grantees to let us know the gap between their budgeted income for the following year and the funds they have secured. Last year the gap was close to £30million, and it’s growing.
But this isn’t an article about the problem, it’s about looking at some potential solutions.
Calls for increased funds
The Low Commission back in 2015 estimated that the cost of ensuring a basic level of information and legal advice on social welfare law issues in England and Wales in 2015, would be at least £500m per year.
It called for £50m new funding per year from central government (Cabinet Office, Ministry of Justice (MoJ) and DWP) to create a National Advice and Legal Support Fund plus a further £50m additional funding per year from a variety of other statutory, voluntary, and commercial sources to supplement and complement the new National Fund at both national and local level.
In 2018 the Bach Commission reinforced the need for such a fund. Despite these calls, little progress has been made towards making them a reality.
So, where is that £100million of additional funding going to come from?
Setting aside for the moment the need for additional government investment in this work, some of the more innovative funding options are set out below, many of which have a proven track record globally.
Levies and insurance
In 2023 Roger Smith’s call for a National Legal Service included not just a call for an increase in the legal aid budget but also for a levy on the legal profession. Levies on court fees or even wealthy litigants are other possible options, as are increased use of legal expenses insurance or canny use of the apprenticeship levy. In Canada proposals for a system of public legal expenses insurance have the potential to make access to justice a reality for thousands of people.
Pro Bono Costs Orders
Brought into being (alongside the Access to Justice Foundation) by the Legal Services Act 2007, advocates acting pro bono are able to request that the court makes an order for costs as if the client had been fee paying. Those costs are then paid to Access to Justice Foundation for use in our onward grant making. In 2022 pro bono costs were extended to tribunals. Despite our best efforts, awareness of this hugely impactful access to justice tool is still very low, and there is significant potential for this to increase.
Interest on Lawyer Trust Accounts (IOLTA)
IOLTA schemes generate funds by pooling small amounts of interest generated by client funds held by law firms for short periods (e.g., land registry fees and negotiated settlements). The American Bar Association estimated in 2020 that US IOLTA funds totalled over $175 million and were used for a variety of purposes such as free legal advice and legal education initiatives.
IOLTA schemes exist in each state in the US, as well as in Canada, Australia and elsewhere around the world. They vary in size and approach, as well as in the use of the funds generated. Some schemes exclude certain law firms, some work on an opt in basis. Some are administered by legal services regulators, others by independent foundations.
There has been discussion in this jurisdiction about the introduction of such schemes, most notably in the pre LASPO consultation. As a sector we have not considered in sufficient detail the range of possible IOLTA models and the implications, positive and negative of each. There is an urgent need for in depth research on this point, to establish whether such a scheme could be viable in the UK.
Residual Funds from Collective Action cases
The Consumer Rights Act 2015 introduced collective actions in the competition law arena, permitting opt-out litigation taken on behalf of a whole class of affected individuals, with the ability for damages to be awarded reflecting the entire loss of that class and so the full extent of the defendant’s wrongful acts.
No cases have as yet reach trial or settlement under the legislation. However, if or when such an opt-out case is successful, but not all the individuals in the class can be contacted or otherwise do not claim their damages, there may be leftover damages that need to be dealt with. Potentially these could be large sums, although only arising on an ad-hoc basis.
The Act provides that these sums be paid to the Access to Justice Foundation for distribution to legal charities across the UK, in order to support further access to justice. More detail on this can be found on our website here.
During 2024 we will be consulting with a range of stakeholders on this potential opportunity, to ensure that the impact of any funds received is maximised, and that they are distributed through a transparent and collaborative process.
A collaborative approach to next steps
Publicly funded legal services with legal aid at the core remain at the heart of any ambitious access to justice solution. Without a system which genuinely levels the playing field then access to justice will remain a luxury most people cannot afford. But legal aid isn’t the only solution.
Legal advice charities have always juggled a complex mix of funding models. They tell us, quite understandably, what they need to thrive is sustainable long-term funding. We need to think differently about how that is generated.
As a relatively small niche funder we can’t do this alone. We have a responsibility towards the increasing numbers of people currently unable to access legal advice to work together to explore some of the solutions above and others too.
If you’re interested in keeping up to date with our work in this area please sign up to our network newsletter here or contact Clare Carter at clarecarter@atjf.org.uk.
