The Purchaser-Supplier Approach in Legal Aid

Acknowledgements

This research was carried out under contract with the Department of Justice Canada. The author wishes to acknowledge the support and assistance of Dr Ab Currie Principal Researcher, Access to Justice, Research and Statistics Division, Department of Justice, and to thank Dr Currie and his colleagues for their comments on the first draft of this paper, and constructive suggestions as to how that draft might be improved.

The author is a professor of law in the School of Law in the Division of Management and Technology at the University of Canberra in the Australian federal capital. At the time of writing this paper he was a Visiting Scholar at the Centre for Socio-Legal Studies at Wolfson College at the University of Oxford. The author wishes to acknowledge the financial support provided through the Outside Studies Program of the University of Canberra that enabled him to live in England for the first six months of 2002. He also wishes to thank Professor Dennis Galligan, Director of the Centre for Socio-Legal Studies, and Dr Reza Banakar, Senior Research Fellow, in making the necessary arrangements for his appointment as a Visiting Scholar at Wolfson College, and all the research staff, administrative staff and students at the Centre for Socio-Legal Studies for their contribution to ensuring that his time at the Centre was both enjoyable and productive.

The author also wishes to thank Professor Peter Dowling, Pro Vice-Chancellor of the Division of Management and Technology at the University of Canberra for approving the variation to his Outside Studies Program that was necessary for the purposes of this project. He also wishes to thank Mrs Keturah Whitford, Head of the School of Law at the University of Canberra and Ms Sian Jolley, its Administrative Officer, for sending copies of reports and papers from Australian to Oxford for use in this research. The author also wishes to acknowledge the ready assistance of Ms Jay Potterton and Mrs Joan Jardine of the Legal Aid Program in the Legal Assistance Branch of the Family Law and Legal Assistance Division of the Commonwealth Attorney-General's Department for responding to e-mailed requests for information.

Highlights

The funding of legal aid in several common law countries is being affected by new ideas in public administration known as New Public Management (NPM). NPM emphasizes clear policy objectives, measurable outcomes and economic efficiency in contract-like relationships between the funders and suppliers of services.

In legal services this has given rise to the "purchaser - supplier model" (PS) for funding legal aid and other legal services. In the PS model a funding agency are viewed as purchasing clearly defined services that reflect its policy objectives. These services must be delivered with a level of accountability and efficiency consistent with the proper expenditure of public funds.

The PS model is coming to replace some elements of the mutual interest model (MI) that has characterized the past thirty years of government funding that has characterized government funding of legal aid.

In 1996-97 the Commonwealth government in Australia changed from a MI model to a PS model of funding legal aid in the states and territories. In large measure this was done as part of an effort to escape from a focus on expenditures levels and not on needs to an approach to federal funding reflecting the level of need for legal services.

The PS funding model in Australia is still an experiment. Only one Commonwealth State/Territory funding agreement has operated under PS principles. Another is just beginning. However, the experience to date has produced some improvements in the national legal aid system. It also displays several potential disadvantages.

The Australian experiment is still evolving. A pure PS model may not be the most appropriate one for the funding of legal services. A blend of the former MI model and elements of the PS model may provide the best framework for the funding of legal services in a federal state.

Executive Summary

Introduction

This paper is a preliminary paper. The 8 questions in the Terms of Reference (see Appendix A) address two models of legal aid funding legal aid. One model is the mutual interest (MI) or cooperative, partnership approach. The other model is the purchaser-supplier (PS) or contracting between funders/policy agencies and providers for the supply of legal aid services.

A demonstrable international shift towards the PS legal aid funding model prompted the Department of Justice to commission the paper. The Canada/Australia federal legal aid workshop that followed the International Legal Aid Group meeting last year assisted in clarifying the issues to be addressed.

Q. 1: The features of a MI approach to funding legal aid

Such an approach shares many features with other MI models of public policy projects. MI models are predicated on high levels of reciprocity and co-operation in inter-relationships between state/government agencies and other actors invited or required to participate in public policy projects. A high level of agreement exists with respect to policy fundaments. Operational responsibilities and functions are shared, and consultative techniques of decisionmaking and resource allocation deployed, in a general spirit of collective enterprise. In a legal aid context a MI approach operates as a social partnership, financed by the state, but built on mutual understanding, shared fundamental values and trust between governments, legal aid agencies and the legal profession.

Constellation around the socio-legal institution of legal aid is the distinctive feature of a MI approach to legal aid funding. That socio-legal institution serves as the template of MI legal aid schemes. Legal professional ideals of legal aid as providing lawyers for the poor dominate legal aid policy, and lawyers and the interests of the legal profession play a major role in the institutions, administration and supply of legal aid.

Q. 2: The features of a PS approach to funding legal aid

No ideal-type of a PS model exits. PS models are complex inter-mixed New Public Management (NPM) concepts that delineate and separate funding and policymaking and service delivery functions.

In practice the PSM has two general features. The PSM resorts to contract norms and techniques to manage public policy projects to supervise expenditure, ensure value-for-money and accountability, and to manage relationships between funding/policy agencies and suppliers of the services necessary to achieve expenditure targets and policy outcomes. Secondly delineating and separating functions in the PSM makes new demands on funding/policy agencies, including the need to increase to investment in applied, policy-orientated research. Such new investment is evident in both England and Australia.

Q. 3: The advantages of a MI model, based on the Australian experience

The principal advantage of the MI model in Australia was that it worked, providing a reasonably effective and generally efficient system of legal aid. An official report in 1990 suggested five reasons for its success: one, the MI model acknowledged the different socio-legal responsibilities of Federal and State/Territory governments; two, the model worked; three, in the 1970s and 1980s the MI model was consistent with other federal policies; four, it emphasized goodwill and co-operation, and drew on the expertise and experience of participant partners; fifthly, the MI model facilitated conflict resolution and positive outcomes in a complex, multi-interest public policy project.

Other contextual factors included a favourable ideo-political climate, widespread acceptance of the significance and importance of the socio-legal institution of legal aid, the influence of the first "wave" towards equal access to justice in post-war western society. A MI model of funding also had strong attractions to its partners, offering Federal and State/Territory governments a vehicle to cap or limit outlays on legal aid, appealed to the socio-legal predisposition of the legal profession, and benefited the economic and collective interests of its members.

Q.4: The disadvantages of a MI model, based on the Australian experience

Australia was never a big spender on the MI model. Comparatively low funding probably impacted on the availability of legal aid, and probably affected the performance of the MI model.

In the Australian experience the MI model advantaged a majority of its partners, notably State and Territory governments, legal aid commissions, the legal profession and CLCs.

Other partners were disadvantaged. The voices of social welfare organizations such as the Australian Council of Social Services were muted, and social welfare policymakers frustrated by the concentrated on "in litigation" legal aid services.

Whilst substantially funding the MI model Federal governments encountered problems in promoting/protecting Commonwealth interests, managing federal expenditure, difficulties in controlling and monitoring costs and ensuring national uniformity in access to legal aid in Commonwealth/Federal matters. To a significant degree the Federal government was hoisted on its own petard, concentrating in the 1980s on capping expenditure, and paying insufficient attention to national legal aid policy, and developing accountability mechanisms.

By 1990 a MI model was out of step with trends in federal public policy, and legal aid funding the object of critical scrutiny by the federal Department of Finance, and Federal and State/Territory managers and the legal profession faced new and very real problems in demonstrating the effectiveness and efficiency of the MI model of funding legal aid. The MI model in Australia was also criticised for lacking a policy or solution oriented focus, emphasizing instead the delivery of in litigation services by lawyers.

Q. 5: The advantages of a PS model, based on the Australian experience

It is premature to evaluate the Australian experience. Nevertheless PS models promise funding agencies greater control over expenditure and greater co-relation of policy objectives and service delivery outcomes. PS legal aid funding is also likely to improve financial accountability and create flexibility and choice in policy and service delivery strategies.

Application of the PS funding model in Australia has already enabled the Commonwealth/Federal government to assert and exercise control over its legal aid expenditure, and escape the twin legacies of funding by case numbers and bloc funding of State and Territory legal aid commissions. The PS model has also improved lines of accountability, incorporated new performance and data collection standards, imposed new monitoring and reporting frameworks, and moved towards quality standards.

Adoption of a PS model has seen legal aid more closely integrated with other Commonwealth/Federal access-to-justice policies, including a system wide shift towards nonlitigious, out of litigation legal services. It has also fostered new, commercially oriented relationships between the Commonwealth/Federal government and State and Territory governments in supplying legal aid, and encouraged pre-existing PS initiatives in legal aid commissions. Adoption of a PS model of funding has improved the capacity of managers to satisfy Department of Finance program evaluation criteria, and to bring legal aid funding into line with PS and other NPM administrative technologies in the Australian public sector.

Q. 6: The disadvantages and potential negative impacts of a PS model, based on the Australian experience

It is too soon to finally evaluate the shift from a MI model to a PS model in the Australian national scheme in 1996/97. Australian experience. A PS model has only just begun to operate nationally in a complete 3-year funding cycle.

Potentially the advantages of a PS model outweigh its disadvantages. Nevertheless the Australian experience of the transition to a PS funding model was dramatic and difficult. The balance of power in the national legal aid scheme shifted to the Commonwealth. State/Territory governments, legal aid commissions, CLCs and the legal profession viewed the actions of the Federal government as peremptory, bereft of consultation and devoid of sensitivity to their 20- year investment and performance in the MI scheme. Whilst creating great promise for policy targeting and accounting for federal expenditure introduction of the PS model left a bitter if slowly fading legacy amongst State/Territory legal aid commissions and staff, CLCs and the legal profession.

In shifting to a PS model the Federal government also significantly reduced Commonwealth grants to legal aid commissions. This exacerbated ex-partner concerns about process, and an already parlous funding situation. Restricting spending of federal grants to matters identified in funding contracts as Commonwealth/Federal matters and priorities and restrictive Means and Merits Tests and Guidelines negatively impacted on the availability of legal aid, adding to administrative costs in the States/Territories, and at times leading to iniquitous consequences for citizens with in litigation cases. Evidence presented to a parliamentary committee in 1997/98 indicated that changes to legal aid funding accompanying introduction of the PS model has significant adverse consequences for the health of the national scheme, and the interests of ordinary citizens needing financial assistance through legal aid to address legal problems.

The Australian experience aside the PS model has other potential disadvantages. Purchasing funding/policy agencies should take care not to elevate efficiency and effectiveness above the professional cultures, work practices and discretions that have sustained viable markets for the supply of legal aid services by practising lawyers. Nor does the PS approach overcome the risk of supplier capture. Taken to extremes PS and other NPM approaches potentially threaten the participation of the legal profession in legal aid schemes.

Q.7: The implications of a shift towards a PS approach to funding for legal aid as a socio-legal institution

Legal aid as a socio-legal institution will survive PS approaches to funding national legal aid schemes. Even if significant funding cuts or diversion of resources towards PDR and other nonlawyer focused solutions to enhancing efficient and effective popular access to law occur.

The significance of the socio-legal institution of legal aid will change. Shifting to PS models will not be a primary cause. The driving force behind changes to the socio-legal institution of legal aid is the new politics of law evident in market capitalist societies such as Canada and Australia. The forces behind such politics include changes in economic policy, the iconic role of the market and re-regulation for a networked global economy. Within the new politics of law NPM and access-to-justice, integrated approaches to public legal services have been particularly important in changing the significance of legal aid as a socio-legal institution.

Other new political factors include changes in the political economy of legal professions, legal workplaces and labour markets and state and consumer re-negotiation of the 20th century compact between the legal professions, state, and society. The eventual impact of a shift towards PS funding and the new politics of law on the socio-legal institution of legal aid are unknown. However such impacts have the potential to adversely impact on the participation of legal professionals in legal aid programs.

Q. 8: The implications of the shift towards a PS model in a federal state in which the national government is a major funder of legal aid

Many of the implications of a shift to a PS model are canvassed in answering earlier questions. The lessons of the Australian experience are applicable elsewhere provided the distinctive national experiences of socio-legal institutions are acknowledged.

Those lessons are generally applicable to legal aid public policy projects. In federal and unitary states shifting to a PS model policy-making processes should become efficient and effective, governments should invest in research and managers in funding/policy agencies need to ensure that staff administering PS programs have appropriate inter-personal, negotiation and bargaining, accounting and financial, contract, risk and change management skills. The implications for program management need further exploration, drawing on cross-national experiences, and the use of PS funding models in non-legal aid public policy projects. Nevertheless we can posit a preliminary description of the pluses and minuses of the PS model, compared to the MI model of funding legal aid (see Appendix B).

Particular implications of a shift to PS funding legal aid in federations such as Canada and Australia include raising the profile of central governments, increasing expectations of federal responsibilities and action, risk shifting to the centre, cost-shifting to regional provider/suppliers and re-emphasizing the need for effective, system penetrating intranational communication between funding/policy makers and providers/suppliers of legal aid.

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