The Purchaser-Supplier Approach in Legal Aid

5. The Disadvantages Of A Mutual Interest Model

Q. 4 in the Terms of Reference asks, based on the experience in Australia, what are the disadvantages of a mutual interest model? We need to preface the answer to this question with two qualifications.

The first is that Australia was never a big spender on the mutual interest model. From 1987 at least four public inquiries and the Law Council of Australia and other interest groups claimed the national scheme was seriously under-funded (National Legal Aid Advisory Committee 1990; Senate Standing Committee on Legal and Constitutional Affairs 1992, 1993(a) & 1993(b); Law Council of Australia 1994; Senate Legal and Constitutional References Committee 1998). [10] In comparison with other countries best estimates suggest that Australian expenditure was low, certainly in the last 5 years of the mutual interest model. In the early 1990s per capita expenditure on legal aid was AUS$13, compared to AUS$16 in New Zealand, AUS$18 in Canada, AUS$22 in The Netherlands and AUS$65 in the UK (Senate Legal and Constitutional References Committee 1997: 24; see also Fleming & Regan 1995).

The level of funding impacted adversely on the performance of the mutual interest model. Comparatively low funding resulted in a legal aid scheme restricted in scope, with less access to legal representation and assistance, although wider access to free legal advice, than in comparable national schemes, and narrow or "mean" eligibility criteria (Regan 1999). The result was that Australian citizens must be "poorer than in most other societies" and their "case needs to be in a narrower range, to be granted legal aid" (Regan 1997:5). To a degree it is arguable that comparatively low levels of expenditure were a product of diffusion and decentralisation of responsibility between the Commonwealth and the States. As such one interpretation of the Australian experience is that problems in funding were endemic, and an inherent disadvantage of the in mutual interest model. The paper does not pursue this issue. Neither does it speculate whether the quality of the Australian experience may have been different if expenditure on the mutual interest model had been greater.

The other prefatory qualification is that its multi-party, partnership components means that we cannot identify the disadvantages of the mutual interest model from a single perspective. The experience of the mutual interest model impacted in different ways on its component parties, such as the Commonwealth, Federal governments, legal aid commissions and the legal profession. Each of these parties had a different perspective of the mutual interest model, and the operation of the national scheme had different impacts on their respective and different interests. In answering this question the paper does not attempt to explain the disadvantages of the mutual interest model from every perspective of its participant actors.

No public policy project is capable of keeping everyone happy, all of the time. However the experience of the mutual interest model of legal aid in Australia was that it generally worked to the advantage of a majority of the participants (see 4.0 above). The interests of social welfare groups and the Commonwealth/Federal government were the two exceptions to the general experience, as discussed below. The mutual interest model does not appear to have significantly disadvantaged State and Territory governments. The Commonwealth-State legal aid agreements guaranteed their financial exposure, and in many respects provided them with new institutions in State law that were substantially funded by non-State revenues, including grants from the Federal government. It also relieved the State governments from the pressure that had often been applied by the law societies to increase public spending on legal aid from State revenues.

Nor did the mutual interest approach work to the disadvantage of the legal aid commissions, their staff or the CLCs. The State and Territory legal aid commissions were creatures of the mutual interest approach. Management, administration, and service delivery provided secure, and gradually more prestigious, employment and status enhancement for lawyers, and career paths to other professional workplaces. , In relationships with federal legal aid managers, in local professional cultures, and amongst solicitors and barristers supplying legal aid services the power of the legal aid commissions and their managers progressively increased from the early 1980s. Their control of 'street level' expenditure of Federal legal aid funds and the composition of the costs of service delivery was also significant (see below). The emergence of community legal centres pre-dated the mutual interest model (Basten However Federal and State funds provided through the national legal aid scheme financed the rapid growth in numbers in the 1980s and early 1990s. Community legal centres enjoyed a high degree of autonomy, and their lawyers and workers exercised significant control over access to legal aid, and the types of services provided. By the end of the 1980s both the legal aid commissions and the community legal centres challenged the legal profession when it came to the politics of legal aid.

Nor was the legal profession disadvantaged. In fact, for the reasons discussed in Q. 3, the legal profession was the big 'winner' of the mutual interest approach. The Law Council of Australia, law societies and bar associations may have preferred a federally funded Judicare scheme. Even in the late 1980s some law societies still pressed for introduction of cash vouchers to enable legally assisted litigants and accused to choose their own lawyer (National Legal Aid Advisory Committee 1990: 165-6). Yet, the Australian experience indicates that the legal profession was a major, if not the principal, beneficiary of the mutual interest model, collectively, institutionally and economically (see also 4.0).

However there were two "partners" in the Australian experience whose interests were clearly disadvantaged by the mutual interest model. The first were social welfare organizations such as ACOSS and the State and Territory Councils of Social Services. Such organizations had nominees in key institutions of the mutual model such as the Commonwealth Legal Aid Commission and legal aid commissions (see 2.0 above). However it was the assumptions of the socio-legal institution of legal aid (also see 2.0 above) and the legal profession that dominated legal aid policy, and expenditure on legal representation by practising lawyers that dominated service delivery budgets. The concentration on casework in legal aid commissions and legal aid funding frustrated social welfare organizations. In 1989, for instance, ACOSS described legal aid casework as "a treadmill leading nowhere", and argued for greater use of the experience gained in legal aid delivery to plan new, more accessible, affordable and effective strategies to increase the access of poorer and disadvantaged people to the legal system (National Legal Aid Advisory Committee 1990: 18-9).

The principal "partners" of the Australian mutual interest model, the Commonwealth, successive Federal governments and federal managers and administrators, felt the disadvantages of the mutual interest model most keenly. It was Commonwealth funds that provided the bulk of the funding. In the 1980s, for instance, Commonwealth funds averaged 50% of total funding of the national scheme (National Legal Aid Advisory Committee 1990: 79).

Nevertheless the Commonwealth/Federal experience of the mutual interest model was not entirely negative. Until the early 1980s the model probably worked to the advantage of the Commonwealth/Federal interest. To a degree the initial Commonwealth-State legal aid agreements had capped annual Commonwealth spending at 1976-80 case levels (see below), and both the Commonwealth Legal Aid Commission and a predecessor to FLLAD had active research programmes (see for example Commonwealth Legal Aid Commission 1980 & 1981; Hanks 1980 & 1987; O'Connor & Tilbury 1986; Cass & Western 1980).

However there were already problems. The Commonwealth-State agreements concentrated more on capping Commonwealth outlays, than on creating accountability/monitoring mechanisms for expenditure on Commonwealth/Federal legal aid matters. The formula for calculating future Commonwealth contributions to the national scheme was problematic (see below). Moreover the timing of the creation of a national legal aid scheme was unfortunate. By 1976 the federal welfare state was beginning its retreat from open-ended commitments to social welfare-type programs. A new Federal government had professed its intention to reducing Commonwealth outlays on such programs (Jones 1983: 65). There were also difficulties in effecting the transition of the ALAO into the State and Territory legal aid commissions, and there were other teething problems. So in a real sense it was not until 1980 that the mutual interest model was fully operational.

The early 1980s were on the cusp of the sea change in the federal welfare state (Castles 1990: Fleming 1997). This was also the time of a new interest of the Commonwealth in managing its participation in the national scheme (see Attorney-General's Department 1985; see also Cooper 1983). The principal management problems for the Commonwealth/Federal interest was lack of micro/service delivery data, inadequate mechanisms to limit Commonwealth outlays and control costs and expenditure and inadequate monitoring mechanisms to ensure federal funds were spent on providing citizens with legal aid in Commonwealth/Federal matters. The Commonwealth/Federal government was "providing the largest portion of legal aid funding without having any say in who gets legal aid, the types of matter in which assistance is granted, or the manner in which assistance is delivered" (Attorney-General's Department 1985: 2 & 12-40). In the early 1980s there were also concerns that legal aid commission costs in Commonwealth/Federal legal aid cases were rising at a greater rate than in matters of State or Territory law, and that increases in the cost of providing legal aid had not been matched by corresponding increases in the numbers of people assisted.

In 1984-85 a Federal legal aid task force concluded that "the commission system has not protected the Commonwealth's interests" (Attorney-General's Department 1985: 2). The report of the task force contained detailed recommendations to impose conditions on Commonwealth/Federal funding with respect to the provision of legal advice, operation of duty lawyer services, financial eligibility and contributions, the types of matter for which legal assistance should be available, monitoring and conditions of legal assistance, restriction on solicitor of choice, participation in the setting of legal aid fees scales (including the approval of the use of counsel, and to reduce expenditure on non-essential services (in house social workers, the research and education function (Attorney-General's Department 1985: 45-120)).

The task force was especially critical of the funding formula used in the Commonwealth-State legal aid agreements. In the agreements the Commonwealth agreed to annually reimburse the legal aid commissions for the cost of providing legal assistance in a Commonwealth/federal cases. The number of such cases paid for by the Commonwealth in any year was not to be less than the total number of cases funded by the ALAO in the final year of its operations. In South Australia, to take a hypothetical example, the ALAO may have funded 5000 cases of Commonwealth/Federal legal assistance in its final year of operation. The effect of the agreement between the Commonwealth and South Australia was that the former agreed to meet the costs of not less than 5000 Commonwealth/Federal legal aid cases each year, irrespective of the total costs of service delivery. This was the so-called "numbers system". The task force was very critical of the numbers system, pointing out that it encouraged legal aid commissions to manage by reference to Commonwealth case quotas, resulted in a disproportionate number of referrals of Commonwealth/Federal legal aid cases to private lawyers, with little control over costs, and disclosed serious administrative difficulties. The latter referring to a suspicion held by task force and other Federal officials that State and Territory legal aid commissions used uncertainties about the definition of Commonwealth/Federal matters to load the Commonwealth quota with high cost cases.

The task force was also concerned about an absence of national uniformity in the availability of legal aid. Its was also concerned that legal aid commissions were pursuing a collective or community welfare approach, i.e., funding preventive legal aid and community legal education programs. Whereas it was the intention of the Commonwealth/Federal governments that federal legal funds should be spent on assisting individuals in need of legal assistance. As such the task force favoured greater direction by the Federal government as to the specific purposes on which Commonwealth legal funds should be spent. Overall its members considered that the Commonwealth ambition of achieving "a comprehensive legal aid scheme in Australia involving a co-operative exercise between the Commonwealth and the States in the provision of legal aid ... has not been realised" (Attorney-General's Department 1985: 22). To be fair it needs to be said that these criticisms proceed from the Commonwealth/ Federal perspective. The views of the task force were contested by legal aid commissions and law societies and bar associations. Nevertheless they do identify major disadvantages of the Australian experience from the viewpoint of its principal funder. However it also needs to be said that to some extent the Commonwealth/Federal government was hoisted on its own petard. It is probably not surprising that the 1984-85 Federal task force discovered diversity and difference in legal aid delivery and provision, and the existence of multiple heads of criticism of the management, cost and targeting of service delivery. The national scheme after all designedly incorporated a mutual interest approach. Moreover until the early 1980s the Commonwealth/Federal governments had concentrated on establishing the infrastructure of the national legal aid scheme, and not on questions of financial management or service delivery policy, as the authors of the 1984-85 task force conceded (Attorney-General's Department 1985: 14). In other respects Commonwealth inaction also disadvantaged its position in the national legal aid scheme. Once the Commonwealth Legal Aid Commission was abolished in 1981:

"the Commonwealth effectively surrendered all control over Commonwealth funded legal aid delivery by legal aid commissions. It is true that the Commonwealth still held the purse strings but it had no say any more in fundamental matters such as" who would receive legal aid, in what matters would legal aid be granted, what the eligibility criteria would be, what contribution policy should be adopted, and what fees would be paid, except in family law" (Attorney-General's Department 1985: 25).

Similarly the task force was critical of inadequate Commonwealth/Federal investment in monitoring and protecting its policy and financial interests. It reported that in 1984-5 "a small under-resourced area of the Department" examined programs and financial estimates submitted by the State and Territory legal aid commissions (Attorney-General's Department 1985: 25). The task force report also claimed that the Commonwealth sought inadequate information, so that the information supplied by the legal aid commissions was often "insufficient to allow meaningful analysis of those programs" (Attorney-General's Department 1985: 25). It also claimed that there was a lack of timely involvement and interest by the Commonwealth Department of Finance (Attorney-General's Department 1985: 25-26).

These problems continued to blight the Commonwealth/Federal experience of the mutual interest model into the 1990s. Various efforts were made to improve the organizational base of managing Commonwealth/Federal interests, including the establishment of an Office of Legal Aid Administration, creating the NLAAC and a National Legal Aid Representative Council, and the slow but steady pursuit of remedies to deficiencies in program management data and information. The latter, for instance, saw the development of the CLASS and LASSIE data systems, and eventually data sharing agreements with legal aid commissions in the late 1980s saw the first uniform statistics on legal aid delivery in the national scheme. A much greater degree of control over Commonwealth expenditure was achieved in 1986. New funding formulae in Commonwealth-State legal aid agreements replaced the numbers system with Average Weekly Earnings and CPI indexing at 1987/88 funding levels (National Legal Aid Advisory Committee 1990: 11).

In the late 1980s the federal Department of Finance reviewed the justifications for maintaining existing levels of federal expenditure on a number of Commonwealth programs (Department of Finance 1989). The Department was not satisfied that the efficiency and the effectiveness of the Federal legal aid program had been established. In 1989 a senior finance officer was appointed Federal director of legal aid. The Department of Finance was concerned about "the significant increase in expenditure on legal aid (particularly by the Commonwealth) in the 1970s and 1980s, and ... the absence of outcome or evaluation data at least at the national level on a uniform basis" (Thorne 1989: paras 1-2; National Legal Aid Advisory Committee 1990: 11-12).

The Commonwealth/Federal interest also confronted problems of "capture". [11] The legal profession dominated the mutual interest model (see 2.0 & 4.0 above). The interests of the law societies and bar associations and practising lawyers permeated service delivery and administration at the State and Territory level. The presence of other members of the legal profession in management roles spun its web over the mutual interest model. The evolution of strong institutional and personal networks surrounding the administration of the State and Territory legal aid commissions exhibited many positive features (see 4.0 above). From a Commonwealth/Federal perspective it had downsides. The Federal task force complained that some States claimed precedence of local legislation establishing legal aid commissions over the Commonwealth-State agreements (Attorney-General's Department 1985: 24). Its members also alleged that in some States interest groups had sought to argue that the Commonwealth/Federal government was prevented from disagreeing with decisions taken by legal aid commissions. The presence of its nominees on boards of management was said to produce a quasi-estoppel, membership and participation in decision-making preventing the Commonwealth from departing from decisions taken by the management board of a State or Territory legal aid commission (Attorney-General's Department 1985: 24). In these and other ways the task force believed that capture by the legal profession and the legal aid commissions worked to the disadvantage of Commonwealth/Federal interests in the mutual interest model.

Time also took its toll of the mutual interest model. By 1990 it was out of step with public policy trends in the Australian welfare state. The workers' welfare state originating in the 1890s and 1900s had been substantially transformed by neo-liberal economic policy, NPM, privatisation and corporatisation and other market-inspired institutional transformations since 1980 (see 8.0 below). The alliance between the state and the legal profession that had placed the socio-legal institution of legal aid at the forefront of the national scheme was fading (see also 8.0 below). The Commonwealth/Federal government had given notice that the work practices of the professions, including the legal profession, would be reviewed (Trade Practices Commission 1990: 1). In late 1992 it commissioned an Independent Committee of Inquiry into a National Competition Policy to design "a competition policy framework" for the Australian economy (Scales 1996: 69). The Committee of Inquiry reported the following year, and the Federal government accepted and endorsed its framework of recommendations for micro-economic reform (National Competition Policy Review 1993).

In 1993 the Commonwealth Attorney-General commissioned the Access to Justice Advisory Committee to recommend reforms to the legal services system, including the provision of legal aid. He specifically instructed the Access to Justice Advisory Committee to apply competition framework principles in assessing the evidence, and in formulating its recommendations (see Access to Justice Advisory Committee 1994). In 1995 the Prime Minister accepted the Access to Justice Advisory Committee report, and an access-to-justice approach, shaped in the shadow of National Competition Policy, which Australian governments also endorsed in 1995, replaced legal aid ideology as the keystone of the Commonwealth/Federal public policy project of legal aid (see Attorney-General's Department 1995; see also 8.0 below). In the early 1990s Federal ministers, legal aid managers and the Department of Finance were less and less patient with a national legal aid system unable to report and demonstrate its efficiency to their satisfaction. Such reporting outcomes were necessarily inherent problematic, given the inherently different expectations and interest of the "partners" in the national legal aid scheme.

The disadvantages of the mutual interest model in the Australian experience can also be considered more generically. In its review NLAAC took a sympathetic view of its relationships (see above). Instead its report sought to address areas needing improvement (National Legal Aid Advisory Committee 1990: 101). NLAAC identified, for instance, shortcomings in communication between the Commonwealth and the States, and recommended changes (see National Legal Aid Advisory Committee 1990: 112-3). It reported that operationally the legal aid system was overly focused on service delivery, and recommended substitution of a "solution oriented" or policy driven service delivery approach. A services focus had limited opportunities for integration of legal aid with other social welfare programs, and retarded awareness of alternatives to court/lawyer based solutions (National Legal Aid Advisory Committee 1990: 121- 4). NLAAC also reported in detail on other weaknesses evident in the mutual model in 1988-9, including inadequate program management criteria, a lack of uniform and comparable national statistics and evaluation mechanisms, the need for more applied research, insufficient costs data and problems in eligibility criteria and review conditions (National Legal Aid Advisory Committee 1990: 128-9; see generally at 99-178). It also reported that significant gaps remained in the scope of the national scheme, and made detailed recommendations identifying unmet and new, unmapped needs for legal aid services (see National Legal Aid Advisory Committee 1990: 253-82).

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