The Purchaser-Supplier Approach in Legal Aid

6. The Advantages Of A Purchaser-Supplier Model

Fifthly, the Terms of Reference ask, based on the experience in Australia, what are the advantages of a purchaser-supplier model? A comprehensive answer to this question would require interviews and access to data from FLLAD and State and Territory legal aid commissions. Similarly the Australian experience of the PS model is recent and limited. PS-mechanisms (see 3.0) were first incorporated in Commonwealth-State legal aid agreements in 1997-8 (Fleming 2000). 2001-2 is the "first year of a national approach to a purchaser/provider model of funding for legal aid services" (Bourke 2001: 34). The provider/supplier experience of PS techniques in legal aid service delivery is also limited so far, compared, for instance, the experience in England and Wales (see 3.0), and in other Federal and State public policy projects.

Moreover the Australian experience of the PSM is still evolving. The Federal government and FLLAD, for instance, are not committed to the PSM in the current Commonwealth-State legal aid agreements. They are prepared to experiment with different models, provided that such models contain PS mechanisms adequate to implement Commonwealth policy and priorities (Bourke 2001: 10). Similar evolutionary possibilities are evident in the States. Changes to its constituent statute now require Legal Aid Queensland, for instance, to "pursue innovative ways of giving persons legal assistance to minimise the need for individual legal services in the community" (Legal Aid Act 1997; see also Hodgson 1999).

It is also necessary to acknowledge particular features of the PS approach incorporated in the post-1996 Commonwealth-State agreements. These agreements contained a PS-mechanism whereby the States and State and Territory legal aid commissions contract to provide legal aid services, expertise and infrastructure for Commonwealth/Federal purposes, on specified terms and conditions (see 3.0). The Commonwealth/Federal government reserves the right to vary the conditions in which State and Territory legal aid commissions are authorised to spend Federal legal aid funds, for instance, with respect to changed or new Commonwealth/Federal policies, new targets for Commonwealth/Federal expenditure, variations to eligibility criteria, and changes to costs caps in particular types of matters. Provider/supplier compliance with the conditions of funding is monitored by the FLLAD.

As such Commonwealth-State legal aid agreements create a hybrid or two-dimensional relationship between the parties. In part the States/legal aid commissions are contracting as direct service suppliers, i.e., if Federal funds are expended on Commonwealth/Federal legal aid cases serviced by internally employed lawyers. In part the States/legal aid commissions are contracting as indirect service suppliers. That is, the PS-mechanism in the Commonwealth-State agreements assumes that legal aid commissions will also act as purchasers of services from private practising lawyers for the purposes of providing legal aid in Commonwealth/Federal matters (Bourke 2001: 9; Hodgins 1999).

Moreover Commonwealth/Federal government and the States/legal aid commissions acknowledge the special character of the PS-arrangements in the legal aid agreements. They agree that the PS relationship "is not strictly commercial" (Bourke 2001: 10; Hodgins 1999). Instead the parties all conceive of the new relationship as ultimately based "on a shared undertaking of each other's roles and responsibilities and a shared purpose to implement government policy of providing reasonable access to justice through responsive high quality legal services and giving value for money" (Hodgins 1999; see also Bourke 2001: 10).

The principal advantages of the PSM have accrued to the Commonwealth. This is not to say that its former "partners" in the mutual interest approach have not benefited, or are potentially beneficiaries. A PS-approach to financing legal aid offers potential management, financial planning, and marketing benefits to solicitors' firms and other practising lawyers. It may also offer means of developing and enriching professional work (see 9.0). The CLCs have also benefited from the new, integrated approach to legal aid/access to justice policy that paralleled adoption of a PS approach to funding. Federal governments have increased expenditure on community-based legal services, and increased the number and reach of CLCs, particularly in rural and remote areas (Williams 1999(a)).

State and Territory legal aid commissions have also begun to experience the advantages of the PSM, as indicated above, and outlined in Q. 2. Locally inspired PS-approaches were evident in legal aid commissions pre-1997. Partly as a product of the spread of NPM throughout the Australian public sector since the 1980s, and partly as a result of local pressures and initiatives to improve cost-effectiveness in service delivery (see Williams 1999(a)). The demands of the post- 1997 Commonwealth-State funding agreements expanded the province of PS-approaches in the States and Territories. Some States responded by modifying the statutory functions of legal aid commissions. The functions of Legal Aid Queensland, for instance, now include the provision of legal aid as a service provider under a PS arrangement, whether with the Commonwealth or otherwise (Legal Aid Act 1997, s. 7). Even in States and Territories where the legal aid legislation was not specifically amended the PS funding model in Commonwealth-State agreements has had a significant impact. Since 1997 legal aid commissions have improved information, cost management and control and other systems to comply with funding conditions and service delivery expectations fixed by the new Commonwealth-State legal aid agreements. As the CEO of Legal Aid Queensland describes:

"The purchasing role played by commissions on behalf of the Commonwealth also requires responsibility to ensure that the method of providing services is determined in accordance with contestability requirements. It is vital to know the unit cost of inhouse legal services. To this end, considerable effort has been made to install activity based costing systems and also time recording systems and also time recording systems to accurately cost inhouse legal services. Legal aid commissions are expected to make meaningful decisions about the proportion and type of services provided by inhouse practitioners" (Hodgins 1999).

Application of PS-approaches, allied to the background influence of NPM, has encouraged some State and Territory governments to re-structure legal aid commissions, and re-define their role and functions. In those instances the institutions of internal governance have been streamlined. Managing boards are smaller, corporate, and far less collegial in design. The functions of such re-structured legal aid commissions have a far greater commercial emphasis than before. Since 1997 Legal Aid Queensland, for instance, has been statutorily enjoined to ensure that "legal assistance is given to persons in the most effective, economic, commercial and efficient way" (Legal Aid Act 1997).

Legal aid commissions are also significant purchasers of legal services. In this role we would expect that the application of the PSM would reflect its generic benefits, both in the case of services purchased from outside, private sector practising lawyers, and also in the case of services supplied by practising lawyers employed inside legal aid commissions. Such generic benefits of the PSM include:

  • Assisting in clarifying agency needs (via contract specification and negotiation processes) and increasing competition;
  • Increasing leverage of funder/policy agency (purchaser) over outputs;
  • Increasing management autonomy of service providers;
  • Minimising tension between multiple and conflicting agency roles;
  • Moderating competing goals of policy/funding agency purchasers (service standards, quality, and efficiency), and service providers (ensuring funding/winning contracts);
  • Reducing opportunities for client capture (see Boyd & Cronin 1994; Aulich et. al. 2000: 3).

The literature also suggests that application of the PSM is likely to improve financial accountability, management, create flexibility and choice in policy and service delivery strategies and target policy outcomes to meet identified needs for service delivery. In some circumstances a PS approach is said to enable funding/policy agencies to create or intervene in occupational markets (see Boyd & Cronin 1994; Aulich et. al. 2000: 3).

Obviously the Commonwealth and Federal government also stand to reap these generic benefits. Moreover the experience in England suggests that a PS approach encourages innovation and experimentation in delivery methods (see Orchard 2001). The FLLAD has indicated that it is open to such future opportunities.

However the principal advantage of the PSM so far is that it has enabled the Commonwealth to exercise control over its legal aid expenditure. The Federal Government and FLLAD believe that the PS mechanisms in the post-1997 Commonwealth-State agreements "operate effectively to ensure its priorities in the legal aid area are met" (Bourke 2001: 10; Williams 1999(a). The new funding mechanism has allowed the Commonwealth to escape from the legacy of the "numbers system" and bloc funding of the State and Territory legal aid commissions (see 4.0). Neither of these funding arrangements was linked to tangible needs, especially for legal aid in Commonwealth/Federal matters. Since 1997 the Federal government and FLLAD have invested money into needs research, and have developed formulae for assessing demand for legal aid in Commonwealth/Federal matters. These formulae now provide the basis of allocating Federal legal aid funds to the respective States and Territories, and are incorporated into the current Commonwealth-State legal aid agreements (Bourke 2001: 13). This is seen as not only achieving a more rational and objective basis to allocation of Federal funds for legal aid, but together with the articulation of Commonwealth policy and eligibility criteria to promote equity and national consistency in the availability and access to federally funded legal aid services (Bourke 2001: 22-24). At the same time the PS approach and these associated developments have created the potential for even greater strategic focus of legal aid funding (Williams 1999(a): 6).

Adoption of a PS approach in Federal funding of legal aid has also improved lines of accountability. Incorporating improved measures performance information collection, and a monitoring and reporting framework, including financial information and reporting on quantity and quality. The Commonwealth/Federal government also believes there is potential to increase reporting criteria, including quality standards (Bourke 2001: 13). Other advantages of the PSapproach are that it has required the Federal government and the FLLAD to articulate and publish its legal aid policies (see 2.0 above), continue its investment in data control and monitoring technology and personnel and prompted investment in applied, policy-oriented research (see 2.0 above).

The benefits accruing to the Commonwealth/Federal government are not restricted to new funding/policy relationships with legal aid commissions. It has also applied PS-approaches to funding CLCs, and has installed case recording systems in CLCs to improve reporting of case outcomes with Federal funds (Williams 1999(a). Moreover in asserting control over Federal expenditure the Commonwealth/Federal government has raised its profile in national legal aid/legal services policy, to a greater degree than at any time since the mid-1970s (Fleming 2000: 371). On the other hand the de-lineation of Commonwealth/Federal fields of responsibility in the new legal aid agreements also focused State and Territory government on needs for legal aid in their own legal systems. In some States there were small but significant increases in government funding of legal aid commissions (Fleming 2000: 372).

The advantages of the PSM in managing Federal legal aid funding cannot be seen in isolation. In 1994-95 Commonwealth/Federal government policy towards funding and providing public legal services officially swung away from the socio-legal institution of legal aid. It was replaced by an access to justice approach, broadly conceived of as global approach to delivering equality in fair, appropriate and affordable access to an efficient and competitive national legal system (see Access to Justice Advisory Committee 1994 & Attorney-General's Department 1995; see also 8.0 below). This new approach had two important consequences for the dynamics of legal aid. One such consequence, the diminished significance of the socio-legal institution of legal aid is discussed below (see 8.0). The other important consequence is that Commonwealth and Federal legal aid policies are "now more broadly defined", and in policy-making there is an "increasing shift towards non-litigious solutions to legal problems" (Bourke 2001: 1).

Such a shift involves "integration of a range of services ... federal legal aid service delivery arrangements today include not only service providers such as legal aid commissions (LACs) and community legal services, but also a range of other service providers such as mediation organisations, counselling organisations, conciliation and similar services" (Bourke 2001: 20). This new integrated approach has demanded a far more pro-active role of the FLLAD. Its role in the Family Law links Project, reforms to the Aboriginal and Torres Strait Islander Legal Services and various Preventive Dispute Resolution ("PDR") programs demonstrate its new and expanding functions as a co-ordinator of Federally funded legal services. In this context the Federal government and FLLAD see the PSM as a mechanism to ensure better integration and coordination of service delivery, maximising efficiency and effectiveness in expenditure of the available Federal funds, and encouraging a customer-focus in legal services delivery (Bourke 2001: 3; Williams 1999(a).

The PSM has other advantages in the context of the public sector. Controlling expenditure through PS-mechanisms equips program managers to satisfy Finance department's requirements that expenditure was policy-linked and policy-driven, and that public funds were spent efficiently and effectively on acquiring quality services. In England, for instance, the Legal Services Commission cites such a capacity as a significant benefit of its PS approaches to funding and providing legal aid through supplier contracts (Orchard 2001). In the Australian context the management information flowing to the Federal government and the FLLAD from the post-1997 Commonwealth-State agreements is probably not yet sufficient to satisfy all performance criteria imposed on the Federal legal aid program by the Commonwealth Department of Finance. Nevertheless program managers are likely to be far closer to this goal than in 1996. Moreover application of the PSM has probably also demonstrated to Department of Finance officials the bona fides of Federal legal aid managers in seeking to demonstrate the requisite standards of cost controls, accountability and efficiency.

PS-approaches to funding and associated changes to the management of the national legal aid scheme since the mid-1990s such as the appearance of competition and efficiency paradigms, private enterprise styles of corporate governance and other NPM administrative technologies have created another important link with the Commonwealth/Federal and State and Territory public sector (Fleming 2000: 371). Within legal aid commissions, CLCs and the legal profession there has been resistance to the idea of applying NPM to funding and providing legal aid. With good reason, in some cases. Applying the PSM and other NPM techniques to legal aid has its dangers (see 8.0 & 9.0 below). However rightly or wrongly to other government departments and to many Federal and State civil servants the mutual interest model was a relic of the 1970s. It can only work to the advantage of the national legal aid system to improve its interface with contemporary public management approaches to public policy projects. Moreover Commonwealth public sector organizations such the Department of Family and Community Services, the Australian Quarantine and Inspection Service, Centrelink and Telstra have demonstrated the virtues of the PSM and other NPM administrative technologies to improve flexibility in service delivery to citizens consonant with social policy and social justice objectives (Prothero 1999; Johnston 1999; see also Fleming 1997 & 2000).

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