The original project dealt with crime and personal injury files but has now been extended to nine subject areas including matrimonial, housing, debt, employment, welfare benefits, immigration and consumer contracts. Each area of franchising will include a mandatory requirement to supply benefit advice, creating a need for specialists in this area of the law usually reserved for advice agencies. Each area will also require a named supervisor although the supervisor can, and in small practices and advise agencies probably will, be the only person dealing in that franchise area. The Board still has not completed all the criteria of which there are two sets, one for green form work and the other for full legal aid certificates.
To date only three criteria have been published (personal injury, crime and matrimonial). It also expects to cover other areas of legal aid work but there is no clear idea of what areas are to be covered yet. Even where specifications have been published, modifications of all of the Boards proposals are ongoing and many things are still to be confirmed and will remain so after the 1 October 1993 starting date.
Transaction criteria are not the only criteria to be used in the franchising specifications announced in April 1993. The Board, in its draft proposals, also set management standards that firms will have to meet. The Law Society has to created its own management standards to be used by all firms providing legal services. This led to the Board introducing, with minor modifications, the Law Society's "Practice Management Standards".
But franchising is not only about criteria, it is supposed to be a carrot and stick approach with both sides gaining some rewards. For its part the Board has offered financial incentives to practitioners which include devolved powers for payment of £250 for emergency civil legal aid and the use of delegated powers in granting up to two hours of green form extensions, £150 on account for ABWOR certificates. Payment will be quicker, with 75 per cent of costs paid within nine months of issue of a civil legal aid certificate and every nine months thereafter and this may be extended to all full certificates in the future. Practitioners will also be given a named liaison officer at the area office who they can call to clarify any problems regarding legal aid franchising. It is hoped that the new franchising logo will assist firms in marketing themselves. Another more important carrot, although not instantly recognisable, is the increased effectiveness and efficiency that the management and transaction criteria will bring.
The Board will take, for its pound of flesh, much more control in the day to day running of firms. The initial application, once sent in, will be vetted by a liaison officer from the Board who will then undertake a preliminary audit of previous legal aid files and the management criteria. If all is satisfactory then monitoring begins. This is where most of the control begins.
Contracts will be awarded where firms meet the two sets of criteria for a period of five years, with an automatic extension of a further three years if the conditions of the contract have been fulfilled. The area office will have details of refusal and rejection rates for legal aid cases and these will be taken into account, many refusals are currently the result of poorly filled in applications. Also taken into consideration are average costings per case, and in the future client feedback will be assessed. Peer review was ruled out as too expensive. Firms will be audited by trained, but not legally qualified, auditors who will check management standards are being kept and will review legal aid files with the help of the transaction criteria. All this information will be used to assess the quality of work.
The transaction criteria will form the largest part of the Board's information and consist of an extensive file review procedure. These audits, using the transaction criteria, will assess the files for omission rates using a check list of items that should be in every file. Files will have to contain an item somewhere in them detailing such things as names, addresses, action taken, and other information. Items on the checklist will have a simple `yes' included or `no' not included or `not applicable' boxes.
To begin with, thresholds for omissions will be set at seventy five per cent but these are likely to increase once the Board becomes more confident in itself and the performance of the criteria has been tested to provide an accurate record of how files should be formatted. Prof. Sherr has said that the pilot project was too small to fully examine the effectiveness of the criteria. Some information which is not contained in the file will, by its very nature, merit a yes, such as where a client has been charged at a police station. No record is needed of custody details if there is a custody record attached, removing the need to duplicate work. Firms will always be given the benefit of doubt if there is an ambiguous answer and it is hoped that, with time, auditors will be able to "feel" their way through a file in about forty minutes without the assistance of the practitioner, who will be asked not to impede the auditor beyond showing them where the files are kept.
Once completed, the file will either pass or fail, but only a minority of the Birmingham pilot project files failed at this level. Omission rates varied in different areas, non-recording of facts averaged around 15% whereas advice rates had an average of 35% with action taken in between at 28%. The criteria may seem the answer to assessing the competence of the file and the work of the practitioner but it is limited to asking what information should be present, not if it is legally correct or, in fact, was actually given. No account has been taken to combat entries being added after the file is closed or after the client has left, although it was suggested that documents be time stamped in the same way that happens in police stations. This may seem unduly oppressive and unlikely to gain much support within the profession but it may be one way of combating fraud.
File review will never be a foolproof means of analysis, as Prof. Sherr conceded in an analogy with hospital records, "The files were written very well, with all the information required, by many skill levels [doctors and nurses] so each [professional] could understand them but it did not stop my wife from getting both good and bad treatment." It is also apparent from Prof. Sherr that complaints of negligence usually occur when actions are not recorded on the file, these being ones of professional judgement as the omission rates for advice may testify. The omission rates are supposed to set a level of "threshold competence", a marker of what the Board suggests would be their minimum quality level. Of course the Board would be happy with a higher level of competence but an explanation of higher unit costs would, if that were the case, be needed, if not the franchise would be in jeopardy.
Once the audit is completed it will be discussed with the liaison officer and the named supervisor at the firm for that particular franchise area. The named supervisor does not need to be a qualified solicitor but must have at least two years practical experience in the field of the franchise held. Initially less importance will be placed on the transaction criteria and more on the management criteria but the emphasis will swing once the transaction criteria is established and fully tested.
Transaction criteria will mean a change in working practices but is easily overcome with a simple checklist on each file similar or the same as the auditors. Good file management should be at the heart of any legal practice. The major upheaval will come with the introduction of the management criteria. The Board were happy to let the Law Society draft proposals from a consultative report by Ernst and Young. The report must have made sad reading for the Law Society as it called into question whether solicitors had any management systems at all. This was borne out in the comments received in questionnaires given to solicitors attending LAG's franchising courses. Over 70% wished to practise law and not manage their firm.
Their seems to be a need, by firms, for a move towards practice managers which would allow solicitors to carry on practising law. Solicitors are failing to organise their time and as a result much legal work is done but little management achieved. This seems especially true of small firms who see solicitors work in isolation to other fee earners and where control is co-ordinated on a daily basis. The Law Society's "Practice Management Standards" will necessitate a change in the management philosophy of any firm wishing to apply for a franchise. Many of the areas it covers will, in part already, be in existence in most firms although not necessarily documented, the problem will be that the liaison officer or the auditor will want to see written proof of there existence.
There are six key areas covered in the management standards. Much of Part (F), about case management, refers to the standards laid out in the transaction criteria and Practice Rule 15 of the Solicitors Practice Rules on client care, a mandatory requirement, but there are some new key areas. (F8) requires firms to keep records of third party services i.e. barristers or expert witnesses, and to maintain those records with regard to the Data Protection Act (1984). This is a mandatory requirement with no exceptions though it seems pointless for sole practitioners.
The area that will affect practitioners most is the introduction of written documentation in areas they may believe are adequately covered and developed but which are not recorded. Part (A) requires firms to have a written management structure, of which most firms have had only an unwritten understanding in the past. The management structure is supposed to assist in induction of new staff which relates to Part (D) of the standards in which recruitment and training requirements are set out. Each member of the practice will be required to have a job description (D1), suggesting that non-legal aid solicitors will also be required to participate in the introduction of franchising. Firms will also have a list of fee-earners duties from which they will be able to assess the requirements for training (D5). New recruits will be able to see a copy of the job description of the post they are to fill (D2.1) and use others' job descriptions to understand the workings of the rest of the firm, so assisting in induction programs, which will become mandatory (D3). Firms will also have to produce a forward plan, but because of the changing nature of legal aid practice this can be as short as a few pages, especially as it will almost certainly require amendments each year (B1).
The largest area of the practice management standards is Part (C), financial management. Firms that have still to come out of the dark ages and retire those quills will be hardest hit. As yet the introduction of computer technology is not compulsory, if firms employ an accountant to produce their accounts, but it is recommended that firms computerise so they can produce monthly cash flows and various other details. These include analysis of clients and cases which, at the moment, are advisory but with the spread of cost control uppermost in the Board's mind and the increased realisation of better management it is feared many of the optional requirements will become mandatory. Even large firms have expressed fears. Bindmans, a large multi disciplinary practice, has already computerised to assist time recording but fears that their present system does not meet the Management Standards. Smaller firms may not be able to afford the capital outlay and the Boards £2 million budget to introduce franchising does not include any money for capital outlay assistance for small firms.
So will franchising be cost effective for firms? It will depend on how far they have to go to meet the standards required and whether the goal posts are moved once they are there. It doesn't seem as if the Board will save any money in the short term. The legal aid bill rose to £1.093 billion in 1992/3 and will increase to £1.283 billion in 1993-4 this from only £86 million in 1978-9. In a written reply to a parliamentary question, Mr Taylor MP. of the Lord Chancellor's Department, estimates the legal aid bill to rise by at least 10% per year for the next three years.
Prof. Sherr also studied the effects of improved payments to practitioners on their cash flow and suggested that a maximum of 7% improvement based on the interest rates of the period of the pilot program which were between 12 and 15%. He suggested that the benefit would be somewhat reduced when the interest rates dropped and in today's climate could fall to between 2 and 3%. Not much reward for all the extra work and overheads that are required, especially in small firms.
Franchising may be the answer to improving the standards of legal aid practitioners, but it's overall benefits may be the corrosion of the independence of the legal profession. The solicitor who practices legal aid could become a second class professional. It is already a major concern of those in the field of legal aid that the transaction criteria will turn new solicitors into robots, using the criteria as a checklist for every file and not using their initiative. It's potential for combating fraud and malpractice is limited, as one solicitor said "I can still hide anything I need it's just a bit harder." This would seem to be the case if auditing files is only scheduled every six months and reality may take that closer to a year.
The Board has published figures from questionnaires suggesting that 2,600 firms will definitely apply for franchises, the most popular areas being matrimony and personal injury. The spectre of competitive tendering will ensure a good take up as firms fear that the Lord Chancellor intends to introduce exclusive franchises. The Board says it has not been asked to define proposals for exclusivity and has introduced franchising on its own merits but does see the scenario in certain areas of the country where franchise areas are not covered that exclusive contracts may be offered to induce provision of a certain franchise area.
