Civil Legal Assistance Department

John McGovern
President
Glasgow Bar Association
John McGovern & Co
Waterloo Chambers JK
19 Waterloo Street
Glasgow
G2 6AY
12 July 2010

Dear Mr McGovern

VERIFICATION OF FINANCIAL ELIGIBILITY IN ADVICE AND ASSISTANCE/ABWOR IN CIVIL AND CHILDREN'S CASES

I refer to the recent meeting between representatives of the Board and of the GBA. It was very helpful to have the opportunity to discuss the draft guidance and to hear your views. I agreed that I would send you a copy of our thoughts on comments we received from people who responded to the consultation.

I do not appear to have received a detailed response from the GBA to the consultation, other than your e mail dated 2 March 2010 in which you asked for the consultation period to be extended and in which you said that you thought there were assertions in the draft that you did not accept and which appeared to you to contradict the regulations. I think that may be because we were initially due to meet on 31 March 2010, shortly before the end of the consultation period, and the intention was for your comments to be provided and discussed at that meeting, but that meeting, of course, had to be postponed. If I am mistaken and you have provided additional comments then please accept my apologies and if this letter fails to address any of the matters you raised please let me know and I will provide you with our further responses.

We received a number of responses from representative bodies and local faculties and individual solicitors. The comments I have set out below respond to those points, but if there are other points you would like me to address I will be happy to do so if you let me know what they are.

Before commenting specifically the points made by people who responded to the consultation I would like to make some general points. The first is that what we are attempting to introduce here is a system that is fair, simple and not costly or administratively burdensome but which at the same time ensures that the solicitor is able to fulfil his legal duties and ensures that clients continue to have access to the services to which they are entitled.

As we discussed when we met, the draft guidance attempts to address the majority of cases where the client is being seen by appointment and where there is no immediate urgency. There will be some exceptional circumstances and cases that fall outwith the norm and we explain in the guidance how those should be addressed. Clients of course have their own responsibilities and it is important that they are aware of them. They have a responsibility to provide adequate evidence to allow the solicitor to be satisfied as to eligibility and to allow the solicitor to properly calculate any contribution and they should be made aware that in most cases they will not be able to access your services until they have done so. In many cases it will be enough for bank statements to be produced, and these are certainly the simplest way for capital to be evidenced.

Our understanding is that most banks will provide statements free of charge, but as some of your members disputed that when we met we are looking into that further. However, there are some practical suggestions I can make in the mean time. As the qualifying period only relates to the past seven days, most banks if asked will produce a print-out of the screen shot of the account over that period and no charge is made for that service. Also, more and more people now conduct their banking on-line and for those people there will be no problem or cost involved in obtaining statements.

We expect that in the vast majority of cases it will be possible to obtain the necessary vouching right at the outset of the case, and that if it is done then and by well-informed prior arrangement with the client there will be no real additional work for the solicitor to undertake. We accept, as set out in the guidance, that there will be some exceptional cases or scenarios where it is not possible to obtain the vouching at the outset, but in even those cases it should be made clear to the client that their admission to A&A has been conditional on the subsequent production of vouching and the solicitor should obtain it as soon as possible and if it is not produced within a reasonable timescale should withdraw from acting and the client will be liable for payment of any amounts paid to the solicitor.

I would like to emphasise that we do not see or intend that these proposals will add any burden to the work undertaken by solicitors as long as practitioners focus is on obtaining information right at the outset of the case, when an appointment is being made and when it is not uncommon for other documents to be obtained either to support the case or to provide evidence of the client's identity. We will also take a proportionate approach to cases of very low cost.

We also think that documentary evidence of the basis on which a solicitor admitted someone to A&A is prudent because the solicitor has a pecuniary interest in the outcome of the financial assessment. You will see from the research I have summarised below that we found many cases where contributions were calculated incorrectly, sometimes to the detriment of the Fund and sometimes to the potential detriment of the solicitor, and where applicants were admitted who were ineligible. Documentary evidence of financial eligibility will not prevent the occasional error or detect every attempt by an unscrupulous applicant to mislead the solicitor, but it will show the reasonableness of the basis on which the applicant was admitted.

Finally, before moving to the more specific matters raised by respondees to the consultation, I would add that the Board's employed solicitors have been applying these standards and have been able to comply with them without difficulty in the vast majority of cases, obtaining vouching at the outset in most cases and for the rest as they have progressed.

Alternative proposals

We were pleased to note that the alternative proposals suggested by organisation such as the Family law Association are not significantly at odds with the basics of what we are suggesting. However, it was suggested that there were some inherent problems with what we had proposed, so I have commented on those below.

1. Some solicitors did not believe that the regulations place a responsibility on the solicitor, as stated in out guidance, "…when granting Advice and Assistance/ABWOR" to ensure that the applicant is eligible and they went on to say that they believed that this is the responsibility of the Board.

We agree that there is no requirement in the Act or regulations for a solicitor to ensure that the applicant is eligible. However, we consider this to be a somewhat semantic point because we consider the regulations to be clear that it is the solicitor's responsibility to be satisfied that the client is eligible.

Regulation 4 provides that an application for advice and assistance shall be in such form as the Board may require and the information which it should contain. Clear reference is made in this regulation that the information is to be provided to enable the solicitor (1)to determine the client's disposable capital and income and (2) to satisfy himself of the client's eligibility.

Regulation 7 clearly states that the client's disposable income or capital shall be determined by the solicitor to whom application is made.

Regulation 8(1) states,

"A solicitor shall give advice and assistance in pursuance of Part II of the Act only if he has satisfied himself that the client is eligible to receive advice and assistance under the provisions of the Act and of these Regulations."

In light of the clear provisions of the regulations, it is difficult to see how, as some solicitors suggested, establishing the applicant's eligibility "is the responsibility of the Board". It appears from the above that establishing the applicant's financial eligibility could properly be described as a "statutory function or duty" of the solicitor. Not only do the regulations make it clear that this is a function of the solicitor, but it would simply not be possible for the Board to form a view without the information which is available to the solicitor.

2. Some respondees referred to the part of the guidance that said "...some applicants may be admitted when they are ineligible or some applicants may not be paying the appropriate contributions" and asked if we had any evidence to show the existence or extent of any such abuse.

The first point I would like to clarify is that we were careful in our draft not to use the word abuse, but instead to refer to the possibility of people being admitted when they are ineligible or paying inappropriately calculated contributions. The reason we took that approach was to recognise that if adequate evidence of eligibility is not seen then there is scope for error even if there is no out and out intention to abuse the Fund. It also takes account of the possibility that not only might an applicant be asked to pay too little in terms of contribution but also that they may be asked to pay too much. We have evidence of this.

We have carried out research and it did indicate the need for further action. We looked recently at a sample of over 2,500 potentially high cost Advice and Assistance cases where the applicants were in employment, and so there is a greater likelihood of either ineligibility or substantial contributions to be paid, and where it did not appear that the solicitor had obtained documentary evidence of financial eligibility. We sought evidence of eligibility directly from the applicants in these cases. I have summarised some of the key findings below:

• In over 500 cases the applicant has failed to respond to our inquiries and as a result neither we nor the solicitors concerned can demonstrate that the applicant was eligible. Those cases have been referred to our Treasury Department for recovery from the applicants of any amounts paid from the Fund due to their non-co-operation. This of course will result in the taxpayer potentially having to bear greater costs in pursuing these.

• In 27 cases recovery action is being taken because false information was provided by the applicant.

• 379 cases had contributions calculated incorrectly by the solicitor - the actual income shown on the documentary evidence we obtained differed from the income recorded by the applicants. Of those we found that over 40% were paying contributions in excess of what they should have been paying and as a result the contributions payable by these people were reduced. However, 60% had been assessed with an inadequate level of contribution and should have paid more towards the cost of their cases.

• In 182 cases the documentary evidence we obtained showed the applicant either to be ineligible or to have a contribution equal to or in excess of the amount of the account to be submitted. As a result the solicitors concerned elected TO submit nil accounts.

• In 19 cases the applicant has moved address and so their eligibility status remains unknown.

I hope that you will agree that this exercise demonstrates the need for and importance of obtaining and retaining documentary evidence of financial eligibility, because significant issues arose in 50% of the cases we examined. Both the Board and the solicitor are now having to undertake additional work in these cases and there are potential losses to the Fund, both of which could have been avoided had appropriate verification been obtained up front.

However, moving on to some of the other points that were raised under this heading, it is important to note that we do not consider the amount of work to be undertaken by the solicitor to be unreasonable for a number of reasons, which I have set out below:

1. For those in employment production of the recent pay-slip should not be cumbersome either in terms of telling the client in advance of the meeting that they have to produce it or in terms of any in-depth assessment by the solicitor. I would only add that bank statements showing the income would be an acceptable alternative and in some ways better as it helps in showing the capital position.

2. For those in receipt of passported benefits you only need to be satisfied that the applicant is in receipt of the stated benefit. The substantive check and any follow up work on that is performed by Board staff making use of the direct link we have to DWP records.

3. For those in receipt of benefits that are not passported we are not able to undertake the check for you but you only need to see recent evidence of entitlement to the benefit by way of sight of an award letter or bank statement (which would also help with capital), both of which the client can be told in advance to bring to the first meeting, as well as course of evidence of any other income they may have, which is not uncommon for some passported benefits.

To put the above in context, we looked recently at the profile of applicants for civil and children's A&A/ABWOR.

For civil cases almost 70% of applicants are in receipt of benefits, 43% being in receipt of passported benefits, where the Board will carry out the substantive checking and it should be comparatively easy for you to obtain evidence from your client of non-passported benefits income. It is only in around 13% of cases where applicants are in employment.

3. Some respondees referred to the third party mandate and expressed concern about the additional work that this would cause you.

I think that some confusion may have arisen here, because it is not intended in civil and children's cases that as a matter of course you should write to third parties such as employers. It would normally be enough for you to have seen documents such as payslips and bank statements. The purpose of the mandate is only to allow you to easily and quickly address any eligibility issue that might arise in the course of the case, such as a suspicion on your part or a suggestion by an opponent that the applicant has income or capital beyond that declared to you.

The enquiries of third parties referred to in the guidance, therefore, should only arise on an exceptional basis.

Some solicitors also expressed concern about having to address and record responses relating to various types of potential capital. We believe that this could be addressed quickly and easily by way of obtaining a bank statement from the applicant and providing the list of items of capital to them, asking if they own any and in most cases simply recording that the applicant has viewed the list and confirmed they have no such items and no bank accounts beyond those for which statements have been provided. There would be no need to ask and record answers to 10 separate questions, the only exceptions being in those cases where the applicant does have an item of such capital and I hope you would agree in those cases that it is reasonable and appropriate that you record the nature of the capital and on what basis you consider the applicant to remain eligible. We could be of assistance here by providing a form to this effect that the client could check and sign and which you could retain and we have already drafted a document of this type.

I note the concern that you expressed that failure to obtain evidence will in the longer term, if the regulations are changed, lead to non-payment. You were particularly concerned at the possibility of this happening in a case where no evidence was obtained at the time of admission but you were later able to establish that the applicant had been eligible at the time of application. There is no risk here because you would inform us of this when you submit your account and we would be able to make payment. The best and safest approach is to obtain documentary evidence at the first meeting, but if it is not possible to do so but you are satisfied that the applicant is eligible you can proceed to handle the case, but you do so in the awareness and on the acceptance of the risk that if your client later proves to be ineligible it will not be possible for payment to be made to you from the Fund.

For the moment the question of non-payment does not arise in civil and children's cases for not having obtained verification of income. It is not our intention to penalise solicitors who have taken reasonable steps to satisfy themselves as to financial eligibility or who have reasonably acted in good faith in certain circumstances where it later transpires that the applicant has misled them. Therefore, although we continue to consider it appropriate that the regulations should be amended to require documentary verification of financial eligibility in most cases and to withhold payment when such evidence has not been obtained without good cause, we are giving further consideration to quite how the regulations should be amended to protect the Fund and ensure that only eligible applicants are admitted subject to appropriate levels of contribution but without unfairly penalising diligent solicitors who have taken reasonable steps. We are keen to consult with you about how the regulations could be framed in order to meet those objectives but it will be important that when solicitors have not seen documentary evidence of eligibility they are able to explain on what basis they satisfied themselves as to eligibility.

4. It was suggested that what the guidance expects of solicitors would duplicate work undertaken by the Board and that the Board is giving up one of its core responsibilities in favour of passing that responsibility to solicitors.

This is not correct. As I explained above verification of financial eligibility is wholly the responsibility of the solicitor and not the Board. There would not be duplication quite simply because the Board does not verify the eligibility of all applicants for Advice and Assistance. We perform checks on all applicants in receipt of passported benefits, which is of assistance to solicitors and the guidance clearly explains what is expected of the solicitor for those cases. For other forms of income the Board carries out random checks on samples of applicants, but we have to rely on the primary responsibility of the solicitor to establish eligibility for most applicants.

5. Some concern was expressed about "proving a negative" in relation to the difficulties involved in establishing capital eligibility. I understand these concerns and the difficulties involved and it is likely that we would limit the checking of capital to that set out in the guidance and to the comments made in response to point 3 above.

I hope that these comments are helpful and would welcome the opportunity to discuss matters further or to hear your further comments.

Yours sincerely

Joe Kelly
Head of Civil Legal Assistance

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