The new contract fees considered: the real cost of the cuts

This blog looks at the real cost of the cuts which go beyond the advertised 17.5% in many instances.

Police stations

In relation to the London Police Station fees, from 11th January 2016 when the new own client and tendered duty contracts are due to start there will be two fees nationally. The fee for London will be £200.93 and outside of London it is £156.19. The thresholds will be set at £602.79 and £468.57 but given that the hourly rates have been cut by 17.5% this is unlikely to increase the number of cases passing the threshold.

The real losers in this will be those areas outside London where the previous fees were close to London rates. In some areas around the south-east, fees will actually fall in excess of 30%. Take Staines as an example: on 19th March 2014 the fee payable for a Staines Police Station case was £264 and by 11th January 2016 it will have fallen to £156.19 or an eye watering 40.83% cut.

In London, the cut from the March 2014 rates to the new contract rates averages 17.88% with some areas recording considerable higher cuts of up to 24%(Richmond, Tower Bridge and Central London are examples). Heathrow customs has a cut of a third.

Bizarrely the rates are being cut below the new contract rates for the period 1st July 2015 to 10th January 2016 in a number of London areas following which there will be a slight increase: e.g Bexley, Brent, Bromley, Camberwell, Croydon etc. What can be the justification for this bizarre situation?

Magistrates’ Court

The new contract will abolish the higher standard fee. What this means is that although the cut to the lower standard fees is limited, the cut to cases that would previously have warranted a higher standard fee are enormous. This will clearly reward firms that do not undertake very much work on behalf of their clients especially in relation to trials which is counter-intuitive to a guarantee of quality.

It is interesting to note that the higher threshold from 1st July 2015 remains as it will be for the new contracts in January 2016 so any cases falling into what would have been the higher fee band will be cut between 43% and 59% (average 52.7%). It may well be that notwithstanding the reduced hourly rates, we see more cases crossing the threshold into CRM7 claims especially if we have to list matters for multiple non-compliance by CPS. This will increase the administrative burden on the LAA on assessment of such claims.

What is clear is that although we are told that the fee cut for 1st July 2015 represents a cut of 17.5% from the pre-March 2014 figures and that the Government has only ever professed to wanting to cut by 17.5%, in fact for a considerable number of cases (i.e all those in the higher fee band), further considerable cuts will be forthcoming in January 2016 which go far beyond the advertised reductions.

Crown Court

The Crown Court litigator fee reductions from January 2016 are more complicated. For cases over 501 pages, it is a straight 17,5% cut on the pre-March 2014 fee so will be the fee as applicable from 1st July 2015.

For the majority of cases where the page count is below 500 pages, the fee structure divides into five bands of 100 pages. On the face of it, one may not consider this to produce particularly unusual differences. However, when you compare cases from March 2014 to the January 2016 fees where there are 100, 200, 300, 400 and 500 pages of evidence, the average fee cut on these figures is actually 27.26% so we can expect further actual cuts to our income in January 2016 despite having been told that we have had the “necessary” 17.5% cut from 1st July 2015. The change in payment structure produces deeper cuts.

As an example, let’s take a basic burglary. This is a class E offence. It is not unusual to have a low page count. If the page count is 100, before the March 2014 cut, we would have been paid £394.66 on a guilty plea, £557.96 on a cracked trial and £1171.84 on a 3 day trial. In January 2016 those fees will be £189.13, £272.47 and £690.59 respectively. These decreases are 52.08%, 51.17% and 41.07%.

Take any example at random and in very few cases will you find a cut as low as 17.5% (only 16 of the 165 individual fees are at or below 17.5%).

Of course, we are looking at cases on the edge of each boundary and may therefore be considering the worst case scenario. However, these are actual scenarios and will actually reflect the reality of what this re-structuring of the fees means in terms of income on the vast majority of Crown Court litigators’ fees.

Confiscation/Court of Appeal

These cases remain funded under the ex post facto basis and as such rates are reduced under the new contract by 17.5% from the pre-20th March 2014 figures. There will be no further reduction after the 1st July 2015 cut.

However, it is instructive to compare the figures with the last time they were increased (April 1996). The rate has not increased for 19 years. In the last year it has been reduced first by 8.75% and then by a further 8.75% to give a total reduction of 17.5%. When inflation is taken into account, the cut in real terms over that time reaches 50%.

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