£100 Million+ Shortfall Being Faced By Family Law Firms

PaulReflect
September 2, 2014

In the latest family law news, it’s been estimated that high street law firms in charge of legal aid family cases are to face a significant short falls in fees. A huge legal aid funding drop of around £110 million has been predicted. The estimate was supplied by Lawyer Supported Mediation (LSM) after the organisation analysed figures given by the Legal Aid Agency (LAA). It’s said that the Ministry of Justice’s plans to cut spending on lawyers’ fees remain on track, with fees paid this year predicted to be more than £100 million lower than during 2012/13. Unsurprisingly, these developments have worrying implications for family solicitors.

Cuts Continue to Bite

So far, family law firms, like Rix & Kay Solicitors, have been largely unaffected by legal aid cuts. Aside from funding for cases that haven’t been affected by cuts including domestic violence, the firms received £132 million during 2013/14 from the LAA, having received £143 million in 2012/13 – a drop of a modest 7%. However, the LSM have predicted that the cuts are about to bite, with many cases from the previous few years now being concluded. This year, the LSM expects cuts of 74% in comparison to 2012/13, with legal aid fees of just £34 million being paid out in 2014/15. It’s estimated that over 1,200 law firms will be affected, with each organisation losing around £90,000 each on average. In order to survive and for redundancies to be avoided, it’s predicted that they will need to see a significant increase in private fees.

New Challenges for Solicitors?

LSM founder Marc Lopatin was philosophical, seeing the cuts as an opportunity for firms to be innovative and “bring down the cost of family law services”. He heighted the fact that only half of all couples that separate each year actually consult a solicitor, with many being put off by high hourly rates. Lopatin said that law firms must “find new ways of fixing their fees for meaningful service” in order to continue operating.

Barristers Already Being Hit Hard

Family barristers have already been hit far more significantly by the cuts. In 2013/14, barristers received just £15 million from the LAA – a drop of 61% on the previous year. The LSM predicts that this figure will fall even further over the next few years. As a result, many experts have warned that a number of leading barristers are considering their futures, with the LSM expecting family law barristers to receive just £6 million in 2014/15.

Barristers to Take on Solicitors?

Lopatin said that he expected a large number of barristers to start competing directly with divorce solicitors in order to attract divorcing clients. Barristers and lawyers have had a strong relationship in the past, but it’s predicted that this bond will be compromised significantly as resources continue to dry up. Lopatin expected a large number of couples to get in touch with fixed-fee barristers rather than family law solicitors in order to keep their cases out of court.

For more information on legal aid news visit SolicitorsJournal.com