E rrors identified by the National Audit Office (NAO) led to the then Legal Services Commission’s annual accounts being qualified in its last years. The LAA has satisfied the NAO that it is now keeping a tight rein on legal aid, but the agency needs to achieve an overall level of ‘materiality of error’ of less than 1%. This means that in the small samples taken by contract managers at on site audits, you are aiming for a zero per cent error rate. This is not easy!
Controlled work is always vulnerable to audit, as the LAA does not approve the grant of legal aid and practitioners do not know if the LAA will agree with their decision until after cases are closed and claimed. The main problem areas are in controlled work (ie, legal help, controlled legal representation and family help (lower)) cases. The main problem is assessing the eligibility of clients incorrectly or retaining insuÿcient evidence on file. The more complex fee schemes also cause problems, for example, incorrect claims for immigration/asylum cases and lack of evidence for Level 2 family fees.
Now that the Legal aid manual has been discontinued, the relevant guidance document is the Guide to determining financial eligibility for controlled work and family mediation April 2015 v1.1 1 Contract managers will select a small number of controlled work forms at their annual visits. If even one of them fails, it is likely that a further sample will be selected. This is then audited by the organisation itself, and files are checked by the contract manager. If a small number fail, the organisation will be asked to review a further sample of files, which is likely to be very time-consuming . If more fail, it is likely that the LAA’s Operational Assurance team will carry out a contract compliance audit, with significant repayments likely. If even one file fails, the contract manager will issue a contract notice (requiring a significant improvement in performance in relation to the relevant issue within six months) and recoup money against overpayments or ineligible payments. Repeated contract notices can result in contract termination, so are to be avoided at all costs.
If you disagree with your contract manager on costs point, you can use the costs appeal process (see 2013 Standard civil contract speciÿcation para 6.67 et seq).2 2 However, before the formal process kicks in, the contract manager will refer the matter to Operational Assurance, and its staff will carry out an internal review. If you still disagree, you can make representations which will go to an independent costs assessor.
Annual site audits ... the relevant guidance document is the Guide to determining financial eligibility for controlled work and family mediation
Do not overlook a capital assessment at the outset, regardless of whether or not the client is passported on income: failure to do so will result in a nil assessment. In most cases, specific evidence of capital is not required; however, evidence should be obtained in cases of doubt, where there may be reason to believe that the client has intentionally deprived themself of capital or there is evidence of a wealthy lifestyle. Evidence of capital should also be obtained where the client declares capital just under the limit (ie, £3,000 for immigration controlled legal representation matters, £8,000 in all other cases).
Where urgent work must be undertaken, it is possible to start work without evidence to confirm the client’s means. In this situation, you must assess eligibility based on whatever information is available (for example, what the client tells you), and the form completed and signed by the client accordingly.
If a client simply attends the first appointment without the evidence of means, this is not sufficient justification to start work. You need to calculate the client’s gross income from the evidence provided and convert to calendar monthly if necessary; for example, because the client receives benefits or is paid daily or weekly.
Evidence of income-related jobseeker’s allowance and employment and support allowance can be Jobcentre Plus letters clearly showing the income-related element, or by telephoning the Department for Work and Pensions directly and keeping a detailed note on file. Income support evidence can be bank statements as these normally show the name of the benefit in payment.
Employment income can only be verified in a wage slip. It can be tempting to accept a bank statement, but this only shows net income and non-allowable deductions may have been made (for example, pension contributions and loan repayments). Where an employed client is paid weekly, you should obtain four weekly wage slips to cover the entire computation period. Where this is not possible, this should be justified on file and attempts should be made to obtain them.
Maintenance must be assessed even if it is a subject of dispute, as long as it is being received. Where friends and/or family members are supporting the client, a signed and dated letter confirming the level and extent of support must be retained on file. Where the support letter is dated after controlled work commences, this letter must clearly state that the client was being supported throughout the computation period. It is advisable to have a standard letter for the benefactor to complete, as then you can be sure that it will comply.
Practitioners should note the following:
You must complete both income and capital sections (where applicable) of the controlled work form, otherwise the LAA will say that the assessment is incomplete and nil assess the file.
Where the client indicates that they have no income/capital, you must not leave the form blank but use ‘nil’ or ‘00.00’. It is advisable to use the LAA’s civil legal aid eligibility calculator for legal help cases, as you can print out a correctly completed controlled work (CW) application form, ie, CW1: financial eligibility for legal aid clients, for the client to sign.3 3
The client’s partner’s means should normally be taken into account. The key point is whether the relationship is continuing, so the partner must still be assessed where the parties are physically separated as long as the relationship is continuing, for example, when one party is in prison or, in asylum cases, where the parties are separated.
Original CW forms must always be retained on file. Where files are stored electronically, a scanned version of the CW form is acceptable provided it is an electronic PDF copy of the entire form. Photocopies are not accepted.
Reassessment of the client’s financial eligibility should be considered if a change is reported to you, especially if it is recorded during the first attendance. If a decision is made not to reassess, a justification should be provided.
Figures entered originally on the CW1 form should not be amended directly on the form, as it is a legal document signed by the client as true. If reassessment is necessary, it should be done on a separate sheet or a fresh CW1 form should be completed.
In private law cases, there must be evidence on the file of ‘substantive negotiations’ with a third party or their legal representative. Substantive negotiations mean that there must have been an exchange of correspondence, or records of telephone discussions, in which proposals and counterproposals were put forward to resolve the issues.
In public law cases, you must have written notice of potential care proceedings from the local authority and you must be able to justify advice on the basis that it would help to narrow the issues or resolve them, so avoiding proceedings. It is a good idea to attach the evidence to the form.