15 June 2022

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“Existential threat”: Housing lawyers push for full exemption from fixed costs

Groups join forces to tell Ministry of Justice that introduction of fee scheme will lead to law firms and not-for-profit providers exiting the market

Housing lawyers are pushing for an exemption from fixed recoverable costs (FRCs) for all housing cases funded by conditional fees or legal aid, saying they pose an “existential threat” to the sector.

The Ministry of Justice (MoJ) announced at the end of last month that possession cases would be exempted for two years after the expected implementation date for FRCs of April 2023.

In a combined submission this month to the MoJ, the Housing Law Practitioners Association, the Legal Aid Practitioners Group (LAPG), the Law Centres Network, Shelter and the private tenants campaign group Generation Rent said the exemption was “welcome as far as it goes”, but should apply to all housing cases.

The organisations said it was FRCs in “housing disrepair counterclaims and standalone claims, also unlawful eviction claims and others which will hit firms and organisations the most”. This threatened, “in a very real and practical sense”, the early housing advice innovations the government wanted to introduce.

They said: “FRCs need to be re-evaluated for all housing cases if there is to be a housing advice and representation sector to deliver the government’s commitments to access to justice. Extending early advice improves access to justice for tenants but does not improve financial sustainability of providers…

“The housing legal aid sector relies for financial sustainability on the ability to recover reasonable assessed or agreed inter partes costs from opponents, given the low level legal aid rates are paid at. Where a legally aided litigant is successful in a case and the opponent is ordered to pay their costs, the solicitor is entitled to recover such costs from the opponent at inter partes/market rates rather than at legal aid rates from the LAA [Legal Aid Agency].”

The submission, drafted before the announcement of the temporary exemption for possession cases, went on: “The government is clearly aware there are access to justice consequences of fixed recoverable costs. We understand mesothelioma/asbestos, complex PI, professional negligence, actions against the police and child sexual abuse cases will be excluded from fixed costs.

“We would submit the same considerations clearly apply to housing cases and which involve stopping loss of the home and homelessness and ensuring safe housing conditions and so housing cases should also be excluded.”

The organisations warned that FRCs would “drive quality providers who are dedicated to their clients’ interests out of the legal aid and CFA housing law sector as the work will no longer be sustainable”, creating further housing legal aid deserts.

It was possible that non-lawyer claims handlers would fill the gap but “with worse consequences for clients and their damages”. Landlords would have “little incentive to carry out works of repair or refrain from other breaches” of tenancy agreements.

“The government’s early advice projects and the housing possession court duty scheme are at grave risk from these proposals.”

Accompanying the submission was a report the LAGP commissioned from Hawke Legal, a consultancy specialising in legal management. This estimated that the average fees of private practice housing law firms would fall by 23% as a result of FRCs, while the average income of a law centre or other not-for-profit provider would fall by 20%.

Hawke Legal studied 131 housing cases at 19 providers of housing law services, the majority (58%) private practices and a third law centres.

“It appears likely that the reduction in viability caused by FRCs would lead to solicitors’ firms and not-for-profit organisations closing their housing departments,” it said. “This in turn would reduce economies of scale, so that central overheads would not be able to be absorbed by other departments. This could lead to some legal aid providers ceasing to practice altogether.”