Productivity Commission Report on Access to Justice in Australia PDF

Summary

This report provides an overview of Australia's civil justice system, highlighting concerns about its accessibility and efficiency. It discusses various ways parties resolve disputes, including court proceedings, tribunals, and ombudsmen. The report emphasizes the importance of better coordination, awareness, and resources for individuals, especially those from disadvantaged backgrounds. The report aims to improve the system's functionality and overall accessibility for all citizens

Full Transcript

OVERVIEW Key points There are widespread concerns that Australia’s civil justice system is too slow, too expensive and too adversarial. But the notion of a civil justice ‘system’ is misleading. Parties can resolve their disputes in many ways, including through courts, tr...

OVERVIEW Key points There are widespread concerns that Australia’s civil justice system is too slow, too expensive and too adversarial. But the notion of a civil justice ‘system’ is misleading. Parties can resolve their disputes in many ways, including through courts, tribunals and ombudsmen. Each differs in its formality, cost and timeliness. Such a complex system resists both a single diagnosis and remedy. While much focus is on the courts, the central pillar of the justice system, much is done in their shadow, with parties resolving their disputes privately. Community legal education, legal information (including self-help kits) and minor advice help ensure that parties are better equipped to do so. Better coordination and greater quality control in the development and delivery of these services would improve their value and reach. Where disputes become intractable, parties often have recourse to a range of low cost and informal dispute resolution mechanisms. But many people are unnecessarily deterred by fears about costs and/or have difficulty in identifying whether and where to seek assistance. A well-recognised entry point or gateway for legal assistance and referral would make it easier to navigate the legal system. Most parties require professional legal assistance in more complex matters. But the interests of lawyers and their clients do not always align. Reforms to professional regulation are required to ensure clients are better informed and have more options for selecting the tasks they want assistance with, and how they will be billed. Clients should also have independent and effective options for redress when professional standards fall short. Some disputes, by their nature, are more appropriately handled through the courts. While these disputes may be small in number, many individuals are poorly placed to meet the associated costs. Court processes in all jurisdictions have undergone reforms to reduce the cost and length of litigation. But progress has been uneven and more needs to be done to avoid unnecessary expense. The ways in which parties interact with each other and with courts and tribunals also needs to change. The adversarial behaviour of parties and their lawyers can hinder the resolution of disputes or even exacerbate them. Changes to rules governing the conduct of parties and lawyers, and the way in which costs are awarded, would improve incentives to cooperate. Court fees vary widely across courts and jurisdictions and are not set with reference to a common framework. A more systematic approach is required for determining fees. Parties can derive significant private benefits from using the court system; these benefits need to be reflected in court charges, which in many cases should be increased. Disadvantaged Australians are more susceptible to, and less equipped to deal with, legal disputes. Governments have a role in assisting these individuals. Numerous studies show that efficient government funded legal assistance services generate net benefits to the community. The nature and predictability of funding arrangements constrain the capacity of legal assistance providers to direct assistance to the areas of greatest benefit. This needs to change and, in some cases, funding should be redirected. While there is some scope to improve the practices of legal assistance providers, this alone will not address the gap in services. More resources are required to better meet the legal needs of disadvantaged Australians. 2 ACCESS TO JUSTICE ARRANGEMENTS Overview The role of this inquiry The Commission has been asked to undertake an inquiry into Australia’s system of civil dispute resolution with a view to constraining costs and ‘promoting access to justice’. There are many definitions of ‘access to justice’. As Justice Sackville observed: Like other catchphrases, such as ‘fairness’ and ‘accountability’ (if not ‘democracy’ itself), the expression ‘access to justice’ survives in political and legal discourse because it is capable of meaning different things to different people. (2002, p. 19) For the purposes of this inquiry, the Commission has used the term ‘promoting access to justice’ to simply mean, ‘making it easier for people to resolve their disputes’. Civil disputes involve many matters and impact on many people Civil disputes span a wide range of areas and involve a variety of parties, or as Professor Dame Hazel Genn puts it, ‘comprise a rag-bag of matters and participants’: There are disputes relating to the performance or non-performance of contracts involving businessmen suing each other, individuals suing businesses, and businesses suing individuals. There are claims for compensation resulting from accidental injury in which individuals sue institutions. There is the use of the courts by lenders who realize their security by evicting individual mortgage defaulters. Civil justice also involves attempts by citizens to challenge decisions of central and local government bureaucrats, a rapidly growing field that includes immigration, housing, mental health, child welfare, and the like. … Finally, there are the acrimonious and often heartbreaking struggles between men and women following the breakdown of family relationships as property and children become the subject of legal dispute. (1997, p. 160) Reflecting the wide range of areas that they encompass, civil disputes are relatively common. According to the most recent comprehensive survey of legal need, undertaken by the Law and Justice Foundation of NSW in 2008, close to half of respondents experienced one or more civil legal problems (including family law matters) over a 12 month period. More than half of respondents who experienced at least one civil problem considered the problem had a ‘severe’ or ‘moderate’ impact on their everyday life (figure 1). Legal problems were also concentrated among a minority of respondents (figure 2). Of those who experienced at least one civil problem, around 10 per cent accounted for more than half of those legal problems. OVERVIEW 3 Figure 1 Prevalence of legal problems and severity 50 Proportion of respondents with any civil (including family) problem (per cent) Substantial impact Not substantial impact 40 30 20 10 0 Data source: Commission estimates based on unpublished LAW Survey data. Figure 2 The composition and concentration of legal problems 100 100 80 80 Per cent Per cent 60 60 40 40 20 20 0 0 Of all people Of those with a civil problem Both civil and criminal problems 12+ problems Only civil problems 4-11 problems 2-3 problems Only criminal problems 1 problem No problems Data source: Commission estimates based on unpublished LAW Survey data. 4 ACCESS TO JUSTICE ARRANGEMENTS The civil justice system offers many options for resolving disputes Where parties are unable to reach a private resolution, the civil justice system provides them with a range of means for resolving their disputes and asserting their legal rights. The federal, state and territory courts, statutory tribunals, government and industry ombudsmen and complaint bodies, and organisations and individuals offering alternative dispute resolution services all form part of the civil justice mix (figure 3). Figure 3 The three major dispute resolution mechanismsa a Data for ombudsmen/complaint bodies and tribunals is for 2011-12, and data for courts is for 2012-13. OVERVIEW 5 But there are concerns that the system is not accessible Each dispute resolution mechanism has its own processes, which vary in formality, cost and timeliness. Over the years, there has been a steady stream of official reviews, reports and academic studies aimed at improving the accessibility of the various elements. Courts, tribunals and ombudsmen have also initiated their own reforms designed to improve accessibility. Even so, concerns remain that the civil justice system is inaccessible to many Australians. As noted by the Chief Justice of Western Australia, Wayne Martin: The hard reality is that the cost of legal representation is beyond the reach of many, probably most, ordinary Australians. … In theory, access to that legal system is available to all. In practice, access is limited to substantial business enterprises, the very wealthy, and those who are provided with some form of assistance. (2012a, p. 3) While much focus has been on the institutions, differences in the personal resources and capabilities of users, and their perceptions about the system, also influence accessibility. As the Law Council of Australia explained: The ‘effective access’ enjoyed by individuals necessarily depends on a range of factors, including geographic location, economic capacity, health, education, cultural and linguistic variations, formal and informal discrimination, and other variable factors. (sub. 96, p. 28) Disadvantaged Australians in particular face a number of barriers in accessing the civil justice system. These include communication barriers and a lack of awareness and resources. The disadvantages that these individuals face mean that they are both more susceptible to, and less equipped to deal with, legal disputes. Improving accessibility would generate social and economic benefits There are good reasons for governments to seek to improve the functioning and accessibility of the civil justice system. A well-functioning civil justice system protects individuals and businesses from infringement of their legal rights by others. The ability of individuals to enforce their rights can have profound impacts on a person’s wellbeing and quality of life. For example, it can mean that someone who has sustained injuries due to the negligence of others can seek recompense for impairment and/or their reduced income generating capacity. But a well-functioning civil justice system serves more than just private interests — it promotes social order, and communicates and reinforces civic values and norms. A well-functioning system also gives people the confidence to enter into business relationships, to enter into contracts, and to invest. This, in turn, contributes to Australia’s economic performance. 6 ACCESS TO JUSTICE ARRANGEMENTS There can also be fiscal benefits. Prompt, affordable and well understood dispute resolution arrangements can help avoid issues escalating into more serious problems that can place burdens on health, child protection and other community welfare services. Consistent with these broader social and economic benefits, governments already play an active role in Australia’s civil justice system. They provide the broad institutional framework for the civil justice system — governments, through parliaments, make the law and establish and provide funding for the courts, tribunals and government ombudsmen. They also set down the nature of disputes that these bodies will adjudicate and many of the rules that they will operate under. Governments also regulate the market for legal services to address information and incentive problems, and provide funding for legal assistance and dispute resolution services. The Commission’s focus The Commission considers that the performance of the civil justice system (and, in turn, the wellbeing of the community) can be enhanced by: providing access to least cost avenues for dispute resolution and facilitating the quick resolution of disputes at the earliest opportunity enabling the provision of a range of legal services that are proportionate to the problems experienced, easy to access and understand, and treat people fairly promoting affordable services, so that access to justice is equitable regardless of people’s personal, social or economic circumstances and background. The Commission has assessed each of the various elements of the civil justice system against these criteria and examined the problems that frustrate the realisation of these objectives. In doing so, the Commission has focused its attention on problems that — either by themselves, or in concert with other problems — significantly affect the functioning of the civil justice system and, absent government intervention, are likely to go unresolved. Finally, in weighing up options for reform, the Commission considered the likely costs and benefits, including whether proposed reforms would be likely to make the community as a whole better off. Importantly, while the overriding objective is to enhance community wellbeing, that does not imply that the purpose of reform should be to address all instances of unmet legal need. OVERVIEW 7 Problems common to informal and formal aspects of the justice system Many parties encounter a common set of problems regardless of whether they seek to resolve their disputes informally, such as through private mediation or ombudsmen, or through formal mechanisms such as tribunals and courts. People lack knowledge about whether and what action to take … Interactions with the civil justice system often occur at times of personal stress — during a family break up, as a defendant in a claim, following a traumatic injury or the financial failure of a business. Experience is not readily transferable. For example, experience with a dispute about a faulty product leaves parties none the wiser about how to handle a family law dispute. Not surprisingly, many people lack an understanding of their rights, have difficulty identifying the legal dimensions of their problems and do not know where to go for appropriate advice and assistance. A lack of knowledge and capacity contributes to legal problems going unresolved, which in turn can lead to more severe problems in the future. Many organisations, including legal assistance providers, government agencies, ombudsmen, trade unions and industry associations, provide legal information and community legal education to improve the knowledge and capacity of the community. But information and advice services — including those that attract government funding — lack visibility, and service efforts can be duplicated. Information about where to refer people with legal problems needs to be simple and widely known. The Commission considers that each state and territory should have a central, widely recognised contact point for legal assistance and referral to make it easier for people to enter the civil justice system. Each service should be responsible for providing free telephone and web-based legal information within the jurisdiction (including in relation to Commonwealth laws) and should have the capacity to provide minor advice for more straightforward matters. They should also refer clients to other appropriate legal services where necessary, such as local or specialist services. The LawAccess model in NSW provides a working template. Even if well publicised, not all individuals will enter the system through the central contact point. Effective referral processes will be required to connect people to the assistance they need — there should be no wrong door to enter the system. Further, some disadvantaged and vulnerable people will still have difficulty identifying when their problem has a legal dimension and will not be able to access the system without additional assistance. Legal assistance providers, which deal predominantly with disadvantaged clients, are already using methods to effectively reach these clients, but more needs to be done. A greater use of holistic services, outreach, training of non-legal 8 ACCESS TO JUSTICE ARRANGEMENTS community workers to identify legal problems, and legal health checks would identify those who need additional assistance and help them to navigate the civil justice system. … and they find it hard to shop around for legal services While many disputes can be resolved with some basic information and direction, where people do need to engage a private legal professional, they find selecting a service provider challenging. The irregular need for legal advice, combined with different billing arrangements and services offered by providers, makes drawing comparisons difficult and often inconclusive. The difficulties consumers face in selecting lawyers — and switching lawyers, should they prove dissatisfied — have meant that they have not fully appropriated the benefits of the increased supply of lawyers in recent years. Making information available on the average costs that consumers might expect to pay when engaging a lawyer (by area of law and jurisdiction) would help reduce the uncertainty over legal fees that many consumers face and would promote competition. The Commission recommends that state and territory governments establish an online resource (as part of the well-recognised central entry point) that reports typical fees for a variety of legal matters commonly encountered by individuals and small businesses. Even where consumers are given a ‘headline’ price, the Commission has heard that the ‘devil is in the detail’ with some consumers failing to understand key determinants of cost. While all jurisdictions require lawyers to provide cost estimates, some estimates have become impenetrable and have left consumers no better informed. Once consumers have engaged a lawyer, they still face significant uncertainty, since lawyers can and (sometimes unavoidably) do revise their cost estimates during the course of a matter. Placing an onus on lawyers to ensure that their clients understand upfront cost estimates (and any major changes to those estimates) would help address current problems with cost disclosure arrangements. This represents current practice in New South Wales and Victoria — the remaining jurisdictions should follow suit. Consumers of legal services can find it hard to judge quality … The complicated nature of many legal services means that consumers also find it difficult to judge the quality of the services they receive. Reputation can be important in solving this problem. Some consumers can gather information on the quality of lawyers through repeat transactions, and large corporations can rely on in-house legal advice to assess the quality of externally sourced services. But these options are not available to one-off users of legal services, such as many smaller businesses and individuals. One way of overcoming problems with judging service standards is to provide all consumers with some assurance of a base level of quality, including through entry restrictions to the OVERVIEW 9 legal profession and professional conduct rules. These work relatively well, although a balance is required to ensure that measures intended to protect consumers do not act as an unnecessary barrier to entry. A second response is to provide consumers with an avenue for recourse when quality falls short or charges are excessive. Given the disparity in information and expertise between lawyer and client, dispute mechanisms need to be robust and consumer focused. However, some complaint bodies have relatively limited powers and there is scope for some jurisdictions to expand the disciplinary and investigative powers of these bodies. Newly introduced complaint processes in New South Wales and Victoria provide a model. Further, some complaint bodies focus on the profession rather than the consumer, favouring a technical and often strict approach to maintaining professional standards. Melbourne barrister Stephen Warne (2012) outlined how the high threshold for disciplinary action plays out in practice in relation to overcharging: My survey of recent gross overcharging prosecutions suggests that disciplinary prosecutions tend to fail unless based on a fee of at least twice what the disciplinary tribunal decides to be the reasonable fee. Nothing less than ‘gross overcharging’, which is misconduct at common law, generally gives rise to disciplinary charges, even though the statutory definitions of ‘professional misconduct’ in the Legal Profession Acts specifically include plain old ‘charging of excessive legal costs’. (pp. 13–14) Governing legislation needs to be amended to ensure that consumer protection is the explicit and primary objective of complaint bodies. … and whether services make them better off Consumers not only lack the ability to judge when lawyers fail to provide services of a sufficient quality, they also have poor information about whether lawyers are over-investing in quantity or quality (by providing gold-plated services). Indeed, a number of factors encourage lawyers to do just that. For example, lawyers have a duty to their clients. While intended to overcome quality issues, this duty can create perverse incentives, with risk-averse lawyers ‘leaving no stone unturned’. Duties to clients can also mean that lawyers are less inclined to offer assistance for discrete tasks, limiting consumer choice. Further, some commonly used billing arrangements reward inputs rather than outcomes — faced with the incentive of time-based billing, lawyers might take actions of limited benefit to their client. While the Commission does not consider it appropriate to limit time-based billing or any other pricing structure, it considers that lawyers should be obliged to make clients aware of alternative billing arrangements. These obligations should operate in conjunction with obligations on lawyers to only seek remuneration for ‘fair and reasonable’ costs. 10 ACCESS TO JUSTICE ARRANGEMENTS Big potential gains from early and informal solutions Some individuals are deterred from pursuing action for fear that the process will prove too slow and costly. One third of individuals who chose not to act on a substantial legal problem cited a belief that it would be too costly as a reason for inaction. A similar proportion thought it would take too long.1 These fears need not be realised, particularly for less complex matters. Parties have at their disposal a broad range of low cost and timely informal mechanisms to help resolve many kinds of disputes. Ombudsmen provide a low cost, informal pathway Many common disputes, such as those with telecommunications providers, banks and government agencies, can be dealt with by industry and government ombudsmen and other complaint bodies. Ombudsmen mediate outcomes between parties and conduct investigations where necessary, obviating the need for legal representation. Complainants face no, or very low costs — government and industry typically pick up the tab, at around $650 per dispute. Ombudsmen resolve matters quickly — 80 per cent of matters are resolved within one month and 97 per cent within six months. Better directing people to ombudsmen (and other low cost and informal dispute resolution mechanisms) could significantly reduce the level of unmet legal need. But many of these bodies tend not to be visible to those who might make use of their services and, in some cases, complaints processes are unnecessarily prescriptive. Accessibility could be improved through better referral processes, by requiring businesses and government agencies to inform complainants about the relevant ombudsmen, and by removing any requirements for complaints to be in writing. Such measures may lead to an increase in caseload, and while ombudsmen are free of charge, they are not costless. It is therefore important that parties face incentives to resolve disputes in the most efficient manner possible. Ideally, where complaints reflect systemic issues, such as poor billing or communication practices, industry and government agencies would internalise the costs of, and subsequently seek to remedy, these poor practices. Industry ombudsmen create incentives for this to occur — for most schemes, members pay fees according to the number of complaints received and the stage at which they were resolved. While public reporting by government ombudsmen provides some incentives for government agencies to respond in an effective and efficient manner, there is potential to experiment with introducing industry-type payments for disputes involving governments. 1 Respondents could nominate more than one reason in the LAW Survey. OVERVIEW 11 Alternative dispute resolution can be effective, but not for all Alternative dispute resolution (ADR) encompasses a broad range of facilitatory, advisory and determinative processes whereby parties can resolve disputes with the assistance of an impartial practitioner. These techniques are increasingly being recognised as a way for people to resolve disputes without recourse to traditional trial processes. ADR offers a number of advantages, including cost and time savings and confidentiality of outcomes, provided both sides are willing to constructively engage in the process. In cases that already involve courts and tribunals, ADR can be used to narrow the issues in dispute and so minimise hearing times and avoid significant costs. The Commission considers that there are a number of areas where there is potential to better target and encourage ADR use, including in contested disputes of relatively low value. Stakeholders further suggested that family law property disputes and will and estate matters are areas of civil law that may be amenable to greater resolution by ADR. The Commission considers that there are good grounds for using ADR in family law property disputes (this is discussed below) and recommends that pilots be undertaken to assess the relative merits of using ADR in disputes over wills and estates. Governments — be they Commonwealth, state, territory or local — are often party to disputes. Despite good results when deployed, ADR is not widely used by government bodies, save for a few key departments and agencies. Where ADR has been used successfully by government agencies, it has often been underpinned by the use of a dispute resolution plan. There would be benefit in all government agencies (including local governments) finalising and releasing tailored dispute resolution plans and employing ADR more extensively. The dispute resolution plan developed by the Australian Taxation Office provides a template. This should be a priority for agencies involved in relatively common disputes, such as disputes over government benefits and licence approvals. While ADR has proved effective in some circumstances, the Commission recognises that it is not an appropriate mechanism for resolving all disputes. Its use must be accompanied by safeguards that allow for litigation if settlement cannot be reached. Informal resolution processes need to be improved for family disputes It is widely recognised that resolving family disputes through the courts is costly. The Women’s Legal Service Victoria submitted that a less complex family law case costs parties between $20 000 and $40 000, with complex cases costing in excess of $200 000. Family law disputes can also be costly for government, with disputes resolved in the Family Court of Australia costing government on average $5000. Where cases proceed to a final order, the average cost to government is in the order of $20 000. In light of these costs, and the benefits that arise from less adversarial approaches in matters involving children, there has been a shift in the management of parental separation away from litigation towards cooperative parenting. Government has fortified this shift by 12 ACCESS TO JUSTICE ARRANGEMENTS requiring that parties attempt family dispute resolution prior to seeking parenting orders from a court, and by subsidising the provision of these services. Sadly, some family disputes can involve allegations of violence — a recent survey found one in five respondents reported that physical violence was experienced before or during separation. While parties who have experienced violence can seek an exemption from requirements to undertake family dispute resolution, they are left with few, if any, low cost options for resolving their disputes. The highly rationed nature of legal assistance means that few qualify for these services, even though many would struggle to afford a private lawyer. With jurisdiction for family matters involving violence shared by the Commonwealth and the states and territories, parties are also required to navigate multiple systems and organisations. A significant minority of family law disputes — particularly those complicated by family violence — continue to challenge the family law system. A range of reforms are required including increasing the availability of appropriate family dispute resolution services in matters involving violence, clarifying how property will be distributed on separation, and requiring parties to undertake family dispute resolution prior to taking court-based action in matters involving property. Problems in the formal system cast a long shadow Governments, in granting courts and tribunals exclusive jurisdiction over certain matters, have a responsibility to ensure that these institutions operate as efficiently and effectively as possible. There are numerous improvements that could be made. Tribunals have been accused of ‘creeping legalism’ Tribunals are responsible for the resolution of a wide range of disputes, including administrative law matters, civil disputes and guardianship and anti-discrimination cases. They are intended to provide a low cost alternative to the courts by creating a forum where self-representation is the norm, and where parties generally bear their own costs irrespective of the outcome. Indeed, many tribunals include objectives around timeliness and cost in their enacting legislation. However, some participants in this inquiry expressed concerns about ‘creeping legalism’ — with tribunals being seen by users as increasingly formal bodies. As the Springvale Monash Legal Service (SMLS) commented: Tribunals are promoted as a user friendly, cost and time effective option in the dispute resolution process. SMLS believes that whilst this was the initial intention of the tribunal jurisdiction there has been a drift away from this ethos. (sub. 84, p. 9) OVERVIEW 13 The use of legal representation is thought to be contributing to this problem, with some representatives conducting themselves as if they were in court. Some stakeholders have expressed concerns that lawyers are also bringing an adversarial tone to proceedings. Where legal representation is used it increases the costs incurred by parties. A study undertaken by the Victorian Small Business Commissioner of small businesses using Victoria’s Civil and Administrative Tribunal found that the average cost of legal advice and representation was just over $8000. Legal representation is already restricted in a number of tribunals and some stakeholders have advocated stronger enforcement of these restrictions. The Commission considers that some restrictions on representation in tribunals are appropriate and should be enforced more strictly. However, the Commission also accepts that some degree of representation is inevitable and indeed desirable. For example, representation is appropriate where it would facilitate efficient identification and resolution of the issues, or ensure fairness and equity, such as in specialist tribunals dealing with adult guardianship and mental health issues. In cases where representation might genuinely be required, the Commission considers that representatives should be required to support the objectives of the tribunals in which they appear. This was supported by the Administrative Appeals Tribunal, which suggested that these requirements be made explicit in legislation. The key to promoting compliance with stronger restrictions on representation is to ensure tribunals operate in the manner in which they were intended — providing an accessible and understandable forum for individuals to seek justice. Improved processes, including greater adoption of ADR and more user-friendly arrangements for self-represented litigants, would diminish both the need for, and value of, legal representation. Court processes have been improved but reforms have been uneven Courts are the central pillar of the civil justice system. They provide an open forum where individuals and businesses may come to determine and enforce their legal rights and to establish and clarify the law. In performing these functions, courts need to balance competing tensions. Michael Black, former Chief Justice of the Federal Court of Australia, described the tension faced by courts in the following way: We should maintain the search for that elusive point of equilibrium at which the competing pulls of cost, speed, perfection and fairness are balanced in a way that produces substantial and accessible justice — not perfection, but nevertheless processes and outcomes readily recognisable as substantial justice according to law. (2013, p. 92) Recognising the need to strike a better balance between accessibility and ‘perfection’, courts in all Australian jurisdictions have either initiated or completed substantial reforms. 14 ACCESS TO JUSTICE ARRANGEMENTS A central tenet of these reforms has been a shift away from traditional roles in which the court was reactive — where the judge was an umpire rather than a player in the process — and responsibility for the pace of litigation was left in the hands of the parties and their lawyers. In its place, there has been a move towards more active judicial management of cases with the court taking greater initiative in case preparation, including management of pre-trial processes and, for the very few matters that proceed to trial, the trial itself. While substantial reforms have been undertaken, progress has been uneven across jurisdictions and arguably court processes do not yet sufficiently ensure that unnecessary costs and delays are avoided. Litigation costs are one indicator that more remains to be done. In many jurisdictions, these costs can easily run into tens of thousands of dollars in solicitors’ fees alone. Added to this are the costs of disbursements — such as court fees, and fees for barristers and expert witnesses. The Commission considers that well-targeted and appropriately employed case management can yield further significant benefits in terms of improved efficiency and reduced cost and delay. The challenge is in getting the balance right by ensuring that case management processes do not generate their own unnecessary work for legal practitioners, court staff and judicial officers. There is no ‘best’ model of case management, but it is possible to identify elements of case management that promote timely, fair and efficient dispute resolution. These include, where appropriate, abolishing formal pleadings, tightly controlling the number of pre-trial appearances and strictly observing time limits. The case management processes employed by the Federal Court of Australia as part of its ‘Fast Track List’ provide a working example. Independent of moves towards greater case management, particular aspects of court processes have also been reformed. Rules around discovery and expert witnesses — both of which have been identified as significant contributors to cost — stand out as two areas that have undergone change, although not all jurisdictions are equally advanced on this reform process. Greater judicial scrutiny could help ensure that discovery efforts are proportionate to the matters at stake. This could be facilitated through restrictions on the availability of discovery and rules that expressly require the cost implications of discovery to be considered at the time it is ordered. Judicial training on discovery management is important to support judges to perform this ‘gate-keeper’ role, as is clear guidance to practitioners and the court about discovery options and alternatives. Australian courts have also been active in developing innovative reforms to improve the quality of expert evidence and reduce unnecessary costs and delay associated with its use. The Commission sees scope for broader adoption of some of these reforms, such as requirements to seek directions before adducing expert evidence, and for greater use of concurrent evidence and single or court appointed experts. OVERVIEW 15 The Commonwealth, New South Wales and Victoria provide examples of positive reforms in these areas. Reforms to court processes are only a partial solution to the problems of disproportionate cost and delay. Any reforms need to be accompanied by better incentives for users and their legal representatives. The system is adversarial, so there is little incentive to cooperate Litigation has been compared to warfare, restricted only by the rules of the legal game. The adversarial behaviour of parties can hinder the resolution of disputes or even exacerbate them. Counterproductive behaviour can include: a lack of cooperation and disclosure, particularly at early stages of proceedings the use of procedural tactics, including to delay proceedings, where it is perceived to be in a litigant’s interest incurring unnecessary or disproportionate legal and other costs. It has been suggested that moving to an inquisitorial system would address many of the issues raised in this inquiry. However, consideration of such a fundamental change to the underlying tenets of Australia’s legal system is beyond the scope of this inquiry. Nonetheless, there is substantial scope to improve the efficiency and effectiveness of Australia’s civil justice system. A cultural shift towards more cooperation would improve access to justice. The Commission considers that there are grounds for parties and their lawyers to be subject to requirements that facilitate the swift, proportionate and just resolution of disputes. Greater use should be made of pre-action protocols which, if well targeted, and accompanied by strong judicial oversight, can help resolve disputes early by narrowing the range of issues in dispute and facilitating ADR. Costs awards provide another mechanism for deterring parties from incurring unnecessary or disproportionate legal costs. These arrangements — which courts use to determine whether and which parties should bear the costs following the outcome of a case — significantly affect the conduct of parties. Typically, in Australia, ‘costs follow the event’ and the successful party is entitled to payment for legal costs from the unsuccessful party, referred to as party-party costs. The amount of costs awarded is often calculated by reference to a ‘scale of costs’ — such scales rarely match the actual costs incurred by parties. Many scales are activity-based and so encourage parties to over-spend and drive up the costs of litigation and the length of a trial. Moreover, parties have very little control over the amount of activity undertaken by their opponent and have little ability to predict their potential liability for costs. The Commission recommends reforming arrangements for determining costs awards. In lower courts, fixed scales should be used to determine the amount of costs a party is entitled 16 ACCESS TO JUSTICE ARRANGEMENTS to be awarded. These fixed scales should prescribe costs amounts based on the stage of proceedings reached and the amount that is in dispute. In superior courts, it may be more appropriate to adopt a system of costs management, which requires parties to submit and agree upon costs budgets at the outset of litigation, and so cap the amount of costs that may be reclaimed by the successful party. Such a system was recently introduced in English and Welsh courts. Currently, parties that are self-represented or represented pro bono are not eligible for an award for costs if successful in a case. This reduces their ability to meet their expenses, and creates asymmetrical incentives that favour their opponents. There is a strong argument for allowing these types of parties to be awarded costs. Not all parties are on an equal footing The effectiveness of the adversarial system is premised on parties being on an equal footing, but this is not always the case. Differences in the bargaining power of litigants are most evident when comparing the two extremes — self-represented litigants and well resourced, repeat users of the system, such as governments and big businesses. If it is acknowledged that inequalities in bargaining power affect justice, it begs the questions: how might self-represented litigants be placed on a better footing; and how might the bargaining power of well-resourced litigants be kept in check? When considering whether and how best to assist self-represented litigants, context is important. In some tribunals and lower courts, self-representation is the norm and poses few problems. However, self-represented litigants can be at a disadvantage in more adversarial settings such as higher courts. Deputy Chief Justice of the Family Court, John Faulks, said there are three ways to respond to self-representation, ‘ … one is to get them lawyers, the second is to make them lawyers and the third is to change the system’ (2013, p. 2). The Commission considers that ultimately, the civil justice system needs to better accommodate self-represented litigants. Many of the changes that would benefit self represented-litigants would also benefit other court users. While courts and tribunals have already made efforts to simplify forms and procedures and provide information to support self-representation, there is still scope to improve outcomes. Equipping judges and court staff through training and clearer rules and guidelines is essential to give them the confidence to assist self-represented litigants while meeting their obligations of impartiality. Notwithstanding the very best efforts to simplify the justice system, some self-represented litigants would benefit from direct assistance, particularly in complex cases in higher courts. A broader range of advice and representation options should be supported, such as unbundled legal services and allowing self-represented litigants to rely on assistance from non-lawyers with appropriate protections in place. Where self-represented litigants fall into OVERVIEW 17 the gap between legal aid and private options, there is a role for duty lawyers and self-representation services. While these services can help to resolve disputes more efficiently and divert inappropriate matters away from courts and tribunals, the effectiveness of these services should be evaluated. In comparison to self-represented litigants, parties such as governments and big businesses carry a substantial degree of bargaining power — reflecting the economic resources at their disposal and their greater experience and knowledge of the system as repeat users. Special power also inheres in the nature of government itself, so judges expect high standards of competence, candour and civility from government parties and their lawyers. These expectations are typically embodied in model litigant rules, which set out acceptable standards and boundaries for the conduct of litigation with the aim of resolving disputes efficiently and appropriately. But there are concerns that model litigant rules lack enforceability, creating weak incentives for governments to comply. Commonwealth, state and territory governments and their agencies (including local governments) should be subject to model litigant obligations (not mere guidelines), with compliance monitored and enforced, including by establishing an independent formal avenue of complaint for parties through the relevant government ombudsmen. Prices do not always reflect the balance of private and public benefits Private and public benefits are generated when parties engage in litigation. Private parties are the primary beneficiaries — they gain by being given a forum to enforce their claims and restrain the actions of others. The wider community benefits through the enforcement of the rule of law and, in some cases, through the clarification of the law and the development of precedents. Given the mixture of private and public benefits associated with court usage, it is appropriate that litigants bear a share of court costs through fees and, in some cases, all costs. Currently, there is no consistent framework or costing model for determining court fees. As a result, court fees generally bear little relationship to the resources used by the court in settling disputes. In many jurisdictions, fees are poorly targeted and so provide a significant subsidy to many parties who do not require such assistance. As noted by Chief Justice Martin, this can come at significant expense to the taxpayer: … the Bell case ran through our court, it was the second-longest-running trial in the history of the state, it consumed enormous resources of the court — on a conservative estimate, it cost us $15 million to run that case, we recovered probably around between $700,000 and $800,000 in fees. So the taxpayer of Western Australia subsidised the parties to that case, who were on one side an insurer, and on the other side a whole lot of banks, to the tune of $14 million, and that’s $14 million that the legal system of this state could have invested much better than in that case. (trans., p. 587) Clear and consistent criteria for setting court fees are required. To ensure that subsidies are only provided to those who require them, fees should be set with regard to the capacity and 18 ACCESS TO JUSTICE ARRANGEMENTS willingness of parties to pay. Factors used to differentiate fees should include the amount in dispute, the type of parties involved, and the length of proceedings. Whether measured as a share of the costs incurred by litigants or a share of the costs recouped by government, court fees in Australia are relatively low. Cost recovery through fee revenue varies widely, ranging from 3 per cent in the Family Court of Australia to just over 50 per cent in the Magistrates’ Court of Victoria. By comparison, cost recovery in British courts is at around 80 per cent and there are intentions to move to full cost recovery by the end of 2014-15. The Commission has estimated that court fees on average comprise roughly one tenth of a party’s legal costs. Consistent with this estimate, empirical studies have found that court fees are not a significant source of financial concern to litigants. Further, recent fee increases in the federal courts have not significantly reduced filings, suggesting that fees do not pose a barrier to most parties at their current levels. Given the substantial private benefits that can accrue to parties using court services, the Commission recommends increasing the level of cost recovery in most courts. Doing so, especially in litigation involving well-resourced litigants, would send a price signal to litigants to consider other suitable avenues for resolving their disputes and would provide additional revenue that may be used to resource the civil justice system. Tribunals should also adopt substantially higher fees in cases that are complex and commercial in nature. Increased cost recovery would not be appropriate in all circumstances, such as in matters concerning personal safety or the protection of children, or where important test cases might otherwise not proceed. Fees should also remain low for small disputes dealt with by tribunals. Accessibility for financially disadvantaged parties in courts and tribunals should be safeguarded through the use of fee waivers and reductions. The Commission has identified a number of avenues for improving the transparency, consistency and simplicity of fee relief processes. The end of the quill pen — courts with 21st century technology Technology is widely recognised as having the capacity to generate time and cost savings for the courts and their users. In his final report on the civil justice system in England, Lord Justice Woolf expressed the view that, in addition to streamlining and improving systems and processes, technology would be a catalyst for radical change. In the past decade, many Australian courts and governments have implemented significant reforms aimed at better using technology to make legal processes more efficient. Initiatives have been wide-ranging and include: allowing court documents to be filed and court fees to be paid electronically OVERVIEW 19 providing online access to court documents conducting procedural hearings through tele- and video-conferencing or tailored ‘virtual court’ applications using case management systems to better support efficient case flow management and performance reporting functions. However, consultations and submissions to this inquiry suggest that investment in information technology has been uneven across jurisdictions and that the availability, quality and use of technology varies widely. The Commission considers that greater investment in technology is warranted given the potential benefits. A lack of resources appears to be the main barrier to the uptake of technology. The Commission’s proposal to increase court fees may provide some of the funds required. In this way, parties paying court fees would also benefit from a more efficient court system. Assisting the ‘missing middle’ The capacity of individuals to deal with the costs of significant litigation is regarded as particularly problematic for the ‘missing middle’ — those on high incomes are thought to be able to manage the costs, while those on lower incomes are thought to be covered by publicly funded assistance schemes such as legal aid. These costs, which sometimes need to be met upfront, combined with the risk of an adverse costs order, can represent significant barriers to accessing justice for litigants who lack (liquid) financial resources but have meritorious claims. While this problem is thought of as mainly affecting middle income earners, it is more widespread. The Commission estimates that only 8 per cent of households would likely meet income and asset tests for legal aid, leaving the majority of low and middle income earners with limited capacity for managing large and unexpected legal costs. Unbundling legal services would help ‘Unbundling’ legal services — a half-way house between full representation and no representation — is one way of making costs more manageable and predictable. Unbundling means that the lawyer and the client agree that the lawyer will undertake some, but not all, of the legal work involved. Sometimes called ‘discrete task assistance’ or ‘limited scope representation’, it differs from traditional ‘full-service’ representation as clients perform some tasks on their own. Where clients cannot afford full representation they at least have the option of some level of assistance, rather than none at all. While this practice runs counter to the convention of engaging a lawyer for the duration of a legal problem — a convention that is supported by a range of professional conduct rules — the practice of unbundling has been a common feature of the legal assistance landscape 20 ACCESS TO JUSTICE ARRANGEMENTS for some time. Unbundling has also become more common in some sectors of corporate practice. Given the potential benefits of unbundling legal services, the Commission considers that changes to court and professional conduct rules are warranted to facilitate a shift towards more unbundling of legal services. Limited licences can also play a role Within Australia, the provision of legal services is ‘reserved’ for lawyers. Professional bodies often cite fears that allowing anyone other than fully qualified lawyers to provide legal advice risks consumers receiving low quality services and the possibility that courts have to ‘pick up the slack’ in rectifying errors or become ‘clogged’ with ill-prepared, ill-advised actions that delay other valid claims. In contrast, in other jurisdictions, including the United States, there has been a growing recognition that non-lawyers should be able to perform some legal tasks, and that maintaining absolute notions of professional purity may be untenable in the face of a significant lack of access to justice. As a retired Chief Justice of the Supreme Court of Texas noted: Time and again, the profession has rejected reform efforts in the name of protecting core values. But as commentators have asked: ‘[W]hat good are the profession’s core values to those who do not make it through the lawyer’s office door?’ Many of these reforms echo those experienced by the medical profession. Just as that model has moved away from services provided by physicians and toward those given by physician’s assistants and nurse practitioners, we could similarly rely more on trained non lawyers to provide many of the services for which a lawyer is now required. Perhaps, ‘[a]s the medical profession has learned, it may be necessary to live with the ethical tension of encroachments on professional autonomy in order to make professional services available to a wider class of society’. (Jefferson 2013, pp. 1979–80) Arrangements in Washington State provide an example of the activities that can be undertaken by non-lawyers. In that jurisdiction, legal ‘technicians’ can hold limited licences, which enable them to perform clearly specified activities. These include working independently to assist clients with tasks such as selecting and completing court forms, informing them of procedures and timelines, and reviewing and explaining proceedings. They are not however, allowed to represent clients in court or negotiate with opposing counsel on their behalf. In Australia, non-legal professionals have, for some time, been providing advice (and in some cases advocacy) in a range of areas including conveyancing, intellectual property, workplace relations, taxation and migration. The Commission considers that allowing non-lawyers to perform some legal tasks has significant potential to improve accessibility and recommends that a taskforce be established to design and implement limited licences, with an initial focus on family law. While in the United States the road to establishing limited licensing has been a long one, the experience gleaned in that process should provide for a more timely implementation process in Australia. OVERVIEW 21 Private sources of funding are important Markets provide a range of mechanisms that allow litigants to spread the risks associated with large and unexpected legal costs, both across time and between parties. While generally limited to monetary claims with reasonable prospects of success, private funding provides an important avenue for litigants to access justice. One private funding arrangement involves lawyers billing on a ‘conditional’ basis. Typically, no fee is charged if the legal action is unsuccessful and an ‘uplift’ percentage is added to the lawyer’s normal bill if the action is successful. In contrast, where lawyers charge ‘damages-based’ fees, they receive an agreed percentage of the amount recovered by the client. While allowed in a number of overseas jurisdictions, this latter form of billing is prohibited in Australia due to concerns that it creates perverse incentives. The Commission is unconvinced that any perverse incentives inherent in damages-based billing are more pronounced than those embodied in conditional billing. Rather, damages-based billing has the potential to provide several advantages, including better aligning the interests of lawyers and their clients by removing incentives to over service. There is an important caveat to this claim — in order for incentives to be aligned, clients need to be fully informed about the merits, and likely costs, of pursuing their claim. The Commission considers that the prohibition on damages-based billing should be removed, subject to consumer protections such as comprehensive disclosure requirements and percentage limits on a sliding scale to prevent lawyers earning windfall profits on high value claims. While lawyers are not currently allowed to offer damages-based billing, no such restriction applies to third parties. Litigants can obtain funding from litigation funding companies, which provide funds in exchange for a share of the amount recovered and typically agree to pay any adverse costs ordered in the event of a loss. They also often manage disputes on behalf of clients, including coordinating class actions. The Australian market for litigation funding is small but well established — having operated for two decades. Funded cases typically relate to insolvency, large commercial claims and class actions. Stakeholder views on third party litigation funding are mixed. Supporters highlight the access to justice benefits, particularly in class actions where litigation funders can level the playing field for litigants who are in dispute with well-resourced and experienced parties. Opponents consider that litigation funding increases the volume of litigation and can give rise to unmeritorious claims. On examination, the evidence that there has been an increase in unmeritorious claims is weak and concerns do not appear to relate to the activity of litigation funders, but to the underlying laws and rights to which they facilitate access. Overall, while the Commission judges that third party litigation funding can provide important benefits for access to justice, consumers need to be adequately protected and have some assurance that funders will follow through on financial promises. Therefore, in addition to oversight by courts, funders need to be licensed to ensure they hold adequate 22 ACCESS TO JUSTICE ARRANGEMENTS capital to manage their financial obligations. Licensing of litigation funders was broadly supported. Does legal expenses insurance have a future? Legal expenses insurance is another mechanism to spread the risk of legal contingencies and provide protection against the costs of bringing or defending legal action. It operates like other types of insurance — consumers pay a premium based on an insurer’s assessment of risk, and their legal expenses are covered when required. There have been attempts to establish legal expenses insurance in Australia. However, uncertainty over legal costs is said to have inhibited uptake and made it difficult to design benefit and premium levels. These problems were compounded by a lack of appetite by consumers who failed to see value in insuring against the costs of legal events. There is better information available today that can be used to design premiums. Australia-wide surveys of legal need now provide important information on the propensity of different groups to experience legal problems, while reforms to costs awards outlined in this report would address a great deal of uncertainty around adverse costs orders. More broadly, the insurance market has adopted more sophisticated methods for pricing risk since the inception of the original legal expenses insurance in 1987. But even if information gaps could be addressed, and insurance products offered, as has been the experience in the past, some parties might not take advantage of risk-spreading opportunities because they do not accurately perceive the existence of risk or because they are unfamiliar with the market’s potential for addressing the risks they face. Is there a role for government in helping smooth legal costs? Given the weak incentives outlined above, it is not clear that the market will offer legal expenses insurance. It has been suggested that a government-backed scheme is required and should be modelled on Australia’s Higher Education Contribution Scheme. The proposed legal expenses contribution scheme (LECS) would offer income-contingent interest-free loans and provide a tool for those who do not qualify for legal assistance to pursue cases of merit — particularly where monetary amounts are not involved. Those who qualify for a loan would repay the Australian Government by contributing a percentage of their income over the period of the loan. In cases where there was a sufficient award of damages, the loan would be paid out following the outcome of the case. Similar arrangements to a LECS already operate within some legal aid commissions. However, it has been suggested that a LECS could apply to a larger group of Australians and to a wider range of legal matters and that people would have a longer period of time over OVERVIEW 23 which to repay their loan. Some argue that the existence of similar schemes make LECS a proven concept. However, the Commission is not convinced that LECS-style initiatives are suitable for those on very low incomes. While legal aid commissions already provide for a system of deferred payments, this has resulted in some taking on debt for extended time periods and in some cases, substantial amounts of debt have been written off. The Commission considers that a more appropriate and direct way of assisting those on very low incomes is to extend the means test for legal assistance services — this proposal is discussed in more detail below. While a LECS-style initiative may be better suited to middle income earners, the Commission has not examined the necessary design features and suitability of such a scheme for this demographic. Legal assistance services for disadvantaged people Disadvantaged people face a number of barriers in accessing the civil justice system, which make them both more susceptible to, and less equipped to deal with, legal disputes. If left unresolved, civil problems can have a big impact on the lives of the most disadvantaged. The Commission was given many examples of simple problems spiralling into complex problems when legal assistance was not provided. Unmet civil problems can also escalate into criminal matters. Notwithstanding the reforms outlined in this report, differences in personal resources and capabilities mean that the most vulnerable Australians may still find the system inaccessible. There remains a role for government in assisting these individuals to uphold their legal rights and resolve their civil (including family) law disputes. What does the legal assistance landscape look like? The legal needs of disadvantaged Australians are currently serviced by one of four government funded providers, which offer a range of services, including information, advice and casework. Each of the four providers play a different role (figure 4). 24 ACCESS TO JUSTICE ARRANGEMENTS Figure 4 The four government funded legal assistance providers 2012-13 a Includes contributions from public purpose funds (PPFs). b For LACs, ‘other’ comprises self-generated income. For CLCs, ‘other’ includes fee income, philanthropic donations and other sources. OVERVIEW 25 Legal aid commissions (LACs) receive the majority of government funding and service most Australians who receive publicly funded legal assistance. The LACs are independent statutory authorities (established under state or territory legislation). They provide legal assistance services in criminal, family and other civil law matters. Community legal centres (CLCs) are community-based not-for-profit organisations. They play a distinct role assisting Australians who cannot afford a private lawyer but who are unable to obtain a grant of legal aid. As community-based organisations, they seek to embed their services within their communities, drawing on volunteers and pro bono services. Their primary focus is on civil (including family) law matters. Aboriginal and Torres Strait Islander legal services (ATSILS) focus on providing culturally tailored services in criminal and civil law matters. Family violence prevention legal services (FVPLS) specialise in family violence matters. Like the ATSILS, they provide culturally tailored services, but do so with the aim of preventing, reducing and responding to incidents of family violence and sexual assault among Aboriginal and Torres Strait Islander people. Together, these four legal assistance providers received around $730 million in government funding in 2012-13 (figure 5), which covered both criminal and civil (including family) matters. To put this in context, this represented around 0.14 per cent of all government spending. Figure 5 Criminal and civil legal assistance funding Millions, expressed in 2011-12 dollars 800 ATSILS 700 600 FVPLS 500 400 CLCs 300 LACs - state grants; 200 PPFs & self-generated income 100 LACs - Commonwealth grants 0 26 ACCESS TO JUSTICE ARRANGEMENTS There is scope to improve the delivery of legal assistance services The people who manage and work in the four legal assistance services are highly committed to assisting their clients. The task they face is a challenging one — clients often have complex needs, requiring a holistic approach. Ideally, the four providers would operate in such a way as to leverage their particular skills and expertise and maximise coverage (both in terms of geography and areas of law). While there have been efforts within particular jurisdictions to increase cooperation and coordination among providers, practice falls short of this goal. An overarching vision is required and should be reflected in eligibility principles While governments have service agreements with organisations from each of the four provider categories, these are not underpinned by a clear or common view of priority clients or areas of law. This has resulted in providers adopting different priorities as evidenced by the way eligibility criteria for civil casework are determined. Eligibility tests typically involve a means, matter and merit test. The means tests consider both the income and assets of parties and are intended to give an indication of a person’s capacity to pay for private legal advice. The way in which income and assets tests are applied by the LACs varies across states and territories, but all apply stringent criteria. CLCs typically determine their own eligibility criteria, including means tests, but these tend to be, on average, slightly more generous than those applied by the LACs. Not all target disadvantaged Australians. Given that the distribution of CLCs is uneven across states and territories, and the eligibility tests vary across centres, access to casework services can be determined by a person’s postcode. The eligibility criteria employed by the ATSILS differ again. The means test includes a relatively more generous income test, while the assets test appears slightly less generous than that used by the LACs. The Commission considers that the principles used for determining eligibility for government-funded individualised legal assistance should be consistent and linked to an agreed measure of disadvantage and appropriately updated so that they do not become more restrictive in real terms over time. This would make tests more transparent and equitable. This approach is consistent with aims embodied in the most recent National Partnership Agreement (NPA) on legal assistance services for ‘more appropriate targeting of legal assistance services to people who experience, or are at risk of experiencing, social exclusion’ (COAG 2010, p. 4). The Commission recognises that social exclusion, while encompassing income and financial poverty, extends to a wider range of life domains, covering employment, skills, health, disability and personal safety. This points to the need for eligibility principles that also take OVERVIEW 27 into account the impact of a legal problem on a client’s life and the flow-on effects to the justice system and other publicly funded services. A more systematic approach for allocating funding is needed Many of the problems facing the legal assistance sector stem from the way in which resources are determined and allocated. Government funding for each of the four providers is determined independently and inconsistently. Funds are not allocated across providers so as to maximise coverage of geographic areas or particular dispute types. The total quantum of funds allocated is not necessarily sufficient to achieve governments’ stated priorities and can be unpredictable, making it hard for providers to plan services. Further, some funding sources relied on by the states and territories — namely contributions from public purpose funds — are declining and are likely to continue to do so. A closer look at government approaches to funding highlights some of the inconsistencies. Commonwealth funding for LACs and ATSILS is distributed between the states and territories based on a model that seeks to reflect legal need and the costs of providing services in particular jurisdictions. Funding allocations for FVPLS are largely determined using an input-based approach, with providers receiving funding to cover core staff and other costs when servicing identified high need geographic areas. In contrast, Commonwealth funding for CLCs is largely ad hoc or based on history. While more recent decisions about how to allocate any additional funds have mostly attempted to take into account the incidence of unmet need, the legacy of past funding decisions means that there is a disconnect between legal need and government funding, such that two CLCs servicing similar communities and facing the same cost structures may not attract the same funding. Commission analysis of the current geographic distribution of CLCs also revealed a mismatch between areas of greater disadvantage and the placement of centres. These findings align with those of previous reviews and studies, which have sought to examine whether CLCs are servicing areas of high need. While it has been suggested that centres located in relatively affluent areas focus on low-income clients, the Commission also found that these centres tended to serve fewer clients with low incomes. The Commission considers that Commonwealth funding for all four providers should be allocated according to models that reflect the relative costs of service provision and indicators of need given their priority clients and areas of law. Funding allocation models currently used to determine LAC and ATSILS funding should be updated to reflect more contemporary measures of legal need. Irregularities in Commonwealth funding for legal assistance services are compounded by the different funding approaches and efforts of the state and territory governments. It is not clear 28 ACCESS TO JUSTICE ARRANGEMENTS how the states and territories determine their civil law funding contributions and the quantum varies significantly by jurisdiction. State and territory government funding for LACs ranges from just under $10 per capita in Queensland through to $16 per capita in the ACT. Variation in funding for CLCs is more pronounced. State and territory governments provided around $30 million for the Community Legal Services Program (CLSP) in 2012-13. Victoria accounted for almost 40 per cent of the total, followed by New South Wales (27 per cent), Queensland (22 per cent), Western Australia (9 per cent) and South Australia (3 per cent). The governments of Tasmania, the ACT and the Northern Territory did not contribute any CLSP funding. Differences in funding across states and territories could reflect either varying levels of effectiveness or different unit costs. But even these factors would only provide a partial explanation for variations in funding. Further, while their activities often relate to areas of state and territory law, funding for ATSILS and FVPLS is provided almost exclusively by the Commonwealth. As a consequence, state and territory governments have little incentive to consider how their policies impact on the demand for the services of these two legal assistance providers. The Commission considers that any additional Commonwealth funding for civil legal assistance services should be structured in such a way as to encourage funding participation by the states and territories. State and territory governments should also contribute to the funding of services provided by ATSILS and FVPLS. In order to maximise the efficiency and effectiveness of services the Commission considers that the Australian, state and territory governments should agree on priorities for legal assistance services and should provide adequate funding so that priorities can be fully realised. Such funding should be stable enough to allow for longer-term planning, and flexible enough to accommodate the anticipated reduction in other sources of funding (particularly Public Purpose Funds) in coming years. The allocation of funds within jurisdictions should also be considered holistically, rather than undertaken separately by the Commonwealth and states. The model used to allocate funds for CLCs in Western Australia provides a working example, whereby the Australian and state governments agreed on service priorities following an assessment of localised legal need. State-based forums, with representation from the Australian and the relevant state or territory governments, service providers and the community services sector, should be used to establish a clear understanding of the roles of each of the four providers in addressing the priorities articulated by governments. OVERVIEW 29 Interim funding is required to fill service gaps While assessments of localised legal need, along with comprehensive and comparable data on the costs and benefits of delivering legal services, should be collected to inform decisions about long-term resourcing requirements, in the interim, funding is needed to address the most pressing service gaps. Legal assistance funding for civil matters has not kept pace with increasing costs and demand. Accordingly, there has been a growing ‘justice gap’ for the disadvantaged: those who would take private legal action to defend their rights, but do not have the resources to do so. Even where matters fall within the priorities set by government, service coverage can be incomplete. A recent review of legal assistance found: Current arrangements do not equip legal aid commissions to provide grants of legal aid to all disadvantaged clients in all matters within stated service priorities … (ACG 2014d, p. 113) The nature of matters that fall in the gap is particularly concerning. Assistance with family law matters, including domestic violence and care and protection of children, is not comprehensive in its coverage. The Commission finds the gap in independent lawyer services for children especially worrying. Other gaps in civil law assistance, such as employment and tenancy law, can also have serious consequences. The present means tests used by the LACs are restrictive, reflecting the limited funds available. The income tests are below many established measures of relative poverty. It is not the case that people are ‘too wealthy’ to be eligible for legal assistance, but rather that they are ‘not sufficiently impoverished’. There is overwhelming qualitative evidence that narrowing the gap would be socially and economically justified. However, the costs to society, and the benefits of closing the gap, are difficult to measure quantitatively. Ideally, cost-benefit analysis would be used to determine the appropriate quantum of funding required to extend the reach of services, but a lack of data precludes this. The Commission has instead used an approach that derives funding by comparing the current reach of services against what it judges to be reasonable benchmarks (such as poverty and legal need). The Commission has estimated that additional funding from the Australian and state and territory governments of around $200 million a year is needed to: better align the means test used by LACs with other measures of disadvantage maintain existing frontline services that have a demonstrated benefit to the community allow legal assistance providers to offer a greater number of services in areas of law that have not previously attracted funding. Advocating for increases in funding (however modest) in a time of fiscal tightening is challenging. However, not providing legal assistance in these instances can be a false economy as the costs of unresolved problems are often shifted to other areas of government 30 ACCESS TO JUSTICE ARRANGEMENTS spending such as health care, housing and child protection. Numerous Australian and overseas studies show that there are net public benefits from legal assistance expenditure. As former Chief Justice Gleeson commented: The expense which governments incur in funding legal aid is obvious and measurable. What is not so obvious, and not so easily measurable, but what is real and substantial, is the cost of the delay, disruption and inefficiency, which results from absence or denial of legal representation. Much of that cost is also borne, directly or indirectly, by governments. Providing legal aid is costly. So is not providing legal aid. (Law Council of Australia, sub. 96, p. 114, quoting State of Judicature, speech delivered at the Australian Legal Convention, 10 October 1999) Getting better value for money from legal assistance Given the scarcity of resources, it is critical that existing and additional funds are directed to where they are most needed. Frontline service delivery should be prioritised, along with advocacy work where it efficiently and effectively solves systemic issues which would otherwise necessitate more extensive individualised service provision. Some changes are required in order to bring this about. Most CLCs are relatively small in scale. Whether measured as a share of expenditure or expressed in staff numbers, the evidence suggests that CLCs dedicate significant resources towards administration. The vast bulk of centres employ less than ten full-time staff, with centres with three or four full-time staff being common. As autonomous providers, each centre has its own management committee and corporate and administrative functions. A lack of scale can give rise to other problems, including the absence of career paths for practitioners and a lack of capacity to deal with staff absences and peaks in workload. Where centres seek to cover a broad spectrum of legal work, there can also be problems with ensuring that staff have the relevant expertise. The capacity of staff to identify systemic problems is also less likely where scale is very small. Centres are already looking to address a lack of scale. For example, CLCs that operate in the Western suburbs of Melbourne have agreed to amalgamate, with a view to improving resource allocation and managing organisational risks. The Commission supports amalgamation as a way of reducing administrative costs and freeing up resources for front line services and sees a voluntary approach, rather than one dictated as part of a funding agreement, to be preferable. That said, the importance of achieving such efficiencies across the CLC sector is a priority. The operation of some FVPLS is also affected by their relatively small scale — around half of providers service a single high need area with very few staff. Where FVPLS operate in rural and remote communities, opportunities for amalgamation with other providers of legal assistance services are more limited. Auspicing arrangements, where units operate under the broad direction of a coordinating organisation, may provide an alternative in these circumstances. OVERVIEW 31 Some separation of funding for civil and criminal matters is required All four legal assistance providers play a role in meeting criminal as well as civil legal needs. While criminal matters make up a relatively small share of all legal disputes, they attract a large proportion of legal assistance resources. Priority is given to criminal law issues not just because of the consequences these matters have on people’s lives, but also because of the discipline imposed by the courts to do so. Criminal courts can, and do, stay proceedings involving indictable offences where parties are unrepresented. No such discipline exists in the civil space. Absent some demarcation of funding, any injection of funds to address the gap in civil services risks being siphoned into criminal matters. The Commission has not been asked to examine the adequacy of legal assistance funding for criminal matters and has made no recommendations to change the level of funding in that area. However, the Commission considers that any current and future civil funding allocations be earmarked for that purpose as a way of ensuring that civil legal needs are met. Pro bono plays a small but important role in bridging the gap The private profession has a long tradition of providing legal services free of charge, and governments are keen for them to do more. But the role of pro bono services in assisting disadvantaged Australians to access justice is poorly understood and there are limits to the role that pro bono can play in addressing unmet legal need. Headline figures suggest lawyers provide an average of close to 30 hours of pro bono service per year. But these estimates largely reflect efforts by lawyers in large law firms, who are more likely than lawyers in small firms and government agencies and in-house corporate lawyers to undertake formal pro bono work. Further, while there are efforts to reorient pro bono work towards disadvantaged groups, the bulk of pro bono work is undertaken for not-for-profit organisations rather than for disadvantaged Australians. Placed in the broader context, the overall contribution of pro bono services is relatively modest. Expressed as a measure of the number of lawyers, pro bono from larger firms equates to around 3 per cent of the capacity of the legal assistance sector, and less than 1 per cent of the entire legal market. There are some barriers to expanding pro bono services. Addressing the complex legal needs of disadvantaged clients can be challenging and not all private lawyers are equipped with the expertise to provide such services. Outside of the services they provide pro bono, many lawyers would have little exposure to ‘poverty law’ in their day to day work. The capacity and culture of workplaces can also affect the willingness of lawyers to provide pro bono services. Other barriers are more easily addressed. Free practising certificates for retired and other non-practising lawyers are a simple and relatively inexpensive way of increasing pro bono 32 ACCESS TO JUSTICE ARRANGEMENTS services. Providing positive affirmation that a conflict of interest does not exist (as occurs in Victoria) can also help overcome fears that pro bono work — for example, in immigration and income support matters — will come at the expense of future government contracts. While compulsion is sometimes considered as a means of bolstering pro bono efforts, the Commission does not consider this approach to be appropriate. Providing pro bono is not ‘free’ — the lawyers involved give up their time, and partner organisations (such as CLCs or referral bodies) must use resources to coordinate, train and supervise pro bono lawyers. Rather, the Commission considers that governments should promote the advantages to lawyers of providing pro bono services. Where government funds are used to encourage or facilitate pro bono effort, outcomes should be evaluated. Steps to better understand how the system is functioning It is widely acknowledged that data on the civil legal system leave much to be desired. Previous reviews have identified the need to build an evidence base to monitor the system and guide policy reform. The Commonwealth Attorney-General’s Department considered that data on the justice system were lacking and statistics were inconsistently collected and reported. The Commission concurs with these views. The absence of data has hampered policy evaluation and caused a reliance on qualitative assessments. The dangers with this approach were highlighted by Dame Hazel Genn, who remarked that: The discourse is anti-empirical. It does not need information, although it does incorporate atrocity stories that support any particular matter under discussion. What is discussed becomes what is known. The mythology is developed and elaborated on the basis of war stories told and repeated. (1997, p. 169) Much needs to be done to improve the nature and quality of data collection in the civil justice landscape and the Commission has identified a number of areas throughout this report where data would be particularly valuable. Governments should work together to develop and implement reforms to collect and report data that have common definitions, measures and collection protocols. Outcomes-based standards to measure service effectiveness and the capacity to link de-identified records should be a priority given their value in policy evaluation. Data should be collected and published by a civil justice clearinghouse. The clearinghouse should be established as part of the National Centre for Crime and Justice Statistics, within the Australian Bureau of Statistics. Not only are more data needed, but a greater capacity to evaluate the data in order to craft evidence-based policy is also required. To that end, funding should be provided for coordinated evaluation projects into all parts of the civil justice system, making best use of OVERVIEW 33 the data collected by the clearinghouse. Greater quantitative evaluation — especially cost-benefit analysis — has an important role in informing future funding and policy directions and thereby improving access to justice for all. The Commission has recommended an advisory committee provide expert advice to the Law, Crime, and Community Safety Council as to how this might best be done. 34 ACCESS TO JUSTICE ARRANGEMENTS Summary of the Commission’s main proposals The following table represents a brief summary of the main reforms proposed and does not include all of the Commission’s recommendations. The recommendations themselves should be relied on to provide details in each of the areas specified. The full set of recommendations is provided in a separate section of the overview. Figures in brackets refer to the recommendation numbers. Current problem Proposed reform Main benefits of change Consumers lack information People lack knowledge about whether and what action to take For most individuals and Legal Assistance Forums should Individuals and businesses will be businesses, legal problems arise establish Community Legal able to access information from a irregularly. They lack information Education Collaboration Funds to well-recognised entry point to on their legal rights and develop high quality education determine whether they have a legal responsibilities, what action to resources. (5.1) problem and be referred to an take, or who to consult. Legal Legal aid commissions should appropriate service to resolve their information and referral services enhance their existing activities to legal issue. Consolidation of current are fragmented and duplicated. develop well-recognised entry services provides potential for points for the provision of legal reallocation of existing funding to information, advice and referrals. higher priority areas. (5.2) It is hard to shop around for legal services The irregular, subjective and A central online portal, which Consumers will be better informed uncertain nature of legal services provides consumers with about potential costs prior to means that consumers find it hard information on typical prices for a engaging a legal professional. Better to shop around and cannot easily range of legal services, should be access to information will improve compare value for money. made available in each jurisdiction. consumer choice and reduce the (6.2) transactions costs of engaging legal services providers. Consumer redress options need to be more effective The powers of complaint bodies Complaint bodies in each Giving consumers an effective need to be strengthened to better jurisdiction should have consumer avenue for redress will provide protect consumers of legal protection as their primary appropriate incentives to deter services from wrongdoing. objective, be equipped with wrongdoing by those offering legal powers to allow this, and be more services. This allows complaint transparent. (6.4-8) bodies to exercise their functions more efficiently and effectively. OVERVIEW 35 Current problem Proposed reform Main benefits of change Big potential gains from early and informal solutions Ombudsmen provide a low cost, informal pathway Many consumers are not well Government and industry should Raising the profile of government informed of the services that raise awareness of ombudsmen, and industry ombudsmen would ombudsmen offer in resolving including among providers of promote relatively low-cost dispute disputes. In some cases, the referral and legal assistance resolution options. Greater visibility small scale of ombudsmen can services. Governments should and use of ombudsmen could contribute to a lack of visibility. look to rationalise the reduce the level of unmet legal ombudsmen services they fund to need. improve the efficiency of these services. (9.1-2) Alternative dispute resolution can be effective, but not for all More legal problems could be Courts should incorporate the use Adopting processes that facilitate resolved through alternative of appropriate alternative dispute greater use of alternative dispute dispute resolution processes. resolution in their processes, resolution will lower costs and lead where they are not already doing to faster resolutions. so, and provide clear guidance to parties about alternative dispute resolution options. (8.1, 12.2) Informal resolution processes need to be improved for family disputes Parties who experience family Family violence specialists and Those experiencing family violence violence have few low-cost options lawyer assisted dispute resolution will have more accessible and for resolving their disputes and should be used more broadly to appropriate informal options for may participate in processes that better facilitate dispute resolution resolving their family law disputes. are not appropriate due to limited where violence is a factor. (24.1) options. Obtaining advice and dispute Requirements to undertake Parties engaged in property-based resolution services at a cost that is mediation should be extended to family law disputes would use proportionate to the value of property as well as parenting proportionate options for resolving assets in dispute is a problem for disputes and the Australian them. It will be easier and cheaper family law property disputes. The Government should consider how for people to work out their law does not provide clear the law governing property division entitlements and come to fair guidance on the likely distribution could be clarified to promote agreements about their division of of property after separation and greater certainty, fairness and property. families with property disputes are reduce transaction costs. (24.3-4) not necessarily encouraged to undertake early, informal resolution. Aspects of the formal system contribute to problems in accessing justice Tribunals have been accused of ‘creeping legalism’ Tribunals are intended to be a low Tribunals should enforce Parties to disputes will be able to cost, less formal and more timely processes that enable disputes to access justice through tribunals in way to resolve disputes compared be resolved in ways that are fair, the way that was intended. Improved to courts. Outcomes do not always economical, informal and quick. processes will diminish the need for, align with these objectives. Restrictions on legal and value of, legal representation. representation should be more rigorously applied. (10.1) Court processes have been improved but reforms have been uneven Court processes have significantly All courts should examine their Adoption of leading practice changed to improve the efficiency processes in terms of consistency processes will streamline the court of the litigation process, but there with leading practice in relation to system thereby reducing costs and is scope for further reform. case management, case time associated with litigation. allocation, discovery and use of expert witnesses. (11.1-6) 36 ACCESS TO JUSTICE ARRANGEMENTS Current problem Proposed reform Main benefits of change The system is adversarial, so there is little incentive to cooperate Adversarial conduct works against Statutory obligations should be Overarching obligations on the timely and effective resolution of placed on parties and enforced t

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