Law: Getting down to business on legal aid: The new franchise system for solicitors raises some fundamental questions, says Roger Smith

OVER THE next month, around a quarter of all solicitors' firms will apply for a contract, known as a franchise, to cover their legal aid work. This development in the administration of legal aid reflects the increasing influence of business methods and personnel in the running of public services. Their application to legal aid raises some important issues.

Legal aid provision has always been privatised. Over 99 per cent of all legal aid expenditure, now more than pounds 1bn a year, is received by solicitors and barristers in private practice. After the Second World War, lawyers obtained state funding without nationalisation. The Law Society was even given the role of administering legal aid, the equivalent of handing the NHS to the British Medical Association. Criticism of the Law Society's poor performance in this area mounted during the 1980s, and it was replaced by a Legal Aid Board in 1989.

The tone of the new board was set by its chairman. John Pitts was a businessman with no noticeable previous experience in law. Six of the other 11 board members came from business. Their first act was to install new management. The new team, many of whom also came from business, duly improved the quality of its administration. The Legal Aid Board now wants to do more than improve its existing procedures: it wants to change them in accordance with latest business practice. Hence, franchising. Its origin is the concept, taken from industry, of the preferred supplier. A business actively works with its suppliers so that it can rely, without checking, on the quality of what they provide.

Today is the first day that solicitors can apply for a franchise. If they apply by 29 October and are successful, they are guaranteed a franchise from the earliest possible date, probably in June 1994. The franchise will be a contract that gives solicitors better payment on account and greater authority to incur costs in return for meeting specified quality targets. The objective, says the board, is 'to provide an accessible and quality assured legal aid service to clients giving improving value for money to the taxpayer'. Legal aid practitioners will be able to continue without a franchise. The board, however, hopes that the promise of easing their cash flow will entice them all to join.

The board does not hide the fact that one of its ultimate aims is the gathering of enough information to be able to bring down franchisees' costs to the average for each type of case. This could, however, be done equally well without franchising. It stresses that its goal is the improvement of quality by the installation of systems so that solicitors check their own work.

The way in which the board is setting quality standards provides the first general point to be taken from franchising. In a political world where the rhetoric is all of deregulation, the board is doing precisely the opposite: it is imposing precise standards with which legal aid practitioners must comply. Franchisees will need to show compliance with standards that are only discretionary for the rest of the profession. Solicitors' firms will be working through the autumn to get their strategic plans, job descriptions, case management systems and other franchising requirements into shape for the board's auditing visits.

Secondly, the board has had to confront the issue of whether its manufacturing principles are adequate to deal with professional practice. The board proposes to use almost every judgement of quality except a direct assessment of a solicitor's work. Its closest proxies to this are the transaction criteria that it is developing. These are questions that a lay auditor can seek to answer in a file. The number of answers that are missing can be expressed as a percentage of the total. This is known as the omission rate. The higher the omission rate, the lower the quality. This, at least, is the theory. The board has raced ahead with the formulation of these transaction criteria, neglecting to ensure that the underlying research was published. We do not, therefore, know what evidence exists for a correlation between good notekeeping and good lawyering. The board's judgements on quality need, therefore, to be reviewed with care.

The third and final point is the relationship of politicians with the board. Lord Mackay chose last autumn, just as the board was launching its franchising proposals to a sceptical legal profession, to reveal that he expected 'to see the Legal Aid Board offering contracts to accredited firms for undertaking blocks of cases following competitive tendering'. The board clearly sees such intervention as unhelpful. It expressly rejected competitive tendering in 1989 as not 'a realistic or worthwhile exercise now or in the near future'. Competitive tendering is, however, very much the Government's weapon for bringing private firms into the public sector. The board says that, in this case, it is not a useful tool. Its chief executive has called the resulting impasse 'a running sore'. Meanwhile, the board's initiative is being soured by allegations that it is operating to a hidden agenda, inadvertently disclosed by its controlling politicians.

Legal aid raises questions that are fundamental to a much wider range of services. If businesses regulate suppliers, why should not government? What are adequate measures of quality? Above all, having created agencies modelled on business practice, when should politicians leave them to get on with the job?

Roger Smith is director of Legal Action Group