Legal Aid funding in crisis – is there a fix? Launch of options paper

11 July  2024

National Legal Aid is launching an Options Paper on Thursday 11 July that reviews how the legal aid funding crisis can be fixed.

The recent independent review of Commonwealth funding identified that Legal Aid Commissions, alongside the broader legal assistance sector, have been critically under-resourced for over a decade and significant investment is needed to meet even current demand.

Commonwealth funding for Legal Aid is particularly fundamental to supporting victim-survivors of domestic and family violence in family law with over 32,000 grants of aid provided each year. 86 per cent of all grants include a risk of domestic and family violence.

But Legal Aid Commissions can’t meet demand. The recent Justice on the Brink Report which analysed Legal Aid funding found that an additional 16,000 grants are needed each year, just meet current demand.

The lack of funding means only those Australians in poverty are eligible for Legal Aid: only 8 per cent of Australian households are able to access a grant. This means that many Australians, including victim-survivors, are having to go into debt to pay for a lawyer or make difficult decisions such as agreeing to ex-partner demands to avoid legal costs.

Legal Aid relies on private practitioners to deliver its services, with 72 per cent of all grants of aid provided by the broader legal sector. Again, due to under-resourcing the fees paid to family law lawyers have not meaningfully increased in over a decade.

Legal Aid Commissions are struggling to find lawyers, particularly in rural and remote communities, which is leading to long wait times and people missing out on services. Services in some areas are being wound down.

The Options Paper identified additional Commonwealth funding from general revenue is the solution to these issues, but in these tight fiscal times it is also important to look at what other funding options might be available. These options included a legal sector levy with a tiered approach based on how much legal assistance work law firms undertake, a social levy utilising gambling revenue and a HECS like loan system.

National Legal Aid has commissioned Impact Economics and Policy to review what other funding opportunities there might be.

Quotes attributable:

Emily Millane, Impact Economics

“Our analysis has identified that Commonwealth funding via general revenue is the best option in addressing the current Legal Aid funding crisis.

However, a legal sector levy, a social levy or a HECS style loan system could also be part of the solution.

Australia’s eight largest law firms in 2023 had a total revenue of $5 billion and based on a 10,000 staff count this represents around half a million dollars per head.

A legal sector levy could be structured so that higher-income firms pay a larger share with a reduced levy for those that do legal assistance work and those firms that do more than 20 per cent legal assistance work would pay no levy. This has the benefit of bringing in income, but also increasing the number of available lawyers for legal aid and other legal assistance work.

Other options to be considered include directing gambling revenue to legal assistance funding and developing a HECS style loans scheme for clients. The loans scheme would not work for those under the poverty line, but it could be an option for those on low – middle incomes.”

Katherine McKernan, Executive Director, National Legal Aid

“The Productivity Commission identified over a decade ago that increased Commonwealth funding for legal assistance was needed. Instead, funding for Legal Aid has shrunk by 3 per cent.

The funding mechanism for legal assistance – the National Legal Assistance Partnership – has recently been reviewed and is in the re-negotiation process. We are hopeful that this will result in greater investment in family law grants of aid, raising the means test and increasing private practitioner fees.

But, we are also looking at what other funding solutions there might be. The Impact Economics analysis provides some options for consideration – that may not be the whole solution – but part of the solution.”

Mark Woods, Chair Access to Justice Committee, Law Council of Australia and legal aid lawyer “I have been representing legal aid clients in criminal and family law for over three decades. In that time I have seen my colleagues resign from this work to the point that the number of law firms available to take legal aid work has dropped from 17 to 10 in my regional community alone – despite the significant increase in the population.

Legal aid work is highly rewarding but also very challenging due to the problems faced by people experiencing disadvantage and the processes involved in accessing the family law system. It makes a huge difference to people and communities but the suburban and regional local lawyers that do this work can’t be expected to take on the volume of this work with an hourly rate that is less than half of what the standard rate is.

The Commonwealth government should be funding this work, but I welcome consideration of how the legal sector, particularly the big end of town, could also contribute.”

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