The warning is contained in a document by the ministry to Justice Minister Simon Power dated December 23 2008 and titled Reducing Forecast Expenditure on Legal Aid. It was released to Law News under the Official Information Act.
The paper noted that legal aid expenditure had increased in recent years from $84 million in 2003/04 to $106 million in 2007/08 and stated that it was forecast to increase further to $144 million in 2010/11. However, the document did not detail the reasons for those increases.
Former Justice Minister Phil Goff on May 10, 2005 introduced to Parliament a Legal Services Amendment Bill increasing legal aid income eligibility thresholds which had remained the same since 1969. Mr Goff said that the changes would restore to a wide range of lower-income New Zealanders the ability to afford legal representation for civil, family and criminal matters.
"It is based on the principle that access to justice ought not to depend on the ability to pay. The changes will increase the number of New Zealanders who are potentially eligible for legal aid to 1.2 million, up from the current 765,000. The number of legal aid grants made is expected to increase to 85,000, up by 25,000." Those changes took effect on March 1 2007.
The Ministry of Justice document also did not canvass the rapid increases in the number of criminal cases coming before the courts. Between 2002 and 2007, the number of summary charges increased by 29 per cent while indictable matters rose by 25 per cent.
The number of convictions in 2008 was 228,000, an increase of 15,000 on the previous year, and a rise of 50,000 compared with a decade ago. The Manukau District Court has seen a doubling of its workload in recent years.
The December 2008 paper said that reducing the forecast legal aid expenditure was a priority. It discussed a number of options, ranging from changes within the current system to a fundamental review or more radical options. For example, the ministry said that civil legal aid costs could be reduced by shifting cases to conditional fee arrangements.
"Officials have considered high-level options to reduce the expenditure on legal aid. We have identified options that minimise the risks inherent with changing the legal aid system. These risks include:
- access to justice could be reduced to unacceptable levels;
- negative externalities could be created in other parts of the justice system, for instance, inefficiencies or delays within the court system;
- the legal profession could be affected (potentially to the detriment of both users and non-users of legal aid) and;
- options could have perverse consequences, due to the complexity of the system in place, and the relatively recent implementation of several significant changes within the system. Some initiatives put in place in overseas jurisdictions to reduce expenditure "have actually been found to increase it or have reduced the quality without cost savings."
The ministry went on to state that the incentive effects within the system required consideration. "For instance, if the system pays per court-event, then it is reasonable to assume that (unless mechanisms are put in place to manage this incentive) the number of court events in each case will be maximised to increase revenue."
Law News requested that the ministry provide details of the research and statistics which this statement was based. In response, a ministry spokesperson said the ministry's view was that, "the ministry is aware of anecdotal evidence that the current system may be open to abuse. These concerns are significant because, even the perception that these activities can occur means there is a lack of confidence in the legal aid system. Simply put, that's enough. The point here is that it (abuse of the system) may be possible."
Law News also requested an interview with ministry officials to discuss this issue in detail.
The spokesperson replied that, "We do receive anecdotal complaints that lawyers and/or their clients are gaming the system. However, these are not collated into the type of information you have requested that we discuss with you... Because we cannot discuss details in the manner you suggest, and because of the ministry's role in the ongoing independent review, we decline your offer of an interview."
The December 2008 paper, under the heading "Promising options to reduce expenditure", said that abolishing the 10 per cent increase in legal aid remuneration rates provided for in the 2008 budget would save money.
But the paper warned of other results as follows:
- " It is expected that there would be short-term impacts on overall service provision, and related factors such as court efficiency, as some lawyers could exit the system.
- "There could be adverse impacts, as any incentives to extend case length and the number of court appearances involved in a case may be exacerbated, as some lawyers seek to maintain their previous level of income.
- "This would likely result in some higher-quality providers exiting the system and lower-quality providers taking on more work. This would be expected to have some impact on the quality of services and potentially on court efficiency.
- "There were supply-side problems that the 10 per cent increase was intended to address (such as provision of family legal aid services in some areas.) "It is possible, but not certain, that these problems may be addressed by the weakining of the legal services market as a result of the current economic climate."
The ministry also said that the Public Defence Service "can" create savings.
"The pilot (now permanent) of the Public Defence Service shows that the PDS can create savings and has benefits for other parts of the justice system and for users. In the medium term (3-5 years) establishment costs are repaid and efficiencies begin to be gained. Over the longer term it is hoped that the competitive environment created by the service will continue to drive further costs savings by helping to ensure that private providers become more efficient."
The paper discussed administrative costs in respect of legal aid, describing these as "relatively small, but still significant."
$17.952 million was appropriated for those costs in 2007/08 but the paper said that the Legal Services Agency had for several years been using reserves to cover a deficit in its operations. The ministry referred to a Pricewaterhouse-Coopers draft report which said that there was scope for "significantly enhancing the efficiency and effectiveness of the agency."
The report went on to discuss what is described as "more severe and higher risk" options to reduce expenditure but warned of potential risks. "It should be noted that these options have the potential to substantially reduce the outcomes sought from the legal aid scheme, and could have human rights and constitutional implications, and potentially could result in us not upholding international obligations."
Suggestions included capping legal aid expenditure, capping particular categories of expenditure, or lowering case numbers by reducing the number of eligible persons. Justice Minister Simon Power of April 2 2009 announced a fundamental review of the legal aid system. Speaking on TVNZ's Q+A programme on May 17 he said that the behavious of lawyers was causing delays in the criminal justice system.
" I think it's time that the courts were able to hold lawyers - both prosecution and defence - to account for not moving through hearings in a timely and appropriate way. I just think we are at the point now where the gaming of the system around the criminal justice processes has to be front-footed."
Asked whether lawyers were indeed "gaming" the system, Mr Power replied: "Oh, look, I think what we're seeing is the system being badly incentivised, particularly around legal aid, to encourage multiple appearances on issues that should be dealt with in a short and timely way at the first appearance."
Responding to a further question as to whether lawyers were "clipping the ticket" to make extra money by creating delays, Mr Power said: "Well as you know, I've asked Dame Margaret Bazley to do an extensive review of the legal aid system and we're going to to be very interested in whether or not that's the finding of her review. This gaming of the criminal justice system has got to stop."
Law News asked Mr Power's office for specific details of which lawyers were gaming the system, and the dated and places on which this had occured.
He replied through a spokesperson that: "The system is badly incentivised to encourage multiple appearances on issues that should be dealt with in a short and timely way. I have asked Dame Margaret Bazley to have a close look at this as part of her review and it wouldn't be appropriate for me to comment before she reports back."
Barrister Marie Dyhrberg said that Mr Power had not qualified his comments by referring to "some" or "a few" lawyers. "He actually said 'lawyers' - meaning that in his view a majority or substantial number are committing fraud on the system by deliberately manufacturing false reasons for adjournments to obtain money which amounts to criminal fraud."
Ms Dyhrberg said that, unless the minister could substantiate his claims with specific examples to confirm that a majority or substantial number of lawyers had acted in this way, his statements could well amount to defamation.
She called on the minister to back up his claims by providing specific details of the names of lawyers and the times and places at which such behaviour had occured. Ms Dyhrberg said that the remarks also cast a slur on reputations of judges, as there was an implication that judges were either complicit with lawyers engaging in such behavious, or were incompetent in failing to prevent it. "The reality is that (the comments are) untrue. Only when there is a really good basis for an adjournment will you get it."
She also said that lawyers ended up being out of pocket as a result of a greater number of appearance. Ms Dyhrberg said that all participants in the court system needed to work together to achieve efficiencies.
For example, technological developments meant that lawyers could now do bail variations from their offices using computers, which resulted in great time savings. She suggested that a formal system of sentence indications in the High Court, particularly in respect of major drugs' trials, could result in more guilty pleas.
Barrister Jonathan Temm, who is a member of the NZLS Presidential Legal Aid Working Group, said that all defence lawyers who did legal aid work were controlled by the Legal Services Agency. If any lawyers were rorting the system, the agency had a statutory responsibility to identify them and remove them from legal aid work. He said that, to his knowledge, the agency had not done this in a single case.
He said that it was far too simplistic to address increasing legal aid costs by attacking the defence bar. Mr Temm said that many different players interacted in the system, including the police, the Crown, the courts and the Department of Corrections. He also pointed the finger at poorly-drafted legislation which was repeatedly amended, such as the Sentencing and Bail Acts.
Mr Temm criticisd the high administrative costs of the Legal Services Agency and said that it had wasted thousands of dollars on redesigning forms which had been satisfactory before the agency had ever been created.
ADLS Inc President, Anna Fitzgibbon, said that making broad-brush statements that criminal legal aid lawyers were rorting the system was dangerous and inflammatory, especially in the absence of cold, hard facts. She said that criminal legal aid lawyers were often singled out as an easy target by those criticising the legal aid system.
However, such critics appeared to have limited understanding of criminal defence work which was "hard, coal-face work".