Post by Colin Henderson on Oct 12, 2013 18:43:40 GMT
Long-time readers of ilegal might recall that when the 10% fee cut was introduced in October 2011 many of us housing lawyers wondered how on earth we could continue to work for the reduced rates of pay. I was curious if the biggest supplier of housing advice was managing to break even on their legal aid contracts, particularly as after facing down its unionised staff in a well-publicised attack on pay and conditions in 2008 the organisation had become reknowned for its rather "robust" and target-driven management culture. So I had a close look at their annual accounts.
My original thread raised some eyebrows among housing practitioners as it showed that despite its efforts to get as much as possible out of its staff, the fact was that the legal aid contracts only earned half as much as they cost to run.
So recently I wondered if that was still the position for the financial year just gone (i.e. up to the point they had to close nine advice centres and sack 100 advisers and lawyers in March this year). And indeed it was, in fact the figures had worsened, presumably as that fee cut bit hard.
In the last year Shelter's income from legal aid dropped from over £5.9 to just under £5.3 million - predictably about 10%. The costs of running the legal services rose from £10.6 to £11.2 million. So I make that a shortfall of £5.9 or put another way the contracts only earned 47% of what they cost to run. That may be due to the increase in staff numbers under the contracts that year - up to 245 from 226 previously.
In passing I note there are now nine staff earning salaries between £60 - 120,000, though I expect none of them will be legal aid lawyers.
Post by Colin Henderson on Sept 21, 2014 12:55:33 GMT
So here we are in 2014 and its time to update this thread with the lowdown on how Shelter - the biggest single social welfare law agency -is coping in the post LASPO world according to their latest accounts published last month.
Remember that their 2011/12 accounts showed that their many legal aid contracts brought in only half of what it cost to run them. The rest was subsidised by charitable giving. This revelation made those of us expected to turn a profit out of legal aid feel a bit better, especially as this was during the comparative good times before the 10% rates cut.
In 2012/13 the figures worsened. Legal aid income dropped to £5.3m and costs increased. That year Shelter's legal services earned only 47% of what they cost to run.
So what's the 2013/14 picture? I looked and found that the accounts for the first time do not break down the costs of their legal services. This time everything is aggregated as "housing services". I wonder if this is something they'd rather we didn't know? I wonder if it's because someone keeps analysing them??
And again the report makes no mention of the redundancies and office closures of early 2013. It's all the relentlessly positive stuff about "upgrading" services that we've come to expect from Shelter management. Never mind, we can still work out the following:
Legal aid income has slumped from £5.3m to 3m - only 57% of the previous year. And remember, it is likely to fall further. These figures run to March 2014 and every legal aid worker knows that the income from running down pre-LASPO cases has only just faded away - that's why so many private firms only started laying off legal aid lawyers recently.
Legal services staff numbers are now down to 151 from 245, a reduction of 39%. Before the redundancies that number of staff cost £11.2m to run. Even if you assume that no-one has had a pay-rise, the staff costs must still be nearly £7m. So that means legal aid STILL only brings in less than half what it costs Shelter to provide. I make the figure 44%.
Why doesn't Shelter make clear to the public that their donations (up again this year) go to subsidising the government's legal aid cuts?
Why don't other social welfare charities recognise it's damn near impossible to break even doing legal aid work?
And why don't these employers admit that they rely on the fortitude of unbelievably determined and dedicated staff working under huge pressure with no pay rises, no decent pensions, no job security and no prospects of improvement to keep their battered legal services going at all?