CHAPTER 7
Legal aid in civil law matters
Commonwealth priorities and guidelines
7.1 Since 1 July 1997 the Commonwealth has accepted responsibility for
providing legal aid funding for certain Commonwealth matters only. Schedule
2 to the Commonwealth's agreements with the states and territories is
headed `Commonwealth Priorities' and it defines these matters in the area
of civil law as follows (in the version to apply from 1 July 1998):
Matters arising under a Commonwealth statute limited to:
(a) decisions affecting the receipt or quantum of Commonwealth employee
compensation, or a Commonwealth pension, benefit or allowance, including
war veterans' matters;
(b) decisions or actions by Commonwealth authorities which have a real
prospect of affecting a person's capacity to continue in his or her usual
occupation:
(c) discrimination matters;
(d) migration matters; and
(e) consumer protection matters.
Common law or equitable claims against the Commonwealth in limited circumstances.
7.2 The guidelines enlarge on the meaning to be given to some of these
priorities and contain conditions and restrictions on the grant of aid
in particular cases. One restriction applies to all civil matters. It
provides:
Legal assistance may be granted to a party to an action provided it is
shown that, where the party is likely to receive damages or property if
successful, the action could not reasonably be expected to be conducted
under a conditional costs agreement or similar arrangement with a private
practitioner and no other scheme of assistance is available.
Criticisms in relation to the priorities and guidelines
Limited coverage
7.3 The Australian Law Reform Commission observed in its March 1998 submission
that under these priorities, entitlement to legal aid depends on whether
the matter falls into a particular class or not. It then commented that
this precludes consideration of the merits of a case which does not fall
within an area which is funded. [1]
7.4 The Commission also observed that the particular classes in which
legal aid funding is available are limited and contain many gaps, many
of significant social import. It provided the following examples (some
of which are discussed below):
- challenges to decisions relating to entitlements to social security,
as opposed to decisions concerning overpayment of entitlements
- matters arising under the Insurance Contracts Act and superannuation
laws in federal jurisdiction
- migration decisions, other than relating to applications for protection
visas
- product liability
- test cases and public interest litigation (which doesn't fall within
one of the specified categories). [2]
7.5 The Commission is currently conducting a major inquiry into the adversarial
system litigation in Commonwealth courts and tribunals. Its President,
Mr Alan Rose, advised the Committee:
We are finding that, basically, in the area of civil action, to the extent
that the profession is not prepared to run a contingency fee or speculate
the action, you will not get any form of legal aid or any other assistance.
That means that in that whole civil area, few actions if any are brought
by people with modest means. [3]
7.6 The Committee considers this to be the result in part of the strictness
of the priorities and guidelines, and partly due to the lack of adequate
funding which prevents legal aid commissions from providing assistance
for the relatively few matters that do fit within the priorities and guidelines.
Removal of most immigration matters from legal aid funding
7.7 Prior to 30 June 1997, when the previous legal aid funding arrangements
between the Commonwealth and the states and territories were terminated,
there was a range of legal assistance available to migrants and refugees.
[4]
7.8 Principally this consisted of free advice at the visa application
stage by the Department of Immigration and Multicultural Affairs under
its Application Assistance Scheme and the Immigration Advisory Services
Scheme using lawyers and other registered migration agents. In 1995-96
these schemes together were funded at a cost of $1,133,000. [5]
In addition the Department offered the Translating and Interpreting Service,
which provided 24-hour telephone services as well as on-site assistance
for legal aid agencies and community based legal aid services.
7.9 Following refusal of primary and review applications, clients could
seek further review through the courts or the Administrative Appeals Tribunal,
for which refused applicants were able to apply for legal aid subject
to the normal means and merits tests.
7.10 The 1995-96 Statistical Yearbook on legal aid provides the
following information for that year on applications for legal aid for
migration matters, broken down into various types of matters (pp. 22,
26):
| No. of matters in which |
| type of matter |
legal aid approved |
legal aid refused |
| Administrative law migration |
164 |
98 |
| Appeal to Refugee Status Review Committee |
539 |
101 |
| Application for permanent residency |
87 |
29 |
| Deportation cases |
14 |
16 |
| Primary application for refugee status |
493 |
39 |
| Judicial review of refugee status decision |
57 |
59 |
| Submission on humanitarian grounds |
3 |
- |
| totals |
1357 |
342 |
7.11 Under the 1 July 1997 version of the priorities and guidelines,
assistance in relation to immigration matters was limited to refugee applications
from applicants in Australia. The guideline provided that aid should normally
be limited to the giving of advice, preparation of written material and
costs of expert reports. However, the grant could extend to representation
where in the opinion of the legal aid commission the applicant was unable
adequately to represent himself/herself. The guideline also stated explicitly:
`The Commission will not usually grant assistance for other immigration
cases'. [6]
7.12 The Commonwealth has since announced a new policy on legal assistance
for refugee applicants, based on a whole-of-government approach to funding
for migration and refugee cases, and a desire to ensure that legal aid
funds do not duplicate assistance which is available elsewhere. [7]
Under this policy, assistance is generally no longer available under legal
aid for migration and refugee cases from 1 July 1998. Instead what
assistance is to be given will come through the Immigration Advice and
Application Assistance Scheme operated by the Department of Immigration
and Multicultural Affairs. The remnant of assistance that continues to
be provided under legal aid is defined in the guidelines to come into
operation on 1 July 1998. These provide:
4.1 Legal assistance may be granted in relation to proceedings in the
Federal Court or High Court dealing with a migration matter, including
a refugee matter, only where:
(i) there are differences official opinion which have not been settled
by the Full Court of the Federal Court or the High Court; or
(ii) the proceedings seek to challenge the lawfulness of detention. A
challenge to the lawfulness of detention does not include a challenge
to a visa decision or a deportation order.
4.2 Legal assistance for migration matters may be granted only in accordance
with paragraph 4.1, even if the matter could also be characterised as
falling within another priority or guideline area.
7.13 The Immigration Advice and Application Assistance Scheme is the
outcome of the merger in late 1997 of the Application Assistance Scheme
and the Immigration Advisory Services Scheme. [8]
As its name suggests, it provides application assistance to protection
visa applicants in detention and to eligible visa applicants in the community.
It also provides immigration advice to eligible members of the community.
The budget for this new service is about $2 million per annum with the
allocation for detention work accounting for approximately 60% of this
figure. [9]
7.14 As under the previous schemes, advice is provided by external organisations
under contract, and final contractors are likely to be a mix of private
legal and/or migration agents, companies, non-profit community organisations
and legal aid commissions. The Minister for Immigration and Multicultural
Affairs, the Hon Philip Ruddock MP, informed the Committee in January
1998 that interim contracts had already been let to the Legal Aid Commissions
in New South Wales and Western Australia. The Minister emphasised however
that the service provided is not a legal service, even though some of
the contracted providers have legal qualifications. [10]
7.15 The Committee regards as unacceptable the virtual removal of all
legal aid for migration matters. It notes that the Commonwealth is abrogating
responsibility for an area in which it has passed laws. It is therefore
not an action which flows from the declared aim of the new legal aid agreements
that the Commonwealth would only provide legal aid in relation to matters
which arise under Commonwealth laws. Rather, the Government has stated:
The intention of the new guideline is to enable the redistribution of
scarce legal aid resources so that, from the Attorney's point of view,
more legal assistance can be directed to matters of priority to the Commonwealth
arising under Commonwealth law. [11]
7.16 Moreover, in respect of refugees, the Commonwealth has international
obligations. The Legal Aid Commission of New South Wales told the Committee
that the `Commonwealth must fund the representation of asylum seekers
in recognition of Article 16 of the United Nations Convention Relating
to the Status of Refugees'. [12] The Legal
Aid Commission of Western Australia said in 1997 that Australia's international
obligations under the refugee convention were `an influencing factor'
in its decisions on whether to grant legal aid to refugees. [13]
The sort of advice provided under the new Immigration Advice and Application
Assistance Scheme is not an adequate substitute for legal aid in the Committee's
view.
Social security matters
7.17 The new legal aid arrangements reduced the availability of legal
aid for social security appeals to the Administrative Appeals Tribunal.
[14] The reduction in legal aid is in part
due to the changes brought about by the guidelines, but it is also because
of a lack of sufficient funding to provide assistance to all cases that
comply with the new guidelines. [15]
7.18 The guidelines relating to Commonwealth legal aid for appeals in
relation to social security and other Commonwealth benefits now provide
for two levels of assistance. The first deals with assistance in order
to obtain instructions and necessary reports and prepare submissions for
appeals to the Administrative Appeals Tribunal. Under the guidelines in
the revised version to take effect from 1 July 1998, this may be granted
where:
(i) the case related to an overpayment exceeding $5000; or
(ii) the applicant is at significant risk of prosecution; or
(iii) the applicant cannot afford to pay for medical reports and the
appeal is about the health of the applicant or of someone for whom the
applicant has parental responsibility; or
(iv) the applicant by reason of disability or disadvantage cannot adequately
prepare or present the case; or
(v) the appeal raises important or complex questions of law.
7.19 For actual representation in Tribunal proceedings, assistance may
be granted where:
(i) the applicant may incriminate himself/herself; or
(ii) the case is complicated; or
(iii) the applicant by reason of disability or disadvantage cannot adequately
prepare or present the case; or
(iv) the appeal raises important or complex questions of law.
7.20 The Administrative Appeals Tribunal advised the Committee that,
coinciding with the reduced access to legal aid, there has been an increase
in the number of persons appearing unrepresented before it in its social
security jurisdiction, although no statistics are available to measure
this. [16] The Tribunal advised the Committee
that some social security matters are straightforward, and legal representation
is unnecessary and may be a disadvantage. However, it said:
within social security there can also be very complex matters which involve
a number of different amendments to the legislation and relate to transitional
provisions and application and accrued rights, and assistance from solicitors
can be very helpful. When you add to that issues about lack of funds,
lack of education, language difficulties and those sorts of things, they
can also be remedied to a large degree by assistance from a solicitor.
[17]
7.21 The Legal Services Commission of South Australia told the Committee
of the impact of the new guidelines on people wishing to challenge Government
decisions both in social security matters and more generally:
By its new guidelines, the Commonwealth requires poor people with meritorious
claims to proceed without legal advice or representation against all the
language and literacy obstacles already described and in opposition
to a lawyer employed or briefed by the Commonwealth to represent one of
its departments. In representing themselves they must:
- read and comprehend the legal issues in, for example, the Section
37 Tribunal documents
- read and comprehend the relevant legislation;
- proof, examine and cross-examine witnesses;
- negotiate with the legal representative of a Commonwealth department;
and
- marshal and present legal argument before the Tribunal.
This is not `access to justice' or `equality before the law.' [18]
7.22 The Commission said that the guidelines on social security matters
were excluding a lot of people who needed legal assistance, many of whom
were those who were least able to look after themselves. For example,
there were many overpayments that were less than $5,000 but which still
meant a lot to the recipient. [19] The Commission
argued:
what we see as a skewing of the legal system by these guidelines means
that many people are being disenfranchised; they cannot take matters on
or, if the matter is brought on by the department, they give up. The social
security laws, the Austudy laws, all the laws about income maintenance
provide within them rights for people to contest decisions of the department,
and those rights go right up to the Federal Court. These guidelines are
blocking people from taking advantage of those rights right at the first
level before the real legal argument starts. [20]
7.23 The Welfare Rights Centre of South Australia in October 1997 also
argued that the new criteria excluded many categories where people require
assistance. It gave as examples people seeking to challenge:
Newstart breaches, Special Benefit rejections, Sole Parent Pension cancellations,
Child Disability Allowance rejections, compensation preclusions, overpayments
under $5,000, etc. Many of these people are unable to effectively prepare
their own case, are in severe financial hardship and can not achieve justice
in their case without legal assistance. [21]
7.24 Another area in which legal aid is almost always refused under the
guidelines is for people wishing to appeal against the refusal to grant
Special Benefits to migrants within the two-year waiting period after
their arrival. The Committee was told that this caused particular hardship.
[22]
Product liability cases
7.25 The Women Lawyers' Association in New South Wales informed the Committee
that `the amended policies in regard to civil law provide that legal aid
is no longer available for consumer protection matters involving product
liability'. [23] It argued that this discriminated
against women as they have historically been more affected by such matters,
giving as examples faulty contraceptive devices, breast implants, hormonal
treatments and various other products designed especially for women.
7.26 The Australian Plaintiff Lawyers Association also argued that legal
aid should be available for product liability cases.
there is no point in the federal government passing legislation making
it easier, for instance, for consumers to sue product manufacturers by
the amendments to the Trade Practices Act if in reality the consumers
cannot sue because they cannot afford to take on an unequal fight against
a multinational manufacturer of a defective product. The whole point of
the exercise is lost. [24]
7.27 The Association also argued that there was an issue of equity involved:
If we are looking at equity in the delivery of legal services then surely
it is the people who are the victims of that kind of situation where they
are innocent victims of exposure to a very toxic product to which they
never should have been exposed who should get priority over people fighting
over their house in a family law dispute or perhaps even some people accused
in criminal cases. Surely these are the very people in society for whom
the justice system should be set up and whose access to it should be facilitated
by legal aid. [25]
7.28 The Committee notes that the priorities and guidelines do not explicitly
exclude product liability matters. It appears that in practice assistance
for such matters is being refused because they are considered to be matters
for which assistance is available under some conditional fee or contingency
arrangement from the private profession. [26]
Discrimination cases
7.29 Commonwealth discrimination laws provide protection against discrimination
on the grounds of sex, race and disability. Prior to the 1 July 1997 changes,
the test for the grant of legal aid in discrimination cases was whether
there were reasonable prospects of success. The relevant guideline now
provides:
Legal assistance may be granted for equal opportunity/discrimination
cases where there are strong prospects of substantial benefit being gained
not only by the applicant but also by the public or any section of the
public.
7.30 The Committee was told that under this guideline in practice, legal
aid is now only available in Commonwealth discrimination matters for class
actions and test cases: the vast majority of cases concern only an individual's
rights and are no longer legally aided. [27]
The Committee was told that as a result of the changes the Disability
Discrimination Law Advocacy Service in Victoria:
have basically stopped applying for legal aid because it is so rarely
granted. They are finding it a waste of time. … Basically, it is
so rare that they get legal aid grants on the public interest ground that
they find the time it takes to put in the application is not really worthwhile.
[28]
7.31 The Kingsford Legal Centre is attached to the University of NSW
and conducts a specialist practice in discrimination law. Mr John Godwin,
a solicitor at the Centre, told the Committee that the discrimination
laws are in place to protect the most marginalised in society and these
are the people who logically are most in need of legal aid assistance.
However, he said, these sorts of people `are going to find it incredibly
difficult to access the court system without a grant of legal aid'. [29]
He agreed that many people are capable of bringing discrimination cases
without legal representation:
but they are not the most vulnerable and they are not the ones who most
need help. The law is there to create a level playing field. That is most
important for those who are furthest away from the field. Without legal
aid they cannot even get into the stadium. [30]
7.32 Mr Godwin also said that on his understanding legal aid for discrimination
matters is not an expensive proposition, in terms of its overall impact
on the legal aid budget. [31]
7.33 The Committee considers that the requirement that there be a substantial
benefit to the public or a section of it before legal aid will be provided
in discrimination matters is inappropriate. It fails to recognise that
the community has a definite interest in ensuring that discrimination
does not occur in individual cases. It is essential that legal aid be
available to achieve this.
Recommendation 13
Accordingly, the Committee recommends that the guideline in relation
to the provision of legal aid in discrimination matters be amended to
remove the condition that there be a substantial benefit to the public
or a section of it in order for aid to be granted.
7.34 As noted in Chapter 4 above, the Commonwealth Attorney-General's
Department administers a number of statutory legal assistance schemes
which stand outside the mainstream assistance provided under the block
legal aid funding to the legal aid commissions. Three of these schemes
operate to provide assistance under the Sex Discrimination Act, the Racial
Discrimination Act and the Disability Discrimination Act respectively.
[32] The Committee lacks all the information
necessary to assess the extent to which these schemes might fill the gap
left by inadequate provision for legal aid in relation to discrimination
matters.
War veterans matters
7.35 The funding for war veterans legal aid has traditionally been separate
from other legal aid monies. Most veterans legal services funding goes
to organisations such as the Returned and Services League and Legacy and
it is they who then provide advocates for people making an application
for pensions and benefits. However, if an application for a benefit is
refused, and a review by the department and the Veterans Review Board
does not overturn the original decision, an appeal to the AAT is made.
It is at this point that legal aid funding is administered by the legal
aid commissions.
7.36 The new guidelines provide that legal assistance may be granted
to war veterans or their dependants for appeals from decisions of the
Veterans' Review Board in respect of war-caused disability pension entitlement
or assessment claims under Part II of the Veterans' Entitlement Act
1986. Funding for AAT appeals in respect of war related disability
pensions is not subject to a means test, and to this extent veterans are
in a more favourable position than other applicants for Commonwealth legal
aid.
7.37 The legal aid commissions included amongst their concerns about
the 1 July 1997 guidelines a suggestion that the guideline in relation
to legal aid in veterans matters be clarified. In particular, the interaction
between the `ordinarily prudent self-funded litigant' aspect of the merits
test and the guideline was queried: did it require the funding of veterans'
matters that could not be justified on the cost-benefit grounds implied
in that test? [33]
7.38 The Committee notes the July 1998 version of the guidelines removes
whatever ambiguity there might have been. It states that applications
in veterans matters `shall be subject to all aspects of the merits test'.
7.39 The Vietnam Veterans' Association of Australia stated in February
1998 that the new guidelines had yet to be looked at in any detail in
terms of a case-by-case analysis. The Association expressed some concern
that the merits test would be tighter. [34]
However, the Committee was informed that applications for legal aid in
veterans matters are treated favourably. Mr Bruce Barbour, a Senior Member
of the Administrative Appeals Tribunal, said in February 1998:
My understanding is that the guidelines which operate in relation to
assistance in the veterans jurisdiction are far more open and far more
flexible than those in other jurisdictions and that, as a consequence
of that, if a veteran wants to be represented it would be most unusual
for them not to gain assistance. [35]
7.40 Mr Robert Cornall of Victoria Legal Aid advised:
We are now imposing merits tests under the new Commonwealth agreement,
as we are required to. The result of that is that, in 1996-97, we accepted
454 applications in veterans' matters. Only eight were refused, which
is a refusal rate of 1.76 per cent.
It is our view that we are being more lenient in the application of the
merits test it is a requirement of the Commonwealth agreement that we
apply a merits test in veterans affairs matters than we are in other matters.
We respect the very significant position that veterans and their widows
have in Australia. Those refusal rates are very low. They are all based
on a rational assessment of the lack of merit of a particular case. [36]
7.41 The assistance provided under the guidelines does not extend to
all veterans matters. The Legal Services Commission of South Australia
advised the Committee that under Commonwealth guidelines, only people
with war-caused disability pensions contesting disability issues qualify
for legal aid. It said that there is a wide range of other issues and
payments under the Veterans' Entitlement Act for which people need
representation before the AAT. It gave as an example the number of people
claiming eligibility for war pensions for disabilities sustained in combat
in the Malayan hostilities in the 1950's. It said that these people cannot
get legal representation before the AAT because their claims relate to
eligibility, not to disability. [37]
7.42 Another issue raised with the Committee related to particular rules
applied by Victoria Legal Aid to the grant of assistance in veterans matters.
Prior to the new legal aid agreements, Victoria Legal Aid responded to
budgetary pressures by introducing overall caps and stage-of-matter limits
Victoria Legal Aid advised the Committee in February 1998 that in veterans
matters it imposed a fee ceiling of $2,200 to institute proceedings before
the Administrative Appeals Tribunal. If the matter went beyond this stage,
an additional amount of up to $2,500 could be provided. [38]
In line with Victoria Legal Aid's general approach to caps, there is no
discretion to exceed these amounts. [39]
7.43 Veterans representatives argued to the Committee that there should
be some discretion to exceed the caps in particular cases. Mr Bruce Ruxton,
Victorian State President of the Returned and Services League, told the
Committee in April 1997 that the merits test was being applied too laxly,
and cases with `no hope at all' were going through until the cap was reached,
but `the legitimate cases are being baulked by this limit'. [40]
Mr Ruxton said that veterans in Victoria were being discriminated against,
because the legal aid commissions in other parts of Australia did not
have similar inflexible caps. [41] He also
advised the Committee that the Commonwealth had declined to intervene.
[42]
7.44 In February 1998 the Vietnam Veterans' Association of Australia
argued that, due to the complexity of the Veterans' Entitlement Act
1988 and the cases brought under it, legal representation was often
essential and could not always be provided within the caps applied in
Victoria. [43] It also expressed concern that
the action taken by Victoria Legal Aid would be followed by other legal
aid commissions. [44] In May 1998, after the
Committee completed is hearings, it learned that similar concerns were
emerging in Queensland, following a decision by Legal Aid Queensland in
August 1997 to investigate alternative fee arrangements for veterans matters.
It appears that these may involve the adoption of maximum fees by stage-of-matter.
However, it seems that some provision will be made for assistance beyond
the maximum in exceptional cases. [45]
7.45 In Chapter 5 above, the Committee has expressed its concerns at
the injustices that can arise in family law matters if caps or stage-of-matter
limits are inflexible. It takes the same view of inflexible limits on
veterans matters. However, it does not believe that assistance to veterans
should be quarantined from efforts by legal aid commissions to manage
their limited resources more efficiently and effectively. In particular,
it would be concerned if the merits test was being applied too loosely
to veterans' applications for legal aid, so that unmeritorious cases were
taking funds that could be better applied to more deserving applications
from veterans.
7.46 After the Committee had substantially completed work on this report
it learned that the Attorney-General's Department was conducting a national
review of the provision of assistance in veterans matters. [46]
Common law claims
7.47 The priorities in their 1 July 1997 form included amongst the identified
matters, `common law claims against the Commonwealth in limited circumstances'.
The Law Council of Australia pointed out that there has been no elaboration
on the intended meaning of the words `limited circumstances'. [47]
7.48 However, the Committee was not advised of any specific cases in
which the lack of elaboration had caused difficulty. The Committee notes
the version of the priorities which is to take effect from 1 July 1998
now reads: `common law and equitable claims against the Commonwealth in
limited circumstances'. But it still does not elaborate on the meaning
of `limited circumstances'.
7.49 The Committee notes that the guideline makes no provision for common
law claims which are not against the Commonwealth. It seems to assume
incorrectly that the common law is exclusively a state/territory matter.
The Committee considers this to be another example of the inappropriateness
of the attempt by the Commonwealth to isolate Commonwealth matters from
state/territory ones under the new legal aid agreements.
Alternatives to legal aid
Conditional cost and contingency fee arrangements
7.50 As noted at the beginning of this Chapter, under the new agreements
legal aid is not to be provided for civil matters which can reasonably
be expected to be conducted under a conditional costs agreement or similar
arrangement. Under such agreements and contingency fee arrangements, the
practitioner is compensated from any money recovered if the assisted person
is successful. To a considerable extent, the impact of this provision
depends on the willingness of the practitioners in the jurisdiction in
question to enter into conditional and contingency types of arrangements.
The Committee is aware that many practitioners do conduct civil matters,
especially routine personal injuries cases, on some sort of conditional
or contingency basis.
7.51 The impact of the restriction also depends on what other schemes
of assistance exist in the jurisdiction. In its Second Report the
Committee noted the establishment of Law Aid schemes in Queensland and
Victoria to provide legal assistance in civil cases, with the costs of
doing so to be recovered from the proceeds. [48]
In Western Australia there has been a civil law fund administered by the
Law Society which is used to fund civil law matters on a contingency basis.
However, the Committee was advised in April 1997 that it had suspended
operation and was being reviewed. [49]
7.52 The Committee lacks the depth of information to fully assess what
coverage conditional and contingency arrangements and schemes provide.
However, it notes that such solutions are not always appropriate. The
Aged-care Rights Service advised the Committee:
private solicitors will pick up common law injury matters quite happily
if it is a clear case where costs are recoverable from the other side.
But because of the advanced age of a person perhaps 82 or 85 with a broken
hip they are strongly pressured to settle out of court on unfavourable
terms to make sure that those costs can be covered before the person dies.
It is all together not a happy situation. [50]
7.53 In addition, practitioners may be reluctant to enter into contingency-type
arrangements in any but the relatively simple and clear-cut cases. The
Australian Plaintiff Lawyers Association informed the Committee:
It is becoming increasingly difficult for plaintiffs in personal injury
cases to run cases. Many of them are turned away by lawyers who act in
that field, simply because of the administrative costs of running the
case, let alone the possibility that the lawyers may never be paid for
what they do. [51]
Legal expense insurance
7.54 Several submissions referred to legal expense insurance as a possible
means of improving access to legal services, suggesting that premiums
for such insurance be made tax-deductible so as to encourage its use.
[52]
7.55 The Committee notes that suggestions along these lines have been
examined by other inquiries, which gave cautious support to the concept
of legal expense insurance. [53]
7.56 Companies have tried to market legal expense insurance in Australia
for a number of years in a variety of ways with little apparent success.
[54] It seems that consumers are not interested
in purchasing it as a free-standing product. [55]
Nor has there been great success in selling it as an add-on to another
type of insurance, such as home-owner, car insurance or professional indemnity
policies, although this form of marketing apparently works well in many
European countries. [56] Attempts to market
legal expense insurance in the form of a group plan offered to a group
of employees or union members have also not been generally successful.
[57] However, a group scheme in South Australia
involving members of the Public Service Association and the Australian
Nurses Federation (SA Branch) has reportedly worked well over a number
of years in providing a modest range of services to its members. [58]
Similar schemes have apparently had some success in Western Australia.
[59]
7.57 The Law Council of Australia told the Committee it had asked the
Commonwealth Government to assist in getting legal expense insurance schemes
started by encouraging people to take out the insurance, by acting in
its role as employer to assist in having the insurance included in benefits
available to its employees, and by making the premiums tax deductible.
[60] However the Law Council said that the
Government had declined to assist. [61] The
Attorney-General's Department informed the Committee in May 1998 that
it was not convinced that the development of such schemes would have a
significant impact on the demand for legal aid. [62]
7.58 In the Committee's view, if legal expense insurance is to make any
contribution to increasing access to legal services and litigation in
Australia it will be in areas well removed from those dealt with by legal
aid. The Committee does not consider that legal expense insurance schemes
can contribute anything significant to alleviating the scarcity of legal
aid funding. In the Committee's view, there are two reasons for this,
apart from the difficulty of marketing such schemes.
7.59 First, the application of the means test results in legal aid going
only to the very poor. The typical recipients are either not in employment
at all or not in secure full-time employment. Hence they would be outside
the scope of any employment-based or union-based insurance schemes. At
the same time they would be unable to able to afford to purchase legal
expense insurance on an individual basis. [63]
7.60 Secondly, the sorts of legal matters in which legal expense insurance
tends to cover most readily are civil matters, primarily tort actions.
Legal aid is not available to any significant extent for these sorts of
matters. In contrast, the sorts of matters that legal aid is primarily
spent on are major criminal cases and family law disputes. [64]
These are the matters which, it seems, insurers are least able to provide
cover for, not least due to the difficulty of reliably estimating the
incidence and average cost of such matters. [65]
7.61 In summary, the Committee concludes that legal expense insurance
has little to offer by way of alleviating the scarcity of legal aid funding.
It may have some potential to meet some of the legal needs of those who,
due to their means, fall outside the scope of legal aid, but there appear
to be major marketing difficulties to be overcome before this potential
can be realised.
7.62 The Committee notes that the Law Foundation of NSW is currently
engaged on a project assessing its experience with legal expense insurance
and attempting to draw some more general conclusions about its viability
in Australia. [66] The results of this may
offer some guidance on how the marketing problems can be overcome.
Viability of the distinction between Commonwealth and state/territory
matters
7.63 The very limited scope of legal aid for Commonwealth civil matters
has, somewhat ironically, avoided one potential problem. Concern was expressed
to the Committee prior to the entry into force of the new arrangements
on 1 July 1997 that the distinction they imposed between Commonwealth
matters and state/territory matters would cause difficulties in practice.
However, in March 1998 the Legal Aid Commission of New South Wales advised
the Committee:
There was some concern that, where a matter had a Commonwealth and a
state component, there would be some difficulty in apportioning responsibility.
We found, though, that in the areas where we expected we might have difficulty
we really do not because the Commonwealth guidelines are quite restrictive
in their application to some of the civil areas where we anticipated some
difficulties. Because the Commonwealth guidelines are so restrictive,
we do not really have a difficulty at the moment. [67]
Footnotes
[1] Submission No. 108B, Australian Law
Reform Commission, p. 1.
[2] Submission No. 108B, Australian Law
Reform Commission, p. 1.
[3] Transcript of Evidence, Australian
Law Reform Commission, p. 1810. See also Submission No. 178B, Federation
of Community Legal Centres (Vic), p. 10 (`… legal aid in the civil
area … has been wiped out completely'); Transcript of Evidence,
Villamanta Legal Service, p. 1436 (no resourcing in civil areas).
[4] Submission No. 100, Department of
Immigration and Multicultural Affairs, p. 1-8
[5] Submission No. 100A, Department of
Immigration and Multicultural Affairs, p. 1
[6] The equivalent guideline in the agreement
with Victoria omitted the word `usually'.
[7] Letter from Mr N Reaburn, Deputy Secretary,
Attorney-General's Department to Mr C Staniforth, CEO, ACT Legal Aid Commission,
28 April 1998, p. 1. See also Senate, Daily Hansard, 25 May 1998,
p. 2818.
[8] Submission No.100C, Minister for
Immigration and Multicultural Affairs, p. 1.
[9] Submission No.100C, Minister for
Immigration and Multicultural Affairs, p. 2.
[10] Submission No.100C, Minister for
Immigration and Multicultural Affairs, p. 1.
[11] Senate, Daily Hansard, 25 May 1998,
p. 2818.
[12] Submission No. 84, Legal Aid Commission
of NSW, section 3.4. Cf. Submission No. 100, Department of Immigration
and Multicultural Affairs, p. 10, and Submission No. 101B, pp.
2-5; Transcript of Evidence, Department of Immigration and Multicultural
Affairs, p. 224.
[13] Transcript of Evidence, Legal Aid
Commission of WA, p. 1249.
[14] Transcript of Evidence, Administrative
Appeals Tribunal, p. 1383.
[15] Transcript of Evidence, Administrative
Appeals Tribunal, p. 1384.
[16] Transcript of Evidence, Administrative
Appeals Tribunal, pp. 1383-4.
[17] Transcript of Evidence, Administrative
Appeals Tribunal, p. 1386. See also Transcript of Evidence, Legal
Services Commission of SA, p. 1596.
[18] Submission No 44C, Legal Services
Commission of SA, p. 11 (emphasis in original).
[19] Transcript of Evidence, Legal Services
Commission of SA, p. 1596.
[20] Transcript of Evidence, Legal Services
Commission of SA, p. 1597.
[21] Letter from Welfare Rights Centre (SA)
Inc to the Legal Services Commission of SA, 21 October 1997, p. 1 (attachment
4 to Submission No. 44C).
[22] Transcript of Evidence, Legal Services
Commission of SA, p. 1597.
[23] Submission No. 94A, Women Lawyers'
Association, p. 4.
[24] Transcript of Evidence, Australian
Plaintiff Lawyers Association, p. 1057.
[25] Transcript of Evidence, Australian
Plaintiff Lawyers Association, pp. 1057-8.
[26] See para. 7.2 above on this provision
in the guidelines.
[27] Transcript of Evidence, Kingsford
Legal Centre, p 1703; Submission No. 85A, National Network of Women's
Legal Services, p. 11.
[28] Transcript of Evidence, Villamanta
Legal Service, p. 1439.
[29] Transcript of Evidence, Kingsford
Legal Centre, p. 1702.
[30] Transcript of Evidence, Kingsford
Legal Centre, p. 1710.
[31] Transcript of Evidence, Kingsford
Legal Centre, pp. 1702-3.
[32] Transcript of Evidence, Attorney-General's
Department, p. 812.
[33] Letter from Victoria Legal Aid on behalf
of all the Legal Aid Commissions to Mr N Reaburn, Attorney-General's Department,
22 December 1997, p. 3.
[34] Transcript of Evidence, Vietnam
Veterans' Association of Australia, p. 1425.
[35] Transcript of Evidence, Administrative
Appeals Tribunal, pp. 1387-8, and see also p. 1384.
[36] Transcript of Evidence, Victoria
Legal Aid, p. 1419.
[37] Submissions Nos. 44C and 44D, Legal
Services Commission of SA, pp. 15 and 7-9 respectively. See also Transcript
of Evidence, Legal Services Commission of SA, p. 1614.
[38] Transcript of Evidence, Victoria
Legal Aid, p. 1419: `There is a second stage, depending on how far the
matter goes, from a fee of $600 paid at 80 per cent to a total fee of
$3,064 paid at 80 per cent …'.
[39] See for example, Transcript of Evidence,
Victoria Legal Aid, p. 1419: `… if you do not enforce it, every case
can become an exceptional case requiring further consideration'.
[40] Transcript of Evidence, Returned
& Services League, Victorian Branch, pp. 929-30, 934.
[41] Transcript of Evidence, Returned
& Services League, Victorian Branch, pp. 929, 930.
[42] Transcript of Evidence, Returned
& Services League, Victorian Branch, p. 932. See also Transcript
of Evidence, Vietnam Veterans' Association of Australia, pp. 1422-3,
1424.
[43] Transcript of Evidence, Vietnam
Veterans' Association of Australia, p. 1425. See also Transcript of
Evidence, Returned & Services League, Victorian Branch, pp. 935-6.
[44] Transcript of Evidence, Vietnam
Veterans' Association of Australia, p. 1424.
[45] Information supplied to the Committee
by the Veterans Support and Advocacy Service Australia Inc, 22 May
1998. See for some background `Veterans lose Legal Aid right', Courier
Mail, 4 May 1998, p. 6.
[46] Senate Legal and Constitutional Legislation
Committee, Estimates Hearings, Transcript of Evidence, 2 June
1998, Attorney-General's Department, p. 85.
[47] Submission No. 126A, Law Council
of Australia, para. 2.7.
[48] Senate Legal and Constitutional References
Committee, Inquiry into the Australian Legal Aid System: Second Report,
June 1997, para. 2.49.
[49] Transcript of Evidence, Mr G Mohen,
p. 1128.
[50] Transcript of Evidence, Aged-care
Rights Service, p. 1703.
[51] Transcript of Evidence, Australian
Plaintiff Lawyers Association, p. 1056.
[52] Submission No. 27, Australian Institute
of Criminology, p. 5; Submission No. 88, National Legal Aid, p. 63;
Submission No. 90, National Association of Community Legal Centres,
p. 53; Submission No. 93, Australian Society of Labor Lawyers,
p. 20; Submission No. 126, Law Council of Australia, paras.
7.6 to 7.9.
[53] See Access to Justice Advisory Body, Access
to Justice An Action Plan, May 1994, Action 10.2 (`The Commonwealth
should formulate a proposal for legal expenses insurance that it can include
in future negotiations on agency bargaining with the Public Sector Union
and other government sector unions.'); South Australia, Legislative Council,
Final Report of the Legislative Review Committee on An Inquiry into
Matters Pertinent to South Australians being able to Obtain Adequate,
Appropriate and Affordable Justice in and through the Courts System,
October 1993, pp. 28-9 (legal expense insurance should `be promoted and
encouraged provided that any system … be self funding'); and South
Australian Legislative Council, Review of the Legal Services Commission
(Part 1): Report of the Statutory Authorities Review Committee, 11th
Report, December 1996, pp. 86-7.
[54] Transcript of Evidence, Law Foundation
of NSW, pp. 1003, 1006-7; Law Society of WA, pp. 1096-7; Law Society of
SA, p. 1584; Insurance Council of Australia, pp. 1697-1700; Legal Aid
Commission of NSW, p. 1730; Sir L Street, p. 1741; Mr J Giddings,
pp. 1775-6.
[55] Transcript of Evidence, Law Council
of Australia, p. 163.
[56] Transcript of Evidence, Insurance
Council of Australia, pp. 1697-8. Compare the position in England and
Wales as described in Sir Peter Middleton, Report to the Lord Chancellor
of a Review of Civil Justice and Legal Aid, September 1997, paras.
5.51 to 5.52: Legal expenses insurance is potentially a valuable means
of widening access to justice. Although free-standing policies have not
proved successful, legal expenses insurance, in the form of cheap but
limited add-on policies to car or house insurance, is probably more widespread
in this country than is generally believed. Two factors seem to limit
the wider growth of this market. One is that most people do not expect
to become involved in litigation and therefore do not see the need for
this type of insurance. That is essentially a marketing problem for the
insurers. The other is the high and uncertain cost of litigation discussed
in this report.
[57] In the United States it was estimated
in 1996 that between 5 and 10 per cent of employers offered such schemes
as part of the package of benefits provided for their employees: J McCune,
`Courting Employees: Prepaid legal plans rise in popularity as an employee
benefit', Management Review, July 1996, p. 60.
[58] Transcript of Evidence, Law Council
of Australia, pp. 150, 152, 1320-1. The following description the scheme
is taken from South Australian Legislative Council, Review of the Legal
Services Commission (Part 1): Report of the Statutory Authorities Review
Committee, 11th Report, December 1996, p. 86:The [South Australian
Legal Services] Commission currently provides a telephone advisory and
referral service to members of the Public Service Association and the
Australian Nurses Federation (SA Branch) as part of a broader legal expenses
assistance scheme. All members of these associations are entitled to a
30 minute advice session and, if necessary, are provided with legal representation
for motor vehicle matters, personal and consumer matters, minor criminal
offences, mediation services in family law matters and certain alternative
dispute resolution processes. In 1995-96 only 17% of matters for which
initial advice was given resulted in a claim on the scheme, indicating
that early advice helped resolve many legal problems.
[59] Transcript of Evidence, Law Society
of WA, pp. 1097, 1104.
[60] Submissions No. 126 and 126A, Law
Council of Australia, paras. 7.7 to 7.9 and 4.4 to 4.5 respectively; Transcript
of Evidence, Law Council of Australia, p. 150.
[61] Submission No. 126, Law Council
of Australia, para. 7.7; Transcript of Evidence, Law Council of
Australia, p. 1321. See also Submission No. 148, Mr B Withers,
p. 2.
[62] Submission No. 127G, Attorney-General's
Department, p. 9. See also Transcript of Evidence, Attorney-General's
Department, p. 128.
[63] Transcript of Evidence, Legal Aid
Commission of NSW, p. 1730.
[64] Attorney-General's Department, Legal
Aid in Australia: 1995-96 Statistical Yearbook, p. 22 indicates that
in 1995-96 of the 277,754 legal aid applications granted, only 1,843 (0.66%)
were for personal injury cases, and property (207 applications) and contracts
(554) accounted for even fewer successful applications.
[65] Transcript of Evidence, Insurance
Council of Australia, p. 1699; Sir L Street, p. 1740. Compare the experience
in the United States where it is said that few employment-based legal
expense insurance schemes offer cover for criminal matters or divorce
cases: G Flynn, `Legal Assistance Offers Prepaid Peace of Mind', Personnel
Journal, vol. 75(10), October 1996, pp. 55-6.
[66] Law Foundation of NSW, Annual Report
1997, `Legal Expense Insurance'. The Law Foundation was involved from
1988 to 1996 in a joint venture with the GIO in founding and operating
a company called Legal Expense Insurance Limited which became the first
specialist legal expense insurer in Australia.
[67] Transcript of Evidence, Legal Aid
Commission of NSW, p. 1716.