Summary of "Funding Access to Justice Forum"

The "Funding Access to Justice Forum" focused on exploring innovative funding models to address the critical and ongoing funding crisis in the UK’s free legal advice and representation sector. The Access to Justice Foundation, the only fund dedicated to increasing free legal support across the UK, hosted the event to discuss major initiatives and developments aimed at increasing sustainable financial resources for legal aid and advice services.

Key Topics and Discussions:

1. Introduction to the Access to Justice Foundation’s Role

The Foundation distributes funds from pro bono cost orders and undistributed damages from collective actions.
It is exploring new funding streams such as Interest on Lawyers’ Client Accounts (ILA or ILTA schemes).
The Foundation partners with academic institutions like the University of Surrey and the Centre for Social Studies to research potential funding models based on evidence.

2. Research on Additional Funding Models (Presented by Matt Nesvert, Centre for Social Studies)

The project investigates six international funding models, including ILTA schemes used in countries like Australia, Canada, South Africa, and the US.
ILTA schemes pool interest accrued on client money held in trust accounts, which can generate significant funds when aggregated, despite individual amounts being small.
Design choices in ILTA schemes vary widely:
- Whether accounts are offered by private banks or centralized nonprofit corporations.
- The presence of a "comparability rule" ensuring interest rates on client accounts match commercial rates, which increases revenue and enforceability.
- Whether participation is mandatory, opt-out, or voluntary.
- Restrictions on how the revenue can be used (e.g., direct legal services vs. scholarships or judicial education).
The project is conducting surveys of legal advice providers to understand funding needs and the impact of different funding models.
Other funding models under review include levies on large commercial law firms, dormant client money, apprenticeship levies, and legal expense insurance.

3. Ministry of Justice Perspective (Katherine from MoJ)

The MoJ has been studying ILTA schemes internationally and engaging with the legal and banking sectors to assess impacts and feasibility for England and Wales.
The Ministry is keen to move quickly but cautiously, ensuring that any scheme considers effects on different types of legal firms and funding sustainability.
Ongoing consultations with legal aid practitioners have highlighted that many firms rely on non-legal aid income, sometimes subsidized by interest income, to remain viable.

4. Collective Actions and Undistributed Damages (Doug Cample, Scott & Scott; CLA Carter, Access to Justice Foundation)

The UK’s collective action regime, introduced in 2015 under the Consumer Rights Act, allows opt-in and opt-out class actions but has so far been limited to competition law cases.
Only a few cases have gone to trial or settlement, with limited funds distributed to date.
A major issue is low take-up rates by class members (often 10-20%), leaving significant undistributed damages.
The Access to Justice Foundation is the prescribed charity to receive undistributed damages following trials, but the position on settlements is less clear and evolving.
Recent tribunal rulings have started to direct undistributed settlement funds to the Foundation, marking a positive development.
The Foundation is preparing a funding strategy for how to allocate these funds to support free legal advice services sustainably.
The collective action regime is under review, with a call for evidence open until mid-October 2024, inviting input on all aspects, including the use of undistributed damages.

5. Engagement and Advocacy Opportunities

Attendees were encouraged to contribute to the ongoing Access to Justice Inquiry by the Justice Committee, particularly referencing additional funding models and emerging evidence.
Participation in the call for evidence on the collective actions regime and future consultations is vital to shaping policy.
The Foundation is considering creating a mailing list to coordinate advocacy efforts and keep stakeholders informed.
Emphasis was placed on highlighting both the value of free legal advice services and the viable funding solutions to ensure the sector’s sustainability.

Key Challenges Highlighted:

The funding crisis for free legal advice has been long-standing and worsened since 2012.
Designing funding models that are effective, enforceable, and fair to legal firms is complex.
Collective action cases take years and are costly, with uncertain financial returns.
Low participation rates in collective actions limit the direct financial benefit to class members.
The legal framework around undistributed damages, especially from settlements, requires clarification and reform.

Summary of Calls to Action:

Legal advice providers are invited to participate in surveys to inform research on funding needs.
Stakeholders should engage with the Justice Committee inquiry and the collective actions regime call for evidence.
Collaboration and coordinated advocacy are encouraged to push for innovative and sustainable funding models.
The Access to Justice Foundation plans to share further research findings, funding strategies, and opportunities for involvement.