Rethinking the Welfare State: The prospects for ... - e-Library

Legal aid 81
• It limits the use of alternative mechanisms such as the contracting out of
cases to private firms or lawyers.
• The salary structure provides only limited incentives for maximum
productivity on the part of staff lawyers.
• Since the scale and nature of demand must be anticipated in order to hire
adequate staff, staff lawyer programs may be inflexible in responding
to changes in demand and, if located in central staff offices, unable to
meet the needs of rural or remote communities. 22
• It denies consumers the right to retain the counsel of their choice.
An additional argument takes account of the principal-agent problem inherent in the
selection of counsel by the state on behalf of the individual citizen. As Charendoff et al.
explain, “[i]t is argued that any staff system, even if the employer is at arm’s length from
government, is inherently less able to ensure the independent legal advice which legal aid
clients, in particular as they are parties often adverse in interest to the state, should
receive.” 23
The crux of the problem in models of pure public provision is the lack of a purchaserprovider
split. Most governments recognize that there are perverse incentives embedded
in a system in which the state both finances and delivers particular services. Indeed, New
Zealand recently transferred control over legal aid from the Department for Courts to an
independent legal aid agency, 24 as did the Canadian province of Ontario. Similarly, recent
reform initiatives in Northern Ireland have focused on the “establishment of a new
independent body to administer legal aid.” 25 The independence of such an agency is
hoped to introduce a greater degree of impartiality and transparency into the
administration of legal aid. The report to Parliament states that “the Law Society will no
longer be in a position where they might be seen as having a conflict of interest between
their responsibility for administering legal aid on the one hand and representing their
members on the other.” 26
Under arrangements where legal aid attorneys are employed by the state, the attorney
has two allegiances: to her employer, the state, which has a fiscal interest in seeking a
settlement as quickly as possible so as to contain costs; and to her client. While the
employer has means at its disposal to ensure that its interests are accommodated, the
client does not have a voice: his or her preferences do not exert any financial influence on
the attorney. Conversely, the staff attorney may face an incentive to draw a case out over
a protracted period of time in order to avoid taking on new work, a decision which may
not actually be in the client’s best interests, and over which the client can exert only
limited control. The above characterization is an exaggeration of the likely consequences
of the principal-agent dilemma presented by the salaried staff model. It does, however,
illustrate the need to assure some accountability on the part of the attorney to her client,
accountability which may be assured by giving the consumer direct choice with respect to
his or her legal service provider.
Supply-side subsidies
While the basic transaction underlying supply-side subsidization of legal services—the
government pays for services provided by a private lawyer or firm, or community