Clawback in civil legal aid: payment and enforcement of the net liability

Where liquid funds are available at the conclusion of the case, we will expect the net liability to be settled immediately.  However, we only have to receive sufficient funds to meet the net liability.  In calculating the net liability, we have to include

  • the fees and outlays of all solicitors who acted in the case,
  • the fees of counsel and
  • fees and outlays for any supplementary work.

Steps in diligence you may take to enforce a decree

Where steps in diligence are needed to enforce the decree:

  • you may seek sanction to do so under regulation 22 – you should address the prospects of recovery, and the cost-benefit of undertaking diligence
  • where distinct proceedings are required, such as a petition for sequestration or an action of furthcoming, you will have to apply separately for civil legal aid for these proceedings.

The cost of diligence will form part of the applicant’s net liability.

Steps we may take to enforce payment of the net liability

Sometimes, we may need to enforce payment of the net liability ourselves.  Regulation 40(2) allows us to take such proceedings, or do diligence, in our own name or in the name of the assisted person, to give effect to a decree or settlement.

Where we take steps under regulation 40, our priority is simply to ensure the net liability is paid.  It is not our duty to enforce a decree for an assisted person, and if we exercise powers under regulation 40, this is not a substitute for the assisted person taking their own enforcement steps.

We are not acting as agent for the assisted person, although if we recover any surplus funds we will hold these and make them over to them.  If we have to decide whether property can be recovered, we will consult with the assisted person on the steps we have taken.  However, section 34 of the Act prohibits us from disclosing any information about the debtor which has led us to make our decision.

Where the property recovered or preserved consists of or includes an interest in land, regulation 40(3)(b)(iv) allows us to require the assisted person to grant a standard security over that interest in our favour.  If they fail to grant a standard security when required to do so, they will be in breach of their obligations under that regulation.

Interest accrues on the standard security at the current judicial rate of 8% a year.  At a time of low interest rates, clients may find it more economical to get loans from commercial lenders to clear the net liability.  We have no discretion to substitute a lower interest rate.  The assisted person will be responsible for the costs of placing the standard security, although advice and assistance can be provided if the client is financially eligible.

Take care to ensure that neither the assisted person nor you deal with property without our consent.  The assisted person is under a duty to meet the net liability from property they recover or preserve.  If a solicitor deals in any way with, disposes or parts with funds to our prejudice, regulation 40(3)(b)(ii) allows us to deduct equivalent sums from any future payments due out of the Fund to the solicitor.

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