Cyber attack, court delays, and legal aid cuts trigger inquiry into broken system

Parliament opens major inquiry into funding justice, moots new levy on lawyers, and probes LAA hack fallout

The House of Commons justice select committee has launched a sweeping inquiry into the crumbling state of access to justice in England and Wales — and everything is on the table, including a controversial legal sector levy.

Led by Labour MP Andrew Slaughter, the inquiry will explore how to improve access to justice amid chronic funding gaps, overreliance on pro bono work, and a faltering legal aid system. Among the options being explored is an “access to justice fund levy” — essentially a tax on the wealthiest parts of the legal profession, a proposal that has split opinion since first floated by former Lord Chancellor Michael Gove in 2015.

“Access to justice is fundamental to people’s rights to a fair trial,” said Slaughter. “But there are long-standing challenges across the sector, including for those seeking legal advice.”

The committee will scrutinise the legal services market, consider third-party and conditional fee arrangements, and weigh how legal regulators are fulfilling their statutory obligations. MPs will also probe the Ministry of Justice’s (MoJ) response to a major cyber-attack on the Legal Aid Agency earlier this year.

Law Society president Richard Atkinson welcomed the inquiry. “Our 21st Century Justice report sets out clear steps to improve access,” he said. “This includes a free AI-powered tool to help people identify legal issues and get signposted to proper support. But it all hinges on better funding for legal aid — which, like all public services, is stretched to the limit.”

Pressure for reform has intensified following a damning committee report on the county court system, which described centralisation efforts as a disaster and warned the justice system is “creaking.”

Now, in a potentially more immediate move, the MoJ is also considering proposals for a new Interest on Lawyer’s Client Account (ILCA) scheme. Under this plan, interest earned on money held by law firms in client accounts could be pooled and used to fund access to justice initiatives. The idea echoes similar models in the US and Canada but has drawn fire from solicitors.

A roundtable for legal aid providers is scheduled next month, and reactions are already polarising. “As a medium-sized firm doing 35% legal aid work, we’re already suffering,” one Gazette commenter wrote. “We intend to tell them so.”

Richard Atkinson struck a cautious note, questioning the likely returns from the scheme and branding it a “hypothecated tax” on an already stretched profession. Chris Minnoch, CEO of the Legal Aid Practitioners Group, demanded transparency: “If this goes ahead, will the money actually be used to strengthen legal aid — by raising fees or expanding scope — or will it disappear into other projects?”

He added, “Legal aid is the backbone of the justice system. It’s underfunded, overstretched, and at breaking point. Any new funding model must prioritise fixing that.”

Meanwhile, the merger of Herbert Smith Freehills with US giant Kramer Levin marked a major shift in the legal landscape. Reporting record profits of £486.9 million — with profit per equity partner up 8.6% to £1.4 million — HSF enters this new phase as part of the £2.1 billion global behemoth HSF Kramer.

CEO Justin D’Agostino hailed the figures as a “fitting finale” to HSF’s independent chapter, achieved “despite significant macroeconomic challenges.”

Against this backdrop of mega-firm success, struggling legal aid solicitors face growing calls to shoulder more of the financial burden for public legal services. As government coffers remain constrained and justice delayed often means justice denied, the committee’s inquiry may determine how — and who — pays to keep the system from collapse.