The Law Society & Ors, R (On the Application Of) v The Lord Chancellor

In reviewing a ministerial decision based on predictive financial modelling, the court applies ordinary Wednesbury rationality. Where a decision-maker identifies a relevant matter, the manner and intensity of inquiry are for the decision-maker, subject to that standard. No heightened investigative duty arises merely because statutory service provision is important. Costs omitted from a model may be addressed through rational measures outside it, including improved cash flow capable of financing investment. Further modelling is unnecessary where costs are highly variable and speculative. Consultation responses must be considered but need not be treated as conclusive evidence of future behaviour.

The claimants challenged the Lord Chancellor’s November 2014 decision to tender 527 Duty Provider Work contracts for criminal legal aid, within reforms including staged fee reductions and separate Own Client Work contracts. The Divisional Court dismissed the judicial review claims in [2015] EWHC 295 (Admin), holding that the Lord Chancellor understood that KPMG’s break-even model omitted investment costs, acted reasonably in undertaking no further investigation, and adopted legally sufficient support measures. The appeal concerned those findings and challenges to assumptions about delivery partnerships, break-even, latent capacity, organic growth and the diversion of Own Client Work. An A1P1 ground was not developed.

The appeal was dismissed.

1. Under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the Lord Chancellor had a binding duty to ensure that the relevant criminal legal aid services were actually provided, but retained discretion over the arrangements used to achieve that result.
2. The ordinary Wednesbury standard governed the investigative issue. The Court relied on the duty described in Tameside [1977] AC 1014 and applied the approach in R (Khatun) v Newham LBC [2004] EWCA Civ 55; [2005] QB 37. Where a matter is identified as relevant, the decision-maker chooses the manner and intensity of inquiry, subject to rationality review. No special or unusually heightened investigative obligation arose.
3. The Lord Chancellor understood that KPMG’s financial model excluded investment costs. He was entitled to address that omission through measures outside the model. Improved cash flow from advance interim payments could rationally help providers finance restructuring, increase productivity and reduce borrowing needs. Further modelling was not required because investment costs varied between firms, the available data were limited and more precise estimates would have been speculative.
4. The Court rejected the challenges to the delivery-partnership and break-even assumptions for the same reasons. In relation to latent capacity, organic growth and the 50% Own Client Work assumption, the Lord Chancellor was entitled to make an evaluative prediction about future behaviour. Consultation responses concerning firms’ current circumstances were relevant but not conclusive. He could approach them with healthy scepticism and have regard to broad market features.

• Court of Appeal (Civil Division) — In [2015] EWCA Civ 230, dismissed the appeal from the Divisional Court.
• Divisional Court of the Queen’s Bench Division — In [2015] EWHC 295 (Admin), dismissed the claims for judicial review of the November 2014 decision.
• High Court — In [2014] EWHC Admin 3020, Burnett J quashed the earlier decision to introduce 525 Duty Provider Work contracts because the relevant reports had not been disclosed for consultation, but dismissed the challenge to the first fee reduction.