Triennial Review of Legal Aid
Proposal 7: Increasing repayments from legal aid recipients
The legal aid system is under significant financial pressure. Increasing repayment requirements on civil and family legal aid clients is one way of improving the financial sustainability of the legal aid scheme.
Additionally, debt can be challenging to collect, as there are a limited number of enforcement options available to the Legal Services Commissioner outside of court enforcement, and the information available on debtors is often limited and outdated.
We are considering:
- A general increase to repayment amounts: a one-off increase to all or some of the current maximum repayment amounts.
- Introducing a low-level maximum amount payable: requiring those with the lowest income and capital to make repayments.
- Changes to how and when repayment is determined.
- Recovering the full cost of services in civil and family legal aid cases (excluding cases currently exempt from repayments).
- Introducing more powers in the Act to collect legal aid debt.
Further information on the proposal
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Current state |
Those who receive legal aid for civil and family proceedings may be required to repay some of the costs of the legal services they receive. The amount that people are required to repay mostly depends on:
The maximum amount that someone will be expected to repay is set in the Legal Services Regulations 2011. The maximum amounts payable based on income have been in place since 2011 and their value has depreciated overtime. Legal aid does not need to be repaid for some types of cases, such as proceedings relating to the Mental Health (Compulsory Assessment and Treatment) Act 1992, the Intellectual Disability (Compulsory Care and Rehabilitation) Act 2003, the Public Safety (Public Protection Orders) Act 2014, or for most applicants in family violence proceedings. Additionally, the Legal Services Commissioner has the power to waive repayment obligations in cases where serious financial hardship would be caused, and on just and equitable grounds. Current settings mean that most civil and family legal aid clients do not have a repayment obligation. This includes those who earn the least and have the least disposable capital. The Legal Services Act also provides the Legal Services Commissioner with limited enforcement measures that can be taken to collect legal aid debt. |
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Problem or opportunity |
The legal aid system is under significant financial pressure. Increasing repayment requirements on civil and family legal aid clients is one way of improving the financial sustainability of the legal aid scheme. Debt can be challenging to collect, as there are a limited number of enforcement options available to the Legal Services Commissioner outside of court enforcement, and the information available on debtors is often limited and outdated. |
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What we are considering |
Options we are considering include:
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Initial analysis |
This proposal will increase the amount of debt that legal aid clients owe the Ministry and potentially increase revenue and improve financial sustainability. However, due to the low income of legal aid clients (as well as other factors), it is expected that not all of this debt will be repaid. Increasing repayment levels could also affect access to justice by disincentivising people from seeking legal aid. The 2018 legal aid review found that repayment obligations can act as a deterrent for people to apply for legal aid in the first place, even if they are eligible. The disincentive may also be felt more by some population groups, such as those with health issues or disabilities.[1] Increasing the debt to government owed by users of legal aid is likely to have a disproportionate impact on certain groups. For example, it is likely that the proposal will disproportionately impact disabled people[2], families in material hardship and older people with dependents. However, there would still be safeguards in the system to mitigate the risks of the proposals. For example, the Legal Services Commissioner would still have the power to waive repayment obligations in cases where serious financial hardship would be caused, or on just and equitable grounds. |
[1] A 2018 Colmar Brunton Report, Legal Needs among Low Income New Zealanders, showed that, of those with a long-term health issue or disability, 35% said the barrier to them seeking help was the cost of legal services.
[2] Results from the 2023 Legal Needs Survey show that, of the disabled people surveyed, over half (54%) had experienced a legal problem in the past year, compared to almost a third (32%) of non-disabled people.