Justice Minister Judith Collins has wound back legal aid reforms proposed by predecessor Simon Power.

Collins has announced the controversial proposed user charge for civil and family cases will be cut from $100 to $50. Critics had argued the cost would reduce access to justice for the most vulnerable.

Legal aid debt will also begin accruing interest after six months - rather than immediately as Power originally intended.

And a plan to tighten the means test for less serious criminal cases, such as theft, assault or careless driving has been scrapped.

Contentious proposals to remove legal aid eligibility for disputes over relationship property or spousal maintenance, and civil disputes between private parties will stay. But Collins said legal aid grants will still be available for adoption and paternity proceedings.

And a new provision means those not meeting legal aid debt will be barred from further grants for civil and family proceedings until they start paying.

Collins halted progress on Power's Legal Assistance (Sustainability) Amendment Bill in February when she asked the justice and electoral select committee to defer its consideration of the legislation.

She wanted reform to align with a review of the Family Court and said the more ''moderate'' proposals were more balanced.  Family Court reforms were announced in August.

However, a Cabinet paper also released today notes the bill ''is still likely to be contentious'' as it will restrict eligibility for some people and increase the level of payment required from legal aid recipients.''

Collins, a lawyer, signalled her unease with Power's proposals when she took over the portfolio.

Power was targeting a legal aid blowout which rose by 56 per cent  from $111 million in 2006/07 to $173 million in 2009/10. About $35 million of legal aid debt dating back to 2006 is unsecured or not subject to a repayment plan.

But the Cabinet paper said the reforms ''did not fully assess legal aid cost pressures''. It also noted legal aid spending decreased ''slightly'' in 2010/11. The Justice Ministry expects the aid will cost $138m in 2011/12, down from the forecast $158m. Family Court reforms, which reduce the need for lawyers in the early stages of hearings, will save an estimated $41m.

However, Collins' latest changes will ''slightly increase'' legal aid pressures - by about $7 million. Overall the bill will slash $81m from the cost of legal aid over four years.

The select committee received 40 submissions on the bill - mostly in opposition.  Critics said the reforms would reduce access to legal aid, would affect vulnerable people, could breach the Bill of Rights Act and increased the number of people representing themselves.

Collins said it ''made sense'' to align legal aid and Family Court reforms.

"Changes have been developed that affect all court users equally, rather than only legally aided people. So, we now have a better range of solutions to ensure our legal aid system is sustainable," she said.

She added: "Our changes ensure the bill strikes the best balance between targeting legal aid to where it is needed most, encouraging more people to resolve minor family and civil matters between themselves rather than through the courts, and ensuring people have access to justice services.''

A Supplementary Order Paper (SOP)  will be referred to the select committee. The name of the bill is likely to change to the Legal Assistance Amendment Bill.   Collins expected it to have its second reading later this year and come into effect in March next year.

Last month Collins  ruled out one of Power's flagship reforms - an inquisitorial trial system for sex offences and cases with child witnesses.

STAYING OR GOING FROM THE BILL:

* Reducing the proposed user charge for civil and family cases from $100 to $50.

* Changing the point at which legal aid debts will begin accruing interest. Interest will now be imposed six months after the total debt is finalised, rather
than immediately.

* Removing the proposal to tighten the financial means test for less serious criminal cases, such as theft, assault or careless driving.

* Retaining the current definition of disposable capital in the means test.

* Keeping the existing approval frameworks for lawyers who can provide lawyer for the child and youth advocate services, rather than creating new criteria and standards.

* Retaining the list of types of proceedings eligible for legal aid in the Legal Services Act. This means changes to the list must be made by Parliament, rather than the executive.

* An addition has been made to the Bill to better ensure people meet their obligation to repay their legal aid debt. If a person is not meeting their repayment requirements, they will not be able to get legal aid for further civil and family proceedings until they start repaying their debt again.

- © Fairfax NZ News