More than 400 law firms will immediately ?disappear? from the criminal defence market when reforms to legal aid procurement are introduced next year, Lord Carter admitted last week.

Launching his final report, Lord Carter said that criminal defence contracts should no longer be awarded to firms doing less than ?50,000 of work a year in most areas, once new contracts are rolled out next October.

The report recommends a ?wholesale move to fixed pricing? in criminal and civil work. In the second phase of the proposals, which envisage a criminal defence market with fewer, larger practices, firms will bid against each other for contracts based on capacity and ?best value?.

The report was strongly welcomed by the government, which immediately launched a three-month consultation to enable speedy implementation. Acknowledging the upheaval his reforms will cause, Lord Carter recommended that the government set aside ?10 million to help firms prepare for the new market.

He said a ?growth and consolidation fund? of up to ?4 million should be created from April 2007 to March 2009, while a ?6 million match-funded grant programme for IT modernisation ? where firms must also find other sources of funding ? should be established to ?allow up to 2,000 legal aid firms to bid for the maximum grant?.

Under the proposals, fixed fees including travel and waiting costs will be introduced for police station work by next April. New, larger police station areas will be set up, with bulk contracts awarded for those areas by October 2007. Law firms that win this work will follow cases through to the magistrates? and Crown Court.

Firms will only be permitted to take on 20% of police station clients from outside their area. All clients will have initially to go through a call centre, even if they wish to use a particular lawyer outside their area. The requirement that only duty solicitors, not accredited representatives, can undertake certain types of work will be abolished.

In the magistrates? court, a new graduated fee scheme will be implemented by April 2008, designed to give incentives for early preparation and resolution. In the Crown Court, graduated fee schemes for litigation and advocacy will be introduced by April 2007. Advocacy fees will see a 16% rise in response to junior barristers? concerns over pay.

A specialist panel will be launched for very high cost cases (VHCC), with the number of places available likely to be considerably lower than the 400 or so firms that currently handle these cases. A move to contract tendering based on ?best value competition? for all criminal justice work except VHCC will be introduced in three regional waves by April 2010.

On the civil side, tailored fixed fees will be replaced with ?standardised fixed fees? for solicitors by next April. A graduated fee scheme will also be introduced for public law children work and private law family work. Best value tendering for contracts will be implemented by 2011.

Lord Carter said the proposals would save 3% ? or ?100 million ? a year from the legal aid budget. He said: ?If we are not to see the system die by a thousand cuts, we have got to restructure it? we are going to have to trust the market. In metropolitan areas, we will see some prices drop. In some badly serviced areas, we would expect prices to rise.?

He added: ?The profession has feared unbridled competition just based on price. That is something we were not prepared to let happen. Everywhere in the world, people recognise that we have got the best legal aid system here, but it is also the most expensive.?

The Lord Chancellor, Lord Falconer, said: ?Because of the inclusive way Lord Carter has carried out his review? we can move quickly towards implementing it. That?s why I?m starting immediately a full consultation on what he is proposing. The Carter review provides the blueprint. Now we have got to get on with the job.?

Outgoing Law Society President Kevin Martin said: ?Lord Carter is proposing a system with fewer, larger legal aid firms. We are not convinced that this will provide access to justice for all? the Law Society will play a very active role in the legal aid review body that will oversee the transition process and implementation of these proposals.?

Bar Council chairman Stephen Hockman QC said: ?This is as good an outcome as is available, and the proposals are worthy of very serious consideration.?

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