The impact of the Carter report on the future of legal aid will be devastating for legal aid firms, a study commissioned by the Law Society warned today (26 September).

According to research company LECG more than 800 legal aid firms will be forced out of business by the reforms because they will be unable to make a profit from the work. The number is twice that predicted by Carter in his July 2006 report into legal aid procurement.

Law Society chief executive Desmond Hudson said the Government needed to offer more money to make legal aid fees viable, or risk forcing many practitioners out of the sector entirely.

The LECG report says that a criminal legal aid firm could expect to make at best a 2 per cent profit, and many were losing money each year.

The survey also said that between 2001 and September 2005 almost 1,000 criminal legal aid practices closed down. Between March 2004 and March 2006, the number of civil legal aid firms fell by 669.

Fees for both criminal and civil legal aid work have remained almost static over the past five years. Criminal solicitors last saw a pay rise in 2001, while civil practitioners received a 2.5 per cent increase in fees in 2004.

The Carter review proposed new tendering processes for legal aid, with panels established for different types of work. It estimated that around 400 firms would close down or merge as a result of the recommendations, and said larger firms would better be able to satisfy the new requirements to carry out work of a sufficiently high quality.