London law firms will be the hardest hit by impending reforms to civil and criminal legal aid, while other urban areas will also face a tough future, government research has revealed.

The study comes as solicitors slated the Legal Services Commission?s (LSC) proposals for a national preferred supplier scheme as ?a disaster?.

New magistrates? courts fees to be introduced in urban areas in April will cause a 16% drop in fee income for criminal law practices in the capital, according to a regulatory impact assessment published by the Department for Constitutional Affairs (DCA) last month.

Fee income will fall by 9% in Derby, and 7% in Bristol and Nottingham. Newcastle firms will see a 6% slump in fees, while Cardiff and Sheffield will suffer a 5% cut. However, the report noted that firms should benefit from efficiency savings under the fixed fees. Criminal Law Solicitors Association chairman Ian Kelcey said regional urban firms could not afford to take such a hit, while London practices would be sent ?into deficit?.

London Criminal Courts Solicitors Association spokesman Rob Brown said the ?unsustainable? rates were ?sucking money out of London, which is the most expensive place to practise?.

London firms will also face the sharpest cuts in civil legal aid, according to the report?s analysis of the new scheme to replace tailored fixed fees in October, which will see an end to the separate London rate. Some 68% of firms in the capital will face a reduction in fees, followed by 48% of firms in Reading, 43% in Cambridge and 39% in Bristol. However, firms are expected to benefit overall, with the analysis finding that 61% of providers across the country would have been paid more for last year?s caseload had they been paid under the new scheme.

Legal Aid Practitioners Group director Richard Miller said the civil rates would ?devastate? practice in London.

A joint DCA/LSC statement said operating costs in London were not necessarily higher than in other city centres and did not justify the higher average fees.

Solicitors also lambasted the LSC?s proposals for national implementation of the preferred supplier scheme from April, published last month. Mr Brown said the proposals involved ?layer after layer? of unnecessary bureaucracy and assessment, and would require firms ?to make a massive investment in IT systems with no guarantee of a contract at the end of it?.

Mr Kelcey said it was ?crazy? that firms would be required to give the LSC their full accounts, which would drive firms with a mixed practice out of legal aid work.

An LSC spokesman said the financial information required would enable its relationship managers to understand a firm?s finances.

Law Society Vice-President Andrew Holroyd urged the government to move ?more cautiously?, saying changes were coming ?thick and fast?.

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