Monday 14 January 2013 by Catherine Baksi
Legal aid firms may go out of business as a result of the allocation of work for new civil legal aid contracts, representative groups have warned.
The Legal Services Commission notified firms last week of the outcome of tenders for family, housing and debt, and immigration, which will begin in April.
The commission said there was 'significant demand' for the work, with providers bidding for more than double the number of cases, or matter starts, available.
In immigration, there were 506 bidders, compared with the 225 existing contract holders. For the matter starts, providers submitted requests for a total of 140,424, more than three times as many as the 40,831 on offer.
Housing attracted 828 bidders, up from 533 current suppliers. Suppliers bid for 146,820 matter starts, against the 51,889 available.
Due to the high demand, many providers were awarded only the 'guaranteed volume of work', which is 61 matter starts in family, and 100 in housing and immigration.
The Law Society's head of legal aid Richard Miller said the way contracts have been allocated raises 'serious concerns' about the potential impact on the financial health of firms, particularly asylum specialists.
'Some firms are being allocated significantly less work than they need to be economically viable,' he said. 'Some firms - good providers - might even fail as a result.'
Miller said the Law Society had urged the LSC to issue licence contracts, which would allow firms to undertake as much work as they can attract, instead of matter starts, which he said artificially cap the amount of work firms can do and force them to pass on work to competitors.
Carol Storer, director of the Legal Aid Practitioners Group, said: 'The result of the tenders is likely to make it extremely difficult for many practitioners, particularly in larger and medium-sized firms doing immigration, to run a viable practice.'
She predicted that while some firms will decide it is not financially viable to accept the contracts, and decline them before April, others will accept them and realise later in the year that they cannot make them pay.
'It will be a very volatile market this year,' she warned.