Lord Carter's interim report in February 2006 set out his view of "the need for substantial reform of legal aid procurement, especially criminal defence services". In particular, he outlined his vision that through a process of "managed change", a "steady-state" should be reached by 2009 whereby increased volumes of work should be given to the "most efficient and good quality suppliers in return for lower prices". New and published research has helped inform his review's proposals, and he summarises a number of key findings: -
There is a need for substantial reform of the procurement system ? legal aid firms consistently report that they are at the edge of profitability. Firms also believe that, under the current system, there will be many closures of criminal practices, or consolidation;
There are many elements of the system that impose costs and inefficiencies. A key one of these is the bureaucracy involved in the current procurement system;
Legal aid firms are amongst the most efficient of legal firms ? particularly those that are crime specialists. The exception to this is management information and IT ? firm investment in these activities could lead to substantial efficiencies. However, they need to be combined with changes on the part of the Legal Services Commission in the way it interacts with firms;
There are some firms that are able to make reasonable profits from carrying out legal aid work. These firms appear to have a number of common features: higher levels of gearing; higher levels of chargeable hours; a relatively low overhead base; and are specialized in criminal legal aid; and
Typically, firms with larger numbers of fee earners tend to be more profitable.