Solicitors this week accused the government of ?abandoning? small firms by rejecting Lord Carter?s proposal for two funds totalling ?10 million to help them grow and invest in IT ? a decision they said would be ?fatal? to many ethnic minority practices.

The concerns came as Law Society research revealed that the proposed reforms to legal aid procurement could seriously affect the recruitment of future lawyers.

Lord Carter advised the government to provide a ?4 million fund to assist small firms with ?growth and consolidation?, and ?6 million in grants to be matched by firms for investing in ?IT modernisation?, in his proposals for reform of legal aid procurement unveiled in July.

However, the Department for Constitutional Affairs (DCA) and the Legal Services Commission (LSC) rejected the need for the two funds in a document published last month. They said the funds ?could only be afforded at the cost of fee reductions or bringing forward the introduction of fixed and graduated fees, giving firms less time to adapt?.

Sundeep Bhatia, vice-chairman of the Society of Asian Lawyers, said it was ?shocked? by the ?devastating news? that the funds would not be offered. He said: ?The LSC and DCA have abandoned small firms, and I am greatly concerned about the disproportionate effect on ethnic minority firms.?

Sole practitioner Mr Bhatia revealed that he had decided he could not continue with his own small firm, Brent Law Practice, as a result of the Carter proposals. The firm will become part of Veja & Co in Hayes from January, where Mr Bhatia will become a consultant. He added: ?All [small firms] have to consider their own view of the way forward.?

Black Solicitors Network spokesman Lynton Orrett said the ?10 million in funds would have been ?invaluable? to small firms, many of which are run by ethnic minority lawyers. He said: ?Firms are already struggling to keep up with the current IT requirements from the LSC. Most [ethnic minority] firms are new and are still building a base. They will not be able to get the capital investment they need without this fund ? it will be fatal.?

Richard Miller, director of the Legal Aid Practitioners Group, added: ?If the government thinks firms will be able to achieve the structural reforms needed without any capital investment, it does not understand just how low the margins are.?

Meanwhile a survey of more than 800 solicitors commissioned by the Law Society found that more
than half expected a ?substantial decrease? in the recruitment of legal aid lawyers if the reforms go ahead. Some 88% said the proportion of fee-income generated by legal aid work would decrease.

Rachel Rothwell