The Legal Services Commission?s (LSC) preferred supplier scheme is a good idea in principle but risks becoming an additional layer of administration with few benefits for law firms, the Law Society warned this week.

In its response to the LSC?s consultation on how the scheme will work, the Society was particularly critical of the suggestion that initially only family lawyers will enjoy devolved decision-making powers. If this proves successful, devolved powers would be extended to other ?low-risk areas?.

Saying the use of devolved powers ?appears to be the only benefit arising from the scheme?, the Society insisted that their extension must be key to being a preferred supplier.

It said: ?We understand that in the pilot, powers were widely and successfully devolved, and we urge the commission to reconsider this decision. In the pilot, housing practitioners were able to devolve a funding certificate for any matter up to ?5,000. This seems sensible; those suppliers who achieve preferred supplier status are extremely unlikely to abuse such powers. Currently devolved powers allow amendment up to ?10,000 in many cases.?

The Society said that without additional devolved powers, it is hard to see how the aim of lower transactional costs will be achieved. Even then, the response suggests that the effect on costs will not be great.

The response said that while it agrees with the LSC?s objective of moving away from a system that has relatively low up-front entry criteria, ?some of the proposals in the consultation appear to lead in the opposite direction, raising the possibility that firms that achieve preferred supplier status may find they are spending more, rather than less, unremunerated time meeting the LSC?s requirements?.

It also emphasised that ?increased quality measures will increase costs? ? meaning that funding needs to go up too as firms face major staffing problems. The Society expressed concern that the LSC may be moving towards a regional fixed fee, but said it was prepared to discuss a viable scheme of graduated fees.

The response cast doubt over whether the peer review and file assessment processes have been sufficiently refined, and questioned whether the high ratio of new relationship managers to firms will end up with them just being a senior version of the existing account manager.

Generally, the Society said that firms whose annual spend and outcomes are in line with previous performance should be subject to minimal intervention by the LSC ? there was alarm that there seemed to be a move back towards the disliked contract compliance audits.

With Lord Carter?s final report expected out next month, it added that the LSC needs to consult again in the aftermath and cautioned against ?rushing ahead precipitously to implement the scheme?.

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