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Firms hit by late legal aid payments

18 May 2010

Legal aid firms have been unable to pay staff because of cash-flow problems caused by late payments from the LSC, the Law Society has said.

Richard Miller, legal aid manager at the Law Society, said firms were not structured to cope with such a large financial shock.

“Tens of thousands of pounds have not reached firms for more than a month,” Miller said. “Some firms have reported that they have not been able to pay their staff.

“The processing of payments by the LSC in the last year has generally been much better than before, which is why the sudden change has caused such problems.”

Miller said he believed the delay in processing payments was connected to the cuts in staff at the LSC and the additional checks imposed following critical reports from the National Audit Office last year.

“It’s not as if there are no reasons why we have got into this situation, but it is completely unacceptable.”

Des Hudson, chief executive of the Law Society, has written to the banks warning them of the cash-flow problems for firms caused by the payment delays.

He said that, following problems earlier this year, the society had set up an “intelligence sharing protocol” with the banks.

Steve Hynes, director of the Legal Action Group, said the delays were “very worrying”.

He said the LSC had moved from regional to centralised administration in only two years and had to merge different accounting systems.

“A tipping point may have been reached where they cannot cut any more from the administration, unless they allow a lot more autonomy for practitioners.”

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Risk & Compliance Legal Aid