Almost a third of legal aid firms 'consider pulling out'

More than 31 per cent of legal aid practices are considering pulling out of publicly funded work, a survey of 2,000 firms by the Law Society and LSB has revealed.

Family firms are leading the way, with a third saying they intend to withdraw from legal aid compared to 20 per cent of those offering welfare benefits advice or 17.5 per cent of housing practices.

Although criminal legal aid has been spared from competitive tendering on price, 14 per cent of firms said they were contemplating pulling out.

Only seven per cent of firms offering publicly funded employment advice and less than five per cent of those working on medical negligence cases said they intended to withdraw. Of the firms that said they were pulling out of legal aid, 31 per cent said they had already started.

In an introduction to the report, authors Professor Pascoe Pleasence, Dr Nigel Balmer and Professor Richard Moorhead warned that legal reforms presented “a major challenge” to a number of legal aid firms.

“In the legal aid sector, almost permanent freezes in rates of pay and increasing control over quality assurance (with associated rises in administrative costs) has led to a concentration of legal aid in fewer firms,” they said.

“This is not a new trend, but more recently real terms declines in rates of pay have been accompanied by an overall diminution in total spend on legal aid and on volumes of work.

“As noted above, even higher criminal legal aid – which has traditionally expanded – has begun to contract significantly.”

The reports’ authors went on: “It is thought that the business models associated with legal aid work have forced some separation of legal aid departments into new firms by more dominant private fee paying work (with higher margins).

“Legal aid reforms may also have driven a higher level of specialisation among legal aid providers (through requirements in the specialist quality mark, under legal aid contracts, for instance).

“The recent economic climate is also likely to have impacted on staffing balances and, in particular, the utilisation of paralegal staff.”

The report said LASPO, with its cuts in scope, would “reduce the volume of work and gross fees available to legal aid firms under the scheme.

“Even where alternative sources of funding for such work can be found, such as increased reliance on conditional or contingency fees or third party funding for higher value cases, the likely result is a significant decline in work and fee income unless such firms diversify.”

Researches from TNS-BMRB asked legal aid firms in April and May 2012 whether they were considering withdrawing from legal aid over the next three years.