When Michael Gove backed away from imposing the dual contracting system and announced that he would suspend the second 8.75% fee cut for 12 months from 1 April 2016 last week, most criminal legal aid practitioners heaved a collective sigh of relief. Yet, for the law firms that have invested significant resources in preparing for the introduction of the dual contracts, the battle may just be beginning.

Gove’s announcement (available in full here) has left some firms considering whether to claim compensation for the time and money spent on preparations for the contracts. The u-turn, driven partly by a desire to prevent time consuming and costly litigation according to an MOJ spokesman, may therefore cost the taxpayer more before the saga ends.

The Law Society Gazette reported that one firm said it had spent £65,000 and 650 hours of senior fee-earner time in order to prepare for the contracts, while Gurney Harden Solicitors claim that £30,000 was wasted on hiring new staff and leasing new offices in preparation for the contracts.

‘This has been a  when all the Legal Aid Agency had to do was listen to the profession three years ago. The level of incompetence is quite outstanding even by the LAA’s standards… They have caused thousands of employees stress and strain, and there hasn’t even been an apology,’ Gurney, who is determined to seek damages, told the Gazette.

A spokesperson for the LAA has made it clear that the they always retained the right to suspend or cancel the procurement process at any time. The information to applicants document published in November 2014 stated that the applicant organisation alone is responsible for expenses incurred in the preparation and submission of tenders and with any costs associated with cancellation of the process by the LAA.

It is not only law firms, but also the MOJ and LAA that have wasted money as a result of changing the policy at such a late stage. The shadow Lord Chancellor, Lord Falconer, has written to the National Audit Office requesting an investigation into how much the abandoned reforms have cost the taxpayer.

The economies made ‘elsewhere’ in Gove’s department that have permitted the climb down are thought to include a 50% in reduction of administration costs by 2019/20 and a consolidation of office costs. Firms will be invited to apply for new duty contracts later in the year, before the introduction of the second 8.75% fee cut in April 2017.