‘Economically unviable’: firms respond to tender results

Large firms doing volume asylum work are the hardest hit in the new round of civil legal aid contracts, and will suffer a ‘horrendous’ impact as a result of ‘economically unviable’ contracts, writes Elizabeth Davidson. Overall, less than a third of the amount of asylum and immigration matter starts that firms bid for was made available.

The Legal Services Commission (LSC) dispatched its good news and bad this week on contract bids for asylum and immigration, family, housing and debt, and housing possession court duty schemes. Both asylum and immigration contracts and housing contracts were heavily over-subscribed. Family contracts were over-subscribed but to a lesser extent.

The vast majority of asylum and immigration firms have been allocated the minimum guaranteed level of 100 matter starts per office – firms with more than one office will get 100 matter starts per office. In the majority of areas, including London and Greater Manchester, not only have firms been allocated the minimum guarantee but if they drop out then their allocation will not be re-distributed among other providers.

Alison Harvey, general secretary of the Immigration Law Practitioners’ Association (Ilpa) said 100 matter starts could amount to about £35,000 – out of which salaries, heating, lighting and premises must be paid – using a rate of £350 per matter start, although she emphasised there were exceptions, for example, the case would be worth more if it went to the high court.

‘This is very serious. The bigger the firm the more serious the impact is going to be. There are firms who deal with many hundreds of matter starts, who will lose them. It is difficult to see how they can keep on their staff, although they may turn those staff to private work and other areas of law.’
Alison Harvey

Harvey predicted that most firms will sign the contract as it is due to start in April, but that there might be an ‘attrition’ of firms throughout the contract’s duration as they begin to find it financially unviable.

She questioned the LSC’s ‘blanket’ approach, pointing out that firms who followed the advice given to them years ago and specialised and built up their expertise were now being treated the same as other firms, regardless of quality.

‘There is no differentiation at all,’ she continued. ‘It would help if they lifted the matter start limit so that cases followed the clients. As it is, what’s the incentive to do a better job? We want to encourage quality. It seems a colossal waste of talent. If good people haven’t got enough work then what have we possibly gained? Surely, if you are letting a contract, you want to let it to the best people?

‘Why on earth let a whole series of unviable contracts across the country? There is no way that this will not mean it’s more difficult for people to get a good lawyer.’

Richard Miller, head of legal aid at the Law Society, also criticised the LSC’s approach.

‘Where there is a good firm that has managed to attract clients, even though the government will fund the case and the client wants to instruct them, they will have to send it on to the firm down the road. That seems utterly irrational.’
Richard Miller

‘Our starting point is that they shouldn’t be using matter starts, it should be license-only contracting, but the Ministry vetoed that approach because they see matter starts as giving them more budgetary control,’ argued Miller.

‘It is nonsense that using matter starts gives greater control over the budget. It often takes two or three years before a firm is paid, particularly in asylum work, so it is completely illusory that they have budgetary control and it is ludicrous that firms will have to pass work on to their competitors.’

Family law practices in most London boroughs have been granted the minimum allocation of matter starts, as have housing and debt applicants in most areas of the country (but not London).

Family firms (nearly 2,500 offices put in bids) bid for a total of 163,852 matter starts, but only 95,761 were available. Housing practitioners (828 offices) bid for 146,820 matter starts, with only 51,889 available. Immigration and asylum (506 offices) bid for 140,424 matter starts, with only 40,831 available.

Miller is speaking to practitioner groups. Family law has not been hit as badly as the others, and practitioners could turn to private work to make up the shortfall, he said. However, housing practitioners could be very badly hit – the situation was not clear at the time of going to press and is difficult to predict, partly because firms will be required to have exclusive housing contracts to do the work in the new scheme whereas in the current system family law firms can do some housing as well.

An LSC spokesperson said: ‘It is clear from the fact that many organisations have bid for significant volumes of work in this tender round that there is a limited appreciation of the impact of scope reductions contained in the Legal Aid, Sentencing and Punishment of Offenders Act. With this in mind and given the reductions in scope, matter starts have been retained to ensure continued financial control of the legal aid budget and that anticipated savings can be realised.’

With regard to asylum and immigration work, the spokesperson said: ‘There is only a limited amount of work available. The significant demand for immigration and asylum work in some areas, partly as a result of a number of organisations that did not receive a contract in the 2010 tender exercise re-entering the market, means that the LSC has been unable to allocate more than the guaranteed volumes set out in the tender documentation. The LSC is not able to make a determination on what would be viable for individual firms. If firms do decide that the contract would not be viable and withdraw from the tender process, where sufficient matter starts come back to the LSC these will be re-allocated to organisations whose individual bids have not been satisfied.’

There are 1 comments

  1. Surely there’s a simple solution here which gives all parties what they want.

    The LSC should allocate the number of matter starts to the procurement area thus giving them the financial control they need.

    Then any of the providers who have been awarded a contract within the area can use these starts from a central pool.

    This means this gives choice to the client and means true competition between the providers on the basis of quality and service.

    This would comply with competetive tendering rules by allowing new entrants to bid.


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