Legal Services Commission’s Standard Contract 2010 (article 3)

Introductory note: As from the 1st of February 2012, when new contracts started with Family and Family with Housing practitioners, the Legal Services Commission’s mainstream face-to-face civil and crime providers have been operating under the same standard terms. It is unlikely that many people have had the time and/or motivation to read the contract but it is useful to know what’s in it. In this series of articles Vicky Ling considers the impact of the contract from a practical point of view, to help you operate in a way which suits you and your clients, and won’t fall foul of the LSC.

Clause 4 – Financial disclosure and risk

You must maintain certain accounting records, which the LSC specifies. Some of them are routine, and it is easy to understand what the LSC is looking for, others are more obscure and you may need to discuss them with your accountants and your LSC contract manager:

  • a profit and loss account
  • If you are a not-for-profit organisation, accounts as submitted to the Charities Commission and/or the Registrar of Companies
  • a balance sheet
  • a cash flow statement – It is hard to see the point of a retrospective cash flow statement; and it is difficult to imagine what this would be used for, except to comply with the contract, of course!
  • full notes to the accounts including a statement of the accounting policies adopted
  • where relevant, as specified in the contract specification, details of the standard monthly payments and details of all payments on account received in the relevant accounting period in respect of contract work for which an invoice has not been submitted (with explanatory notes) – The LSC may well ask for these details when carrying out reconciliation in respect of un-recouped payments on account

If you have been involved in completing the pre-qualification questionnaire for your organisation, you will realise that a number of the financial requirements in the contract also have to be declared as part of the PQQ and may subsequently be verified by the LSC before a contract offer is confirmed.

An independent accountant must audit or certify your annual accounts within nine months of their ending unless, before the end of the relevant accounting period, the LSC agree exceptionally that a longer period is justified. In general, most firms of solicitors have certified, rather than audited, accounts. You can see which type you have by looking at your last account and reading the accountants’ report, which will make this clear.

You must tell the LSC within 14 days if the independent accountant either refuses to certify your accounts or qualifies them.

In these (and some other circumstances, e.g. where there is a risk to clients or the legal aid fund) you may have to supply more detailed financial information to the LSC.

Appropriate guarantees and indemnities are usually required from organisations with limited liability unless they are a registered charity.

 

 

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