MoJ faces compensation claims over legal aid U-turn

Topics: Legal aid and access to justice,Government & politics

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Some criminal defence firms are considering whether to seek compensation from the government following Michael Gove’s announcement yesterday that he was abandoning a new contracting regime for criminal legal aid.

The justice secretary announced that he had decided ‘not to go ahead with the introduction of the dual contracting system’ in a written ministerial statement.


He is also suspending, for a period of 12 months from 1 April, a second 8.75% fee cut introduced in July last year.

The news was welcomed by many within the legal profession, including the Law Society and practitioner groups.

However, some furious solicitors said their firms were now considering whether to seek compensation from the Ministry of Justice after spending thousands of pounds preparing for the new contracts.

Kent-based practice Gurney Harden Solicitors spent about £30,000 in preparation costs. Director Andrew Gurney (pictured) said the firm had to hire staff and lease new offices.

Gurney told the Gazette: ‘This has been a complete waste of time and effort 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 now have even more firms able to undertake duty work than before they started. They have caused thousands of employees stress and strain, and there hasn’t even been an apology.’

Another firm said its total outgoings in preparing for the new contracts amounted to about £65,700 and 650 hours of senior fee-earner time.

The agency’s Information for Applicants document, published in November 2014, states that the LAA has the right ‘not to proceed to award contracts at any time at its absolute discretion’.

The document also states: 'The applicant organisation is solely responsible for the costs and expenses incurred in connection with the preparation and submission of a tender or associated with any cancellation or suspension of this procurement process by the LAA. Under no circumstances will the LAA, or any of its employees, be liable for any costs.'

Gurney said he intended to pursue ‘every avenue to obtain damages against the [agency] for the financial loss incurred as a result of their conduct’.

A spokesperson for the LAA said the Information for Applicants document 'was very clear that [the agency] had the right to suspend or cancel the procurement process at any time'.

'All firms will be invited to apply for new duty contracts later in the year,' the spokesperson added.

In the House of Commons this morning, justice minister Shailesh Vara was asked by shadow justice minister Andy Slaughter if he would be apologising to firms that had closed, laid off staff or cut salaries on being faced with the prospect of losing contracts.

Vara was also asked if he would be apologising to firms that spent thousands of pounds bidding for and winning contracts.

Vara responded by reminding Slaughter that the Labour government had abandoned its criminal legal aid Best Value Tendering scheme ‘at a very late stage’.

He added that he did not recall previous governments ‘wasting time and effort trying to calculate measures when they have made a change of direction’.

Gove, in yesterday’s ministerial statement, said economies made elsewhere in his department had given him a settlement that allowed him ‘greater flexibility’ in the allocation of legal aid funds.

When asked to expand on the settlement, Vara said that the ministry was ‘consolidating its estates programme generally’ in terms of offices and space it used as the MoJ, and that the department would be making 50% administration cuts by 2019/20.

Readers' comments (11)

  • Looks like due karma whereby the Hunter has become the Hunted

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  • Years since I did anything other than crime and so unsure where we are with the Unfair Contract Terms Act now, but I do recall that you could not exclude liability for your own negligence. The reason that many of us have spent a fortune is solely because of LAA/MOJ negligence. I hope that we make them pay . I really do.

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  • Big love to the contract 'winning' firms who were more than happy to shaft their competitors in what they perceived to be a gold rush for the Faberge egg of Duty work, and especially to those amongst them who were quick to smugly broadcast the fact, when they thought they'd landed on the greener side of the apartheid fence.

    At least the consultants had a good day at the races, and the fees that these firms were falling over themselves to pay for their services should be tax deductible.

    Tenders come and go. Some bidders win, some don't. Sometimes the procuring party changes its mind. It was there in the small print (for all the lawyers to see).

    That's commercial life.

    Welcome to big school.

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  • perhaps someone can help. If I was thinking of setting up a criminal team would I now be able to secure a legal aid contract. I had been considering it before all these problems manifested themselves and may now re visit the idea.

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  • Darkness and dishonesty prevail. Lets have a verse off:

    There was a law firm in Hackney
    Who feared that their clients would flee
    With their fate so abundantly clear
    They just had to bid for Two Tier
    Ending up stuffed by the Legal Aid Agency
    Ripostes in verse please

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  • Anonymous 3.53. You will have to wait for a new bid round fro criminal contracts.

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  • Vara's replies to Slaughter are infantile and pathetic.No previous government has been responsible for causing the profession such a colossal waste of time and expense.He hasn't even got the guts to offer an apology.CLSA's statement cosying up to MOJ is unacceptable.What I want to hear from them are their proposals for holding Grayling/MOJ to account for what has gone before.I won't be holding my breath.

    .Never mind the CSLA statement commending the Lord Chancellor for the decisions made.What I want to hear from CSLA are their proposals for holding Grayling/MOJ to account for what has gone before.I won't be holding my breath.

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  • As a losing firm that clearly had more of everything, we had to deal with uncertainty and the knowledge the LAA had deliberately ensured we would not succeed, we learnt who our friends were. Firms which had a one computer in the whole building miraculous were successful and gloating but common sense prevailed. The TT would never have worked for the profession or clients anybody who believes different has no economic sense or understanding of the finance of running a firm.

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  • The losses are a drop in the ocean compared to the losses incurred by many duty solicitors and firms due to the ghost phenomenon. At least £1/2 billion and probably much more over try last 10 years, all of it taxpayer money provided for the purpose of criminal defence, not buying rota slots from people who have full time jobs elsewhere.

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  • Clive, you're spot on. Never mind congratulating the LC for his brave decision (Gove is intelligent enough to identify a total clunker of a policy). The CLSA need to go on the offensive. Let's start by rooting out Matthew Coats, Hugh Barrett other TT advocates at the LAA who have cost the profession a small fortune over recent years. We need a new LAA with a new culture and a new senior management team. The current lot hate the profession and there is not one iota of seeking to work in partnership with the profession to develop sensible policies.

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