A new relationship between the LSC and solicitors will be at the heart of the national preferred supplier scheme, writes Sir Michael Bichard


The Legal Services Commission (LSC) last week launched a consultation on its proposals for a national preferred supplier scheme (see [2006] Gazette, 23 March, 1).



Through the scheme, the commission wants to achieve a new relationship with providers of legal aid services. It accepts this relationship has not always been as effective as it could be.


The focus on quality services and value for money has been right, but the LSC recognises that the emphasis on checking and auditing has concentrated its limited resources on those with whom it has quality and cost concerns rather than on the firms providing a high-quality, value-for-money service.


The scheme will enable the LSC to forge a more mutually beneficial relationship with the providers it knows will provide quality. It wants this relationship to become a genuine partnership where it actively works together to identify the needs of legal aid clients and develops services to meet them.


The LSC cannot achieve that level of partnership without making significant changes to the way it works. It is serious about this - and is implementing a programme of organisational reform that will make it more efficient and cost-effective.


This includes giving providers greater autonomy over their cases by increasing devolved powers. In time, the LSC wants to devolve to preferred suppliers all decisions that can be made without unacceptable risk to the legal aid fund. The decisions retained by the commission will be turned around much faster.


The LSC will also make its billing and claiming processes simpler, with the aim of reducing practitioners' administrative burden and transaction costs - as well as its own. 'E-business' will be a key feature of the future scheme.


The commission will transform its dealings with legal aid providers through relationship managers, who will work in partnership with preferred suppliers to develop their businesses.


Relationship managers will also be responsible for monitoring performance, with the commission's performance management systems targeted to become less onerous. The purpose of setting higher entry standards for firms wishing to do legal aid work is to enable the LSC to offer risk-based performance management, largely through remote monitoring. Relationship managers will raise any issues at an early stage and then work with providers to resolve them constructively.


Early responses to the consultation have suggested that the LSC should not expect higher quality without paying higher rates. I do not accept this. Peer review results to date clearly show that the average case costs of firms achieving the preferred supplier standard are no higher than the firms achieving threshold, or below, competence ratings. Given there are many practitioners currently able to provide both a high-quality service and value for money, the two are not mutually exclusive.


I appreciate that for many of those working in legal aid, the scheme will mean making changes to the way they operate their businesses. For some, it may also mean combining with other firms. The LSC is clear that the scheme will only work if it contracts with fewer, larger organisations. However, it will expect preferred suppliers to expand or join together to ensure there is no reduction in the availability of legal services to the public.


Sir Michael Bichard is chairman of the Legal Services Commission and a former solicitor