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.

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