A former director of a closed law firm has been ordered to pay the government £22.1m in a High Court judgment finding it 'more likely than not' that 'systemic fraud' had taken place in claims for legal aid. 

The Honourable Mr Justice Pepperall said John Blavo, whose firm Blavo & Co grew to become one of the largest three legal aid firms in the country, should be liable to the Lord Chancellor over what the judge described as an ‘endemic’ culture of dishonesty.

The court heard  that Legal Aid Agency investigators had found a ‘very significant discrepancy’ between claims made by the firm on the legal aid portal and the cases recorded on the court service’s database.

In Lord Chancellor v Blavo & Co Solicitors Ltd & Ors, handed down today, the judge ruled that, on the balance of probabilities, some files were not genuine and he rejected the claim that these were isolated instances of fraud attributed to one individual fee earner.

‘I find that 42 out of the 49 files audited in July 2015 were not genuine files but were falsely created in order to justify dishonest claims for payment,’ said the judge, who noted there was no record in these cases of any hearing having taken place. ‘The fact that the [legal aid] agency was able to find cases of fraud in 42 of the 49 files presented for audit in 2015 indicates that this was no needle in a haystack.’

The court heard that the Legal Aid Agency had looked into more than 23,000 files as part of its investigation into the firm, which was closed down by the Solicitors Regulation Authority in 2015. The judge said there had been a ‘clear failure’ to co-operate with the investigation by providing full, truthful and prompt explanations and by failing to provide files to the LAA.

He ruled that, given the unexplained discrepancy between the claims for payment and data from HMCTS, it was ‘unarguably proportionate and rational’ to terminate the legal aid contract with the firm. Blavo’s case on a repudiatory breach therefore failed.

John Blavo was admitted to the roll of solicitors in 1997 and was formerly the senior partner of Blavo & Co before its incorporation, after which he was sole shareholder and director.

The firm specialised in mental health law, but also practised in criminal, clinical negligence, housing, immigration and family. By 2015 it operated from 18 offices in England and Wales.

The 2015 audit was ordered after legal aid authorities noted growing concerns about the sums being claimed for, the judgment states. After the audit, the agency identified 24,658 cases in which the firm had claimed fees in respect of representation before a mental health hearing, but found evidence a hearing was actually held in only 1,485 cases. The £22.1m figure was the value of claims that were not supported by any evidence of being pursued.

Blavo did not give evidence during the seven-day hearing in October, but called two witnesses on his behalf; a former colleague and an external accountant.

His lawyer submitted that the allegation that an enormous percentage of the firm’s turnover was dishonestly obtained was ‘inherently implausible’.