Criminal firms face crisis

Cashflow disaster: unachievable billing targets and bureaucracy are blamed

The criminal contracting regime has left firms teetering on the edge of a 'cashflow disaster', with many billing just half of what they were bringing in last year, it emerged this week.The Legal Services Commission (LSC) has awarded 2,898 firms contracts worth 39.4 million since the system was established in April.

However, firms claim that unachievable billing targets laid out in the contracts, combined with bureaucratic nightmares, have left them facing a crisis.Franklin Sinclair, chairman of the Criminal Law Solicitors Association, warned: 'This is building up to becoming a disaster, judging by the first three months' figures.

Firms are billing around 55% of what they are told they should be billing, and if this carries on for the next couple of months, the LSC will be asking for its money back.'Malcolm Fowler, chairman of the Law Society's criminal law committee, blamed the problem on the government 'plucking figures out of thin air' and imposing too strict a timetable when creating the contracting system.

'The government can produce reams of rhetoric about quality, but what is needed is a scientific appraisal of what it costs to produce quality when you are racheting up the speed at which you expect people to deliver,' he argued.

Richard Miller, director of the Legal Aid Practitioners Group, also called for the process to slow down, and voiced concerns about the LSC's clawback policies.

'If [the policies] are tight, firms will run into a cashflow disaster,' Mr Miller predicted.

The LSC said the concerns would be discussed at the next consultative group meeting later this month.

The low billing was temporary, and down to firms blitzing a backlog of old claims before 10 April and taking time to come to terms with the new approach to claiming, it added.The LSC also denied that the system was bureaucratic or complicated, describing it as 'simple and straightforward'.See Editorial, page 16Paula Rohan