Concerns about the future provision of legal aid and rates of pay have been fuelled by a recent report.

Paula Rohan discusses whether competitive tendering could be the way forward

It has taken almost a year to deliver, but research into supply, demand and purchasing in legal aid - commissioned by the Department for Constitutional Affairs (DCA) and the Legal Services Commission (LSC) - was finally unveiled last week (see [2004] Gazette, 29 April, 1).

The report by Frontier Economics has been greeted with dismay by the legal profession because its main conclusion is that there is no need for an increase in remuneration.

Some 40% of the 300 firms interviewed said they would take on more publicly funded work given half a chance, even under current rates of pay.

The report says those 40% would be enough to plug any gaps created by increasing demand.

By contrast, the Gazette's own survey earlier this year suggested that nine out of ten firms wanted to be out of the system within five years, and Law Society research showed that around the same percentage of trainees are not interested in legal aid work - again, mainly owing to low pay.

Richard Miller, director of the Legal Aid Practitioners Group (LAPG), puts the disparity partly down to the 40% - or 120 firms - from the sample taking on a much higher than average proportion of their income from legal aid.

This could mean they have little choice in the matter.

'We would seriously question whether this is indicative of the vast majority of legal aid practitioners, who are demonstrating by their actions that they cannot or will not increase the amount of legal aid they do at current rates,' he says.

Indeed, the report admits that those firms with the highest potential capacity to accept more publicly funded cases are 'the least likely to be willing to take on more work'.

Solicitors are also questioning the focus of other areas of the report.

The figures for those firms willing to stick with legal aid rose to 55% in the north and 44% in London, it says.

It does not put the same emphasis on the finding that 60% of firms overall gave legal aid a thumbs down, a figure that soared to 72% in the south.

The reasons firms gave for not taking on more legal aid work - and the researchers provided only three specific options - were that they were 'not interested', lacked staff, or lacked physical capacity.

Lack of profitability was not commonly quoted, the researchers said.

However, Mr Miller argues that all three were still likely to be tied to the remuneration issue.

'Not interested' could easily cover this, while lack of staff or physical capacity would not be a problem if the rates were sufficient to recruit suitable staff and expand capacity, he insists.

The report also does not address how clients in one region where there is a shortage of advice could benefit from any excess of supply in other regions.

Neither did it examine supply in relation to different categories of law.

Solicitors are wary of the report not just because of the impact on rates of pay, but because it recommends competitive tendering as the way forward.

'This could involve competition for individual cases, sets of cases or for contracts,' it says, adding that a change in incentives could lead to reduced costs and subsequently lower prices for firms' services.

This finding was not popular with practice managers at a legal aid forum held by the Law Society's Law Management Section last week.

Sara Murray, manager at Bootle firm James Murray and LAPG vice-chairwoman, questioned why firms should be subjected to tendering just because they were making a profit.

The LAPG also points out that former LSC chief executive Steve Orchard had always argued that the LSC's systems were inadequate to ensure that quality would be maintained within a system of price competition.

'The onus is on the LSC to prove that Steve's reservations have now been overcome,' says Mr Miller.

Competitive tendering is also unpopular with legal aid lawyers owing to concerns about what will happen if firms lose out in the first bidding round.

They are unlikely to stick with legal aid on the off-chance that they might get something from a second round.

The LAPG and the Law Society have concerns about both firms and individual lawyers sticking with it in the long term.

'The government must undertake long-term strategic planning so there is an adequate number of solicitors to fill legal aid advice gaps both now and in the future,' warns Law Society chief executive Janet Paraskeva in response to the report.

'The government must act now so that there is not a deepening crisis and recruitment problems in health and education are not replicated.'

The research was unveiled prior to the government announcing a fundamental legal aid review, expected any day now.

It is likely that Frontier's report will have a strong influence on the outcome of that review, especially as the LSC stuck by its findings on remuneration and purchasing services this week.

'It is clear from the report that, even at current remuneration rates, 40% of the firms surveyed are willing to undertake more legal aid work,' a spokesman told the Gazette.

'There is also some evidence, at aggregate level, of over-supply in some regions.'

However, there may be some hope for practitioners in terms of more money, he adds.

'[The 40% finding] in itself does not preclude the need for targeted remuneration increases in particular geographical areas or categories of law that could help to deal with problem areas.

Indeed, [legal aid minister] David Lammy's recent announcement of new funding for housing emphasises this point.'

Practitioners are now hoping that this is an indication that the government and the LSC will pay at least equal heed to other research that presents a more worrying - and realistic, they argue - indication of how the future of legal aid will unfold if their concerns are not addressed.