A High Court showdown between the lord chancellor and the director of Blavo & Co over £22m in legal aid payments made to the firm, which was shut down by the Solicitors Regulation Authority in 2015, has reached the final stages.

For John Blavo, Robert Bourne of Three Stone reminded Mr Justice Pepperall in his closing submission that the claim being heard was not one of fraud. Addressing similarities between two of the firm's mental health patient files, Bourne said there had been no opportunity for Blavo or attempt by the lord chancellor to contact the fee-earner for those two files 'and to say what, if any, explanation can be given for it'.

Bourne said there were a number of possible explanations for the similarities: 'Explanations include [that] this is a fee-earner who decided of her own motion to try to boost her billing. That's a low-level fraud on the firm. It's a significant fraud but not a systemic fraud. Another alternative is... they're drafts of the same matter which have been inadvertently billed either by the fee-earner or by someone in central billing who has submitted the files. We also cannot rule out the possibility... that the condition of the client has fed into this.

'I'm putting forward hypotheses. But it's not my role to put forward answers. My primary submission is your lordship should not reach any conclusion about these files at all because there's simply not the material for your lordship to do that. There has not been an opportunity to deal with this.'

Bourne pointed out that John Blavo could not deal with the files because he was not the fee-earner for those cases nor the supervising partner: 'He would have no relevant evidence to give about it. Indeed, it's not clear who would have the relevant evidence to give about it except the fee-earner. It would have required a good deal of warning...for the matter to be investigated properly.'

Bourne said it was his decision not to call John Blavo to give evidence: 'But what's the nature of this case? The nature of this case is a claim on a guarantee which Mr Blavo accepts he executed of a liability said to arise either under the business of assessments or because of loss of damage occasioned by the first defendant [Blavo & Co]. Mr Blavo has no evidence to give, save to say he does not know anything about it. In so far as submissions can be made about the validity of the guarantee, of the assessment whether or not there's been a repudiatory breach, all of these are matters that can be dealt with either on the documents or by submissions.'

Bourne said the files that the Legal Aid Agency demanded to see after commencing its investigation into the firm's mental health claims 'is not a completely accurate list of divergence between claims and hearings'.

The agency's investigation, which the firm was notified of on 10 August 2015, started from 'a point of extreme suspicion'. The LAA did not recognise the burden placed on the firm to validate 23,173 files. The firm was burgled on 29 August 2015 but there seemed to be no sympathy from the agency. The decision to terminate all of the firm's legal aid contracts on 30 September was a repudiatory breach. Bourne said the suggestion that it would have been 'practicable' for Blavo or someone else to produce files after the SRA intervened into the firm in October 'is outlandish'.

Rachel Sleeman, for the lord chancellor, began her closing submissions by telling Pepperall that this was a claim in contract, not a claim in fraud: 'That's not to say matters which may or may not amount to fraud cannot support the contractual claim if judged through that prism.'

Sleeman pointed out that, on one of the two patient files that were similar, the client care letter stated that John Blavo was responsible for supervising the fee-earner: 'This is a person who could have given evidence which may have been material but yet he chose not to.' The 'near identical' patient files, Sleeman said, 'goes to the nature of [John Blavo's] credibility. It also goes to the nature of [Blavo & Co's] practice'.

Sleeman highlighted 'a number of issues' with some of the firm's patient files. In one file, there was no record of the client being a patient. In another, the pronouns in the file mixed between 'he' and 'she'. The judge who was said to be at the hearing was sitting elsewhere. Another tribunal member was not a judicial officer holder until the following year.

Sleeman said only 83 files had been provided 'that substantiate the claims made on the [LAA online portal] in their entirety'.

On whether the agency's request for files was reasonable, Sleeman highlighted the standard terms of the legal aid contract, which states that firms may, from time to time, provide the agency with files, which must be done 'promptly'. She added that if a firm had an IT system complying with the agency's contractual provisions, 'it means that [Blavo & Co] had a list of files in storage and there would have been a system in place that would have enabled them to locate them and know what those particular files were'.

Sleeman said nothing was suggested by the firm which suggested that the agency's request was unreasonable or unachievable.

Recalling evidence given by solicitor Lee-Ann Jennine Frampton-Anderson, who was responsible for leading the mental health work at the firm's St Albans office, Sleeman reminded Pepperall that Frampton-Anderson knew nothing about the investigation, thinking she had been asked to search for files for an audit. Sleeman said: 'She found out what was going on when she received a pre-warning letter [from the Solicitors Regulation Authority] because she was a director of the company, but she was kept completely in the dark about what was going on.'

Sleeman told Pepperall that John Blavo was on holiday at the time of the burglary: 'One would have expected a solicitor... to have made every effort to produce the files to show what [the LAA] said must be wrong.' Although two hard drives were taken, Sleeman told the court that the firm was contractually obliged to have a contingency plan in place, with daily back-ups. She said correspondence in the immediate days suggested the burglary did not affect the firm's ability to deliver files.

The hearing continues.