Firms that incurred losses after the High Court quashed the Legal Services Commission’s family tender last year will not receive compensation from the LSC, the Law Society announced today.

Chancery Lane said it had been trying to negotiate a settlement arrangement with the LSC since last October, and it was disappointed that the Commission was unwilling to agree a structured compensation package.

Following the procurement exercise that it ran last summer, the LSC awarded new family law contracts to just 1,300 firms, compared to 2,400 previous providers. This tender exercise was then quashed by the High Court after the Law Society challenged its lawfulness last autumn.

Some firms that had secured contracts in the tender had incurred expenses to fulfil the terms of their new contracts, recruiting staff or signing leases for new offices, which were no longer needed when the contracts were quashed.

Law Society president Linda Lee said: ‘Affected firms across the UK have expressed concern about the financial loss they have suffered as a consequence.’

‘Since October the Law Society has been trying to negotiate a settlement arrangement with the LSC on behalf of all firms, but sadly those negotiations have failed,’ said Lee.

She said that although the LSC continues to deny liability for the losses, some firms have contacted the LSC and entered into discussions about compensation.

‘It is possible that some firms have reached an accommodation with the LSC, and affected firms should urgently consider their position,’ she said.

Legal Services Commission chief executive, Carolyn Downs, said: 'We have been in discussions about this issue with the Law Society since Autumn last year.

'We finalised our discussions and communications with them on 3 February this year. We have already responded to any specific claims we have received.'