Payment On Account: Law Society accuses commission of unfairly penalising firms

The Law Society has lashed out at the Legal Services Commission (LSC) over its practice of recouping payments on account and has accused it of 'unfairly penalising' lawyers - as a solicitor who challenged the practice urged others to follow his lead.


The row unfolded after firms complained to the Law Society that they had been asked to pay back money that had been paid on account by the LSC many years ago; in many cases firms have destroyed files and cannot provide the evidence that they do not owe money.


Law Society President Kevin Martin argued: 'Law firms usually retain paperwork for six years. Solicitors should not be penalised for mismanagement which is not their fault and the commission should not reduce current payments if law firms can show they had proper billing procedures in place.'


He added: 'The Law Society has asked the commission to justify its actions. This is an additional and significant financial burden on many legal aid firms already weighed down by bureaucracy in the system.'


Gerald Shamash, partner at London firm Steel & Shamash, launched judicial review proceedings against the LSC, which eventually settled out of court, with the commission paying the firm's costs.


He called on other firms in the same situation to follow its lead. 'They need to take a robust approach. The LSC may be the paymaster but we need to show that we will not be bullied.'


Mr Shamash also argued that the recoupment exercise had proved to be 'a disaster' on legal aid firms' morale.


The Legal Aid Practitioners Group said it agreed with the Law Society that solicitors should not be required to deal with 'stale claims' that the LSC should have pursued much more promptly. Director Richard Miller said: 'We believe that the failure to do so may amount to maladministration on the part of the commission, which solicitors can pursue through their local MP.'


The LSC said it always aimed to solve disputes amicably with firms but would forge ahead if it meant protecting taxpayers' money. However, it admitted it may have been wrong about some cases.


The commission added that when it had previously reviewed unrecouped payments on account, 25% of the cases assessed had been concluded but not reported. 'In addition, 20% of cases had been settled with the other side paying all costs, yet the solicitors had neglected to inform us,' chief executive Brian Harvey said.