The London Development Agency (LDA) faces a probe over the amount it has paid to law firms for advice on the Olympic Park project, the Gazette has learned.

The London Assembly will launch an inquiry into law firm spending by the LDA’s in-house legal team after the LDA last week admitted to a £160m overall budget overrun on the Olympic Park project. The Olympic Park, currently under development in east London, will be the venue for the 2012 Olympic Games.

The probe will ask ‘questions surrounding the extent to which the LDA’s legal team depended on consultancy advice’ from its panel of law firms, and will ask the LDA for a breakdown of legal fees paid to each firm, according to a spokesman from the office of Len Duvall, London Assembly member for Greenwich and Lewisham. The spokesman said that written questions will be submitted on the matter ahead of October’s Mayor’s Question Time.

A report prepared for an LDA board meeting last week noted that the LDA’s in-house legal resources had to be ‘enhanced’ over the last year ‘to provide more consistent input to commercial matters with greater control over the use of external firms.’

Last week, the London Assembly’s economic development, culture, sport and tourism committee grilled LDA chiefs on the budget overrun. Committee chair Dee Doocey AM said after questioning: ‘What we heard today amounts to nothing less than breathtaking incompetence [by the LDA].’ The overrun means that £45m of funding will be cut from other LDA programmes.

The overrun occurred because the LDA did not properly forecast the costs associated with land acquisition. Accountants KPMG uncovered the full extent of the overrun after they were brought in to investigate. The LDA declined to comment.

The LDA’s current law firm panel comprises: Ashfords; Burges Salmon; DLA Piper; Eversheds; Herbert Smith; Lovells; Shepherd & Wedderburn; and Stephenson Harwood. Its previous panel comprised Berwin Leighton Paisner; Bevan Brittan; Bircham Dyson Bell; DLA Piper; DMH Stallard; Eversheds; Field Fisher Waterhouse; Hammonds; Lawrence Graham; Martineau Johnson; Mills & Reeve; Nabarro; Norton Rose; Pinsent Masons; Shoosmiths; Stephenson Harwood; Trowers & Hamlins and Wragge & Co.