Solicitors have been overpaid nearly £25m for legal aid work, public spending watchdog the National Audit Office (NAO) reported today.

The NAO said solicitors overclaimed for legal aid work to the tune of £18.3m in 2008-09, while £6.4m was erroneously paid to solicitors who provided legal aid to claimants without evidence that they were eligible to receive it. Chancery Lane immediately took issue with the findings in a lengthy statement.

The overpayments emerged during the NAO’s annual audit of the Legal Services Commission’s accounts, which were qualified by the auditor in consequence. The NAO said that the biggest errors were made in relation to solicitors working on family and immigration matters, where 25% of claims were incorrect. The NAO said that, in many cases, the errors resulted from solicitors claiming against an incorrect category of work or for an incorrect level of work carried out.

Amyas Morse, head of the NAO, said that the LSC should impose sanctions on solicitors found to be making incorrect claims.

Edward Leigh MP, chairman of the Commons public accounts committee, said there was something ‘particularly unsettling’ about the overpayments. ‘This is a profession famed for its skill in mastering the finer details of an issue, and for a forensic understanding of what action is permitted and what is not,’ he said. ‘We expect to see solicitors subjecting their own claims to a similar level of scrutiny.’

Leigh said that the committee would expect solicitors to be more careful when making claims, and the LSC to develop better controls and be ‘less shy’ in imposing sanctions on solicitors who make incorrect claims.

Morse said: ‘A significant sum of taxpayers’ money is being paid to solicitors in error. The Legal Services Commission needs to build on its existing efforts to tighten its controls on payments to solicitors and on how it monitors the eligibility of cases supported by legal aid.’

The LSC said that the complexity of the fee regime, limited controls to validate the accuracy of the submitted claims, and the quality of the commission’s post-payment internal assurance processes all contributed to the errors.

Commenting, Richard Miller, Law Society legal aid manager, said: ‘It is unfortunate that the Comptroller and Auditor General did not talk to the Society about his findings. Our experience is that people without knowledge of the system who try to audit files do not fully understand the work done by lawyers or the system under which they operate.

'We would have liked to be able to assure ourselves that the Comptroller's calculations are based on a correct understanding of what was found on the files analysed.

‘It is possible that some solicitors have been claiming against an incorrect category of work or for an incorrect level of work carried out – however these are genuine errors due to the frequent changes the LSC has made to the system over the past few years; confusing and contradictory guidance; and a lack of clear answers from the LSC – indeed, in some cases the LSC does not even know which category a claim should be in. The complexities of the scheme are what need to be looked at urgently, not the solicitors using it.’

For example - in Family:

44 Claim codes; extremely difficult to know which to use;The claim codes are relatively new, and the LSC has no clear guidance on how to apply them; so firms are submitting claims in good faith but are findingthey have made errors through no fault of their own;The rules and guidance as to which category to claim in are hopelessly unclear. The codes are complex and it is inevitable that incorrect codes will be used.Disagreement within the LSC itself regarding certain claims; Difference between Level 1 & 2 especially difficult; Guidance is vague and unclear;Guidance is mostly in the negative - it only says what can’t be claimed; not what can be claimed.

He added: ‘We would dispute any implication that solicitors are deliberately overclaiming. Moreover, the extent of any such overpayment is dwarfed by the level of work in progress firms are prevented from billing. Solicitors firms cannot bill work until the end of the case – so they are required by the rules to carry tens of millions of pounds of work in progress – hardly any other government contractor works to such unfavourable terms.’