Lawyers reacted with a combination of elation and relief last week when Michael Gove pulled the plug on the new criminal legal aid contracting regime.

In a ministerial statement last Thursday, the lord chancellor put an end to a week of speculation by saying he had decided ‘not to go ahead with the introduction of the dual contracting system’.

He will also suspend, for 12 months from 1 April, a second 8.75% cut in fees which was introduced in July last year.

Law Society president Jonathan Smithers (pictured) said Chancery Lane was pleased that Gove had listened and recognised that the current situation was ‘untenable’. He said: ‘It is clear that a competitive approach to the provision of criminal legal aid services is not appropriate. The assurance that there will be no competitive tendering in the future gives practitioners greater certainty.’

Smithers added that suspending the second fee cut for litigators for a further 12 months ‘will provide some assurance to solicitors and help support the viability of criminal legal aid services across England and Wales’.

Gove said that his decision followed two ‘significant’ developments since last July. First, as a result of economies elsewhere in his department, HM Treasury had given a settlement ‘which allows me greater flexibility in the allocation of funds for legal aid’.

Second, following challenges mounted against the government’s procurement process, Gove said it ‘has become clear’ that ‘there are real problems in pressing ahead as proposed’.

A judicial review sought by the Fair Crime Contracts Alliance of the government’s procurement process was due to open on 7 April. A hearing into more than 100 individual procurement law challenges, sought in accordance with part 7 of the Civil Procedure Rules, was to begin on 3 May.

Gove said: ‘My decision is driven in part by the recognition that the litigation will be time-consuming and costly for all parties, whatever the outcome. I do not want my department and the legal aid market to face months, if not years, of continuing uncertainty and expensive litigation while it is heard.’

As the print Gazette went to press, parties in the litigation were expected to liaise to agree orders disposing of the proceedings. This will inevitably involve the consideration of costs.

Some firms have spent thousands of pounds preparing for the new contracts. The Legal Aid Agency’s Information for Applicants document stated that the agency has the right ‘not to proceed to award contracts at any time at its absolute discretion’.

However, some successful bidders plan to seek compensation. One firm spent in the region of £30,000 preparing for the new contracts.