Two-thirds of criminal law firms will be axed from the legal aid system within the next five years through a regime of competitive tendering, the Legal Services Commission (LSC) announced last week.

Unveiling the plans at the Criminal Law Solicitors Association (CLSA) annual conference in Coventry, LSC commissioner Tony Edwards told stunned delegates that it would target the portion of the 2,900 contracted firms operating in major conurbations - where there is a perceived oversupply - and slash the number to 'somewhere below 1,000'.

Top of the hit list will be London, where half the existing 500 firms will be culled.

Mr Edwards expects the rationalisation to be under way within 12 months.

'I would be disappointed if it was not complete within five years because I don't think the Criminal Defence Service (CDS) and the Community Legal Service (CLS) will survive otherwise,' he said.

Mr Edwards said the slimmed-down structure could see solicitors working under a plethora of models in the future; this could include extended salaried services and GP-style contracts.

He also flagged up the desire for a 'substantially simpler relationship between the commission and contracted firms'.

Much of the current complexity - and the friction around the audit process - came from the fee structure, he said.

'A radically different approach is required.

With the exception of very high-cost cases, we believe it will be beneficial to move to fee structures based overwhelmingly on fixed and standard fees.'

CDS head Richard Collins argued that the current system was 'corrosive', with firms in major cities battling for work in a 'restricted pool'.

He said the LSC would be focusing on between ten and 20 cities - including Birmingham, Manchester and Newcastle - with the fittest surviving on quality, location, audit history, and 'the price at which practices are prepared to undertake work'.

Mr Collins conceded that this amounted to competitive tendering.

He said the measures would be counterbalanced with moves to increase coverage in low-supply areas by enticing urban firms away and providing grants for rural CLS providers to branch out into crime.

The changes will not form part of the new CDS contract to be introduced in April.

Delegates predicted chaos caused by a rush of mergers to fight for limited contracts, along with firms going to the wall over scuppered business plans owing to funding withdrawal from banks and reluctance to renew office leases.

Speaking after the conference, CLSA director Rodney Warren said the plans signified an attempt by the LSC to make its own life easier by controlling contract numbers at the expense of the long-term health of criminal legal aid.

He warned that the move would result in more recruitment problems through an exodus of individual solicitors unsettled by the plans.

'I am very worried indeed,' he added.

'There is no mention of helping people to create the big law firms they are after.

How are solicitors supposed to fund them and set them up when, following this announcement, they won't even be able to get a bank loan?'

Law Society chief executive Janet Paraskeva said: 'The government must fully investigate the likely impact of the LSC's proposals before deciding the best way forward.

In doing so, they must ensure the provision of good-quality services for clients and solicitors must be given sufficient time to adapt to the new circumstances.'

See Editorial (see [2003] Gazette, 20 November, 14)

By Paula Rohan