The Government Legal Service has expressed confidence that internal reforms will help fend off competition from private practice firms to provide legal services to government departments.

The recently released corporate plan for the Treasury Solicitor - covering 2003 to 2006 and the first of its kind - said that reduced levels of spending settlements in 2002 'could lead client departments to look critically at their demand for legal services', while market testing by clients 'could lead to a loss of business'.

However, the agency expressed confidence that its client care and modernisation programme would improve service to clients and 'reduce the risk of losing any business'.

It also suggested that 'in many areas, private sector lawyers are unlikely to be cheaper'.

The agency has 509 staff in its main litigation and advisory divisions (a 78% rise since it was established in 1996) and brings in 21 million from litigation work and 7.6 million from advisory work.

It is required to recover the cost of its chargeable services in full from clients.