The radical reshaping of the criminal legal aid market got under way last week, as a major high street player broke cover with a private equity-backed multiple contract push.
Southern firm McMillan Williams Solicitors, which is currently recruiting criminal solicitors, said it would submit ‘a substantial’ number of tenders for the 2015 duty provider crime contracts.
Meanwhile, smaller firms revealed either that they are declining to bid or that they face extinction if they fail to win contracts.
McMillan Williams said that it was confident that its scale would make the new contracts profitable.
Chief executive Colum Smith (pictured) told the Gazette: ‘The amount of money you will make under a contract is not huge, but if you have got enough contracts it is commercially worthwhile doing them… The reason why most people cannot take that option is you must have the capital to fund that.’
Earlier this year, private equity investor Business Growth Fund bought a 26% stake in McMillan Williams, which derives around a quarter of its income from legal aid work.
Smith said the funding had put the firm ‘in a position where we are able to put in a very good bid… Fundamentally, it’s about scale’.
However, Zoe Gascoyne, a partner at Liverpool firm Quinn Melville, said she knew many firms which have ruled out bidding as they think it would be ‘financial suicide’.
Gascoyne, who is chair of the criminal practice sub-committee at Liverpool Law Society, said: ‘The cost of trying to put forward a sustainable model upon which to base the bid plus the costs of the tender itself in terms of instructing accountants… play a significant part in this.’
Meanwhile, Julian Young, senior partner of London firm Julian Young & Co Solicitors, which closed at the end of March, said the firm would have been far too small to bid for the new contracts.
New entities bidding for criminal legal aid contracts should apply for authorisation sooner rather than later, the Solicitors Regulation Authority said today.
The regulator has organised a series of events for practitioners and firms going through the authorisation process. The events will be relevant to any business or business model involving any structure or combination of lawyers or other authorised persons, or non-lawyer owners and managers.
An SRA webinar on authorisation will be held on 27 April, as well as a seminar in Birmingham on 21 April and in London on 23 April.
For further information about firm-based authorisation see: www.sra.org.uk/solicitors/firm-based-authorisation.page.