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Legal aid u-turn: Gove scraps two-tier contract regime

More than two years after the government announced a wave of cuts to legal aid contracts, followed by continued calls by solicitors for their abolition, today (28 January) the Lord Chancellor Michael Gove (pictured) has made a surprise decision to scrap the radical two-tier contract regime.

The Ministry of Justice (MoJ), under the previous Lord Chancellor Chris Grayling, had planned a drastic reduction – from 1,600 to 527 – in the number of contracts for duty solicitors attending magistrates’ courts and providing 24-hour cover at police stations. The plans also included fee reductions of 17.5% in two stages.

Today, the justice secretary has said that ‘thanks to economies I have made elsewhere in my department’, HM Treasury has given a settlement which ‘allows me greater flexibility in the allocation of funds for legal aid.’

To explain the decision to scrap the regime, Gove also pointed to the recent legal action mounted against the Legal Aid Agency, an executive agency of the Ministry of Justice, in November, when 99 unsuccessful firms vying for contracts in the reduced round filed a legal challenge at the High Court to prevent execution of the contracts. Critics levied accusations that the government’s procurement process was flawed.

A judicial review challenging the process was scheduled for April this year.

Gove said: ‘It has become clear, following legal challenges mounted against our procurement process, that there are real problems in pressing ahead as initially proposed.’

‘Given how delicately balanced the arguments have always been, how important it is to ensure we maintain choice and quality in the provision of legal services, how supportive Treasury has been of our broader reform agenda and how important it is to provide as much certainty as possible in the face of legal challenge, I have decided not to go ahead with the introduction of the dual contracting system.’

Gove has also decided to suspend for one year from April the second fee cut introduced in July last year. As a consequence he said the new fee structure linked to the new contracts will not be introduced, and added: ‘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.’

Now, the Legal Aid Agency will extend current contracts to ‘ensure continuing service until replacement contracts come into force later this year.’ Gove aims to review progress on joint work with the profession to improve efficiency and quality at the beginning of 2017, before returning to any decisions on the second fee reduction and market consolidation before April 2017.

‘By not pressing ahead with dual contracting, and suspending the fee cut, at this stage we will, I hope, make it easier in all circumstances for litigators to instruct the best advocates, enhancing the quality of representation in our courts,’ Gove said.

Law Society president Jonathan Smithers said: ‘The Law Society is pleased that the Lord Chancellor has listened and recognised that the current situation is untenable. It is clear that a competitive approach to the provision of criminal legal aid services is not appropriate.’

‘Suspending the second 8.75% fee cut for a further twelve months will provide some assurance to solicitors and will help support the viability of criminal legal aid services across England and Wales. We have constantly said that we fear the profession will be unable to cope with significant fee reductions and are therefore relieved that the Lord Chancellor has listened to our concerns.’

Bar Council chair Chantal-Aimée Doerries QC added: ‘The Bar Council has always opposed the two-tier scheme. We have consistently asked the Ministry of Justice and the Legal Aid Agency to re-consider their plans. Today’s decision to scrap the scheme is the right one. It shows that the Lord Chancellor has listened to the legal profession’s concerns about access to justice and is acting upon them.’

For more on legal aid, see ‘Striking out – a desperate profession and the politics of legal aid’.