The Legal Services Commission (LSC), which controls the £2 billion a year legal aid scheme, is now demanding hundreds of thousands of pounds from solicitors that relate to legal aid allegedly paid to them to fund cases that were never reimbursed when the cases were won.
The action taken by the LSC has angered both solicitors and the Law Society of England and Wales and at least one firm is set to issue legal proceedings against the LSC.
The LSC's case is that money is owed due to firms failing to submit final bills at the end of case, where legal aid funds are then meant to be returned from the client's damages.
Law firms are arguing that it is unrealistic to expect solicitors to produce bills dating back years in cases where files are now destroyed especially when solicitors are only obliged to keep files for 6 years. Law firms are also arguing that if money was owed, then the LSC or its predecessor, the Legal Aid Board, should have pursued these funds at the time.
The LSC is claiming repayments dating back as far as 30 years ago and the Law Society have concerns that its members are being penalised by the LSC's failure to reclaim money in a timely way and that in the absence of the files solicitors are unable to challenge the claims.
The Law Society president, Kevin Martin, has stated that solicitors should not lose out if they can prove that they had adequate accounting procedures in place that would have ensured cases were not closed with any money outstanding. Mr. Martin also acknowledged that the LSC has responsibility to retrieve money paid on account when no final bill has been submitted and stated that the commission should not reduce payments if law firms could show that they had proper billing procedures.
At present it is unknown how many demands have been made but at least 12 firms have contacted the Law Society to make complaints.