Liverpool City Council has accused a local firm of conniving with a landlord in a bid to maximise housing benefit claims.
The council has reported D P Hardy & Co to the Office for the Supervision of Solicitors and the Legal Aid Board, following an aborted judicial review action handled by the firm. It alleges the firm purported to be pursuing the case on behalf of a couple who were not receiving benefit, when in fact it was the landlord who was behind the action.
But the firm, which specialises in judicial review cases, denies the allegations and insists that it acted on the tenants' instructions at all times.
The firm had been granted leave for a judicial review after it claimed the local authority had failed to pay housing benefit to its clients, a Liverpool couple.
The couple had sworn affidavits stating they lived at separate addresses, but the council says the wife later claimed she had always lived with her husband but had been told by the firm to sign the affidavit anyway.
Proceedings against the council were later withdrawn.
Council lawyer David Leivesley said: "The couple confirmed they were having problems with their landlord and that they had not instructed Hardys to seek a judicial review.
"They felt that Hardys were acting on behalf of their landlord in order for the landlord to maximise housing benefit."
David Walmsley, managing clerk at Hardys, said: "At all times we acted upon the instructions of the tenants. We did not even know who the landlord was.
"These accusations being made against us are totally wrong. Liverpool City Council is bitter because we issue hundreds of successful applications for judicial review against it every year."
Both the OSS and the LAB would not comment on the case, although the OSS confirmed it had received a letter of complaint from the council about Hardys.