LEGAL aid lawyers who are fighting this week for a better pay deal will point to the collapse of Deacon Goldrein Green to bolster their case.
The 18-office Liverpool practice was seen as one of Lord Mackay's flagship firms but fell victim to the biggest ever law firm receivership.
Law Society negotiators who are due to meet officials from the Lord Chancellor's Department are certain to draw attention to the firm's plight which follows this year's pay freeze for legal aid lawyers.
Keith Park, senior partner of J Keith Park & Co which has taken over Deacon's headquarters and five branch offices, says the collapse reflects the increasing pressures placed on solicitors carrying out legal aid work.
"Firms such as Deacons, who have opened numerous offices to be accessible to the public, have been driven more and more into the clutches of the banks to finance their practices.
"It is perhaps significant that it was the legal aid system that effectively closed down Deacons. What an irony, when Deacons was a flagship for franchising."
Tony Edwards, senior partner of u2 million turnover legal aid firm TV Edwards, says: "What Deacons shows is that we are not just making it up.
"Legal aid firms are desperately short of money to invest in business. Low profit margins mean there is a major problem in providing good quality legal aid services," he says.
He says legal aid lawyers do not have the capital to buy the technology to improve their standards.
Pay talks will focus on the need to bring forward civil legal aid payments in order to improve cash-flow, says the society's head of professional policy Russell Wallman.
The Liverpool firm operated along hub-and-spoke lines with a centralised litigation department.
"The Lord Chancellor's officials seem to have regarded firms like Deacons as one example of how legal aid firms could be run professionally in the future. What has happened must undermine that," says Wallman.
Lyn Devonald, chair of the Legal Aid Practitioners group, says there is tension between running large, specialist legal aid firms and a payment system which forces firms to run up sky-high overdrafts.