LSC’s legal aid overhaul in turmoil after court of appeal decision

The Legal Services Commission takes a blow as the court of appeal supporting the Law Society’s view that the unified contract for civil legal aid breached EU law.

The Legal Services Commission (LSC) was dealt a blow today (29 November) with the court of appeal supporting the Law Society’s view that the unified contract for civil legal aid breached EU law.

The ruling throws a spanner in the works for the LSC’s current overhaul of the £2bn legal aid system.

The LSC sought to broaden its powers through revamping the contract that exists between the commission and legal aid solicitors, leaving solicitors answerable directly to the commission. The Law Society was opposed to this because it felt it would put solicitors’ capital at risk while reducing their control over the contract.

The Law Society first raised the issue in March when president Andrew Holroyd told Lord Chancellor Charlie Falconer that the proposals were in breach of European law and public contract regulations.

At a High Court hearing in July Mr Justice Beatson ruled in favour of the Law Society, holding that key elements of the Government’s reform programme breached European law (, 21 September).

The court of appeal has upheld the ruling and quashed the LSC’s hopes of taking an appeal to the House of Lords.

Law Society chief executive Des Hudson accused the Legal Services Commission of wasting public money by launching the appeal. He said the Law Society would seek to recover costs, which could run to hundreds of thousands of pounds.

In a statement the LSC said the ruling would only affect how changes to legal aid can be introduced under existing contracts.

It said: “We had already anticipated this outcome and it does not alter the fact that the legal aid reform programme is going ahead and remains on track to achieve its goal.”

Hudson countered: “If the LSC had anticipated this outcome why use public money to fund the case? I am surprised that within a few hours of hearing the judgment it has the confidence to determine what it means. It is a lengthy judgment.”

Hudson said the LSC had refused to negotiate on the Government reforms for legal aid and had closed ranks. “Let’s be clear about this, the LSC is saying to solicitors that they have to risk their own capital with a contract which gave unilateral power to the LSC,” he said.

The row is expected to continue as the LSC ploughs forward with its reform programme despite the Law Society calling for a rethink.

John Howell QC of Blackstone Chambers and Bircham Dyson Bell partner Peter Jacobsen acted for The Law Society, who were also advising Reading firm Dexter Montague & Partners. The Reading firm was suing the LSC at the same time, claiming damages. Liability has been found in their favour and an assessment of damages will now be made.

Robert Jay QC of 39 Essex Street and Keating Chambers’ Paul Darling QC acted for the LSC.