LSC overpaid legal aid providers by £77 million

The National Audit Office has revealed that the Legal Services Commission overpaid legal aid providers by almost £77 million in 2009-10.

The NAO, as part of its annual audit of the Legal Services Commission, identified an estimated total overpayment to legal aid providers of £76.5 million in 2009-10; this is up from an estimated £24.7 million in 2008-09.

Of the estimated total error, £32.9 million were payments made to legal aid providers where legal aid had been provided to claimants whose eligibility could not be demonstrated. The remaining £43.6 million of erroneous payments were made to legal aid providers working on cases which were eligible for legal aid, but where legal aid providers over-claimed for the work they did.

In addition, an estimated £2.1 million was erroneously charged by the Commission to clients. The Commission will use the results of the audit to recover money from or make repayments to specific clients or legal aid providers where possible.

The highest level of error was in relation to legal aid providers working on Family and Immigration claims. Within this area, the NAO's testing showed that 35 per cent of the claims examined were incorrect or not fully supported. For many cases, the error resulted from an incorrect claim by the solicitor regarding the level of fee, which reflects the number of face-to-face meetings held with the client.

Amyas Morse, head of the National Audit Office, said today: "In an environment of much tighter resources and significant staff reductions, although disappointing, it is not surprising that many of the problems I identified in my previous report have continued this year.

"However, there needs to be a sustained focus at senior levels within the organization in order to deliver its Financial Stewardship Plan, as well as the cultural changes necessary to support effective financial management across the Commission's activities."

Practitioners can expect the LSC to take swift action to recover the overpayments. Following the NAO revealing overpayments by almost £25 million in November last year, the LSC began reclaiming the amounts within a month.