The National Audit Office (NAO) estimates that legal aid solicitors have been overpaid by almost £25 million, in response the Legal Services Commission (LSC) has announced it will recover some of the family work overpayment claims by December.
The NAO, as part of its annual audit of the LSC, identified an estimated total overpayment to solicitors of £24.7 million in 2008-09. Of this, £6.4 million were payments made to solicitors where legal aid had been provided to claimants where there was no evidence that they were eligible to receive it. The remaining £18.3 million of erroneous payments were made to solicitors working on cases which were eligible for legal aid, but in which solicitors over-claimed for the work they did.
The highest level of financial error was in relation to solicitors working on family and immigration claims. Within this area, the NAO's testing showed that 25 per cent of the claims examined were incorrect or unsupported.
The Legal Services Commission's Chief Executive, Carolyn Regan, said that they would be recovering over payments from family solicitors by December.
"We recognise the seriousness of the NAO report and are addressing the issues that it raises urgently. We have taken immediate steps to recover over payments made and we are aiming to recover £2m in relation to family work by December. We are also strengthening the controls in our systems and working with providers to reinforce the importance of accurate claims, eligibility assessment and record keeping. This is being implemented through an action plan with the support and engagement of the Ministry of Justice," Ms Regan said.
There are a number of factors contributing to this level of error, including the complexity of the fee regime, the limited controls to validate the accuracy of the submitted claims, and the quality of the LSC's post-payment internal assurance processes. The NAO's says that this, together with the absence of a strict sanctions regime to deter the submission of incorrect claims, creates a risk of solicitors exploiting the payment system.
Amyas Morse, head of the National Audit Office said: "A significant sum of taxpayers' money is being paid to solicitors in error. The Legal Services Commission needs to build on its existing efforts to tighten its controls on payments to solicitors and on how it monitors the eligibility of cases supported by legal aid."
However the Law Society has defended their members and says that the NAO did not consult them about their findings and that the auditors do not understand the legal aid system.
Speaking to the Law Society Gazette, Richard Miller, legal aid manager, said: "It is unfortunate that the Comptroller and Auditor General did not talk to the Society about his findings. Our experience is that people without knowledge of the system who try to audit files do not fully understand the work done by lawyers or the system under which they operate.
"We would have liked to be able to assure ourselves that the Comptroller's calculations are based on a correct understanding of what was found on the files analysed.
"It is possible that some solicitors have been claiming against an incorrect category of work or for an incorrect level of work carried out - however these are genuine errors due to the frequent changes the LSC has made to the system over the past few years; confusing and contradictory guidance; and a lack of clear answers from the LSC - indeed, in some cases the LSC does not even know which category a claim should be in. The complexities of the scheme are what need to be looked at urgently, not the solicitors using it."
Solicitors are angry that the NAO is focussing its attention on the fees of solicitors rather than experts who have long been criticised for overcharging for their services.
Managing Partner of Atkins Hope Solicitors, Charlotte Collier, said: "Whilst it is important to scrutinise how public money is spent, the NAO would have been well employed looking at how the LSC spend it's money on the fees of experts.
"The LSC has no system in place to even know how much they are spending and no real method of establishing if the fees charged are reasonable, no internal audit system, no agreed quality standards to name but a few of the glaring issues which the laissez faire approach of the LSC has allowed to develop. Experts quote their rate and it gets paid.
"Whilst the current Project Board on the Commissioning of Expert Evidence is a start, the massive spend on experts has been known about by practitioners for years but the LSC has only recently started to grapple with the issue and even relatively recently was pretending that it was not a particular problem!"
To read the Law Society's chief executive Desmond Hudson's response letter to the National Audit Office, click here.