Delay in legal aid causing cash flow problems for solicitors

Thu, 20 May 2010

Delays in the payments to solicitors of their legal aid fees by the Legal Services Commission (LSC) are bringing major cash flow problems for solicitors, Law Society chief executive Desmond Hudson has warned. The delays are blamed on staff cuts made at the LSC and the fact that bills are facing closer scrutiny.

The hold up may force solicitors that are affected to extend their overdrafts until the problems have been resolved, and Hudson has written to the main clearing banks to alert them to the issue.

The LSC, which is run by the Ministry of Justice, have admitted that payments could take double the normal time to be settled, making the waiting time two months rather than the usual four weeks. The Law Society finds this situation unacceptable, and want payments to start feeding through soon, if there are no further delays. The Law Society has also established an intelligence-sharing protocol with the banks, which they hope will act as an early warning system.

Hudson pointed out that "Many legal aid firms are already operating on a shoestring and a cash flow problem caused by inefficiencies at the LSC is the last hindrance they need. Through our channel of communication with the banks the Society hopes to obtain some much-needed breathing space for the firms affected."
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