LSC breached procurement rules on legal aid tenders, says judge

The Legal Services Commission breached the Public Contract Regulations 2006 during its tenders for public law and high security mental health hospitals work but will not have to re-run the exercise, a High Court judge has ruled.

Two law firms, Public Interest Lawyers and RMNJ, had brought the challenge, backed by ten other practices.

Mr Justice Cranston ruled that:

• The verification carried out by the LSC to check the quality standards of those firms awarded contracts was flawed. “In particular the process has not allowed the Legal Services Commission to verify that firms meet these criteria in relation to the employment of appropriate supervisors set out in the 2010 Standard Civil contract,” which offends against the principle of equal treatment under the 2006 Regulations
• It was appropriate – to ensure that unfairness caused to successful tenderers who do meet the relevant criteria is remedied – for the LSC to ensure that, within a limited period, all firms holding contracts in public law and mental health comply with the supervisions standards. “Those that found not to comply must have their contract removed. Any new matters starts need to be redistributed pro rata to those firms who do meet the verification requirements”
• There could be no challenge under the general disability equality duty to the process of awarding the contracts for legal advice for mental health patients in high security hospitals, but that duty was engaged because of the outcome of the process. The fact that many patients may need to switch advisers as a result of the tender may “have an adverse impact on those already vulnerable”. Under s. 49A of the Disability Discrimination Act 1995, the LSC must have due regard to whether they need to take steps to ameliorate that result of the contracting exercise
• There was no legal flaw in the way the LSC conducted the tender for the award of public law contracts – there was no breach of its duty under section 4 of the Access to Justice Act 1999. Those specialist public law firms that are no longer able to open the advice cases they did under the 2007 Standard Civil contract, are not precluded from undertaking under certificate publicly funded litigation “which they have done in the past, and which has been such a notable feature of the work of this court”.

A Legal Services Commission spokesman highlighted the fact that the challenges had failed to overturn any of the LSC’s tender decisions.  

He added: “The judge found that the LSC’s tender process did not breach the Disability Discrimination Act, and his judgment confirms that we met our legal obligations under the Access to Justice Act.  We are pleased that the uncertainty caused by this litigation has ended.   

“However, we accept the court’s criticism of the verification process for our supervisor standards in public law and mental health.  We are currently reviewing what additional verification needs to be undertaken as a result and will publish details on our website in due course.”

Saimo Chahal, partner at Bindmans, claimed the judicial reviews had highlighted “once again” the shortcomings in the LSC’s tender processes.

She said: “These two firms with 10 firms standing behind them had always made clear that they were concerned with the impact of the tendering processes on their vulnerable clients and that they were litigating in the public interest. This was accepted by the Court when it granted a protective costs order to the claimants – the first PCO involving law firms in this type of situation. The court observed that these firms were not motivated by commercial interests but were litigating on issues of significant public interest.

“I hope that the LSC will now see sense and agree the steps which have to be taken in order to rectify the flaws highlighted in the tendering processes. If the LSC does not agree to rectify the flaws, then we will be seeking appropriate orders on 21 December."