Legal firms `charging for work not done' 80 law firms investigated over legal aid

Solicitors and defendants are probably defrauding taxpayers of millions of pounds of legal aid every year, says the National Audit Office in a report released today.

According to the auditors, more than 80 law firms were under investigation by the Legal Aid Board in the middle of last year, and cases have been handed to the police and Serious Fraud Office. Payment of legal aid has been suspended to 15 firms following investigations.

The amount of annual fraud is not quantified, but the report cites a 1991 study which suggests that solicitors were taking £6.4m a year illegally.

The Audit Office accuses some solicitors of charging the taxpayer for work not carried out, or charging at solicitors' rates for work carried out by office juniors or secretaries. It speaks of "aggressive marketing" of the legal aid scheme, "raising doubts as to whether legal advice had actually been given or had been given by unqualified and unsupervised personnel", the auditors say.

Once a "green form" is approved, solicitors are reimbursed open-endedly for all work on a case until it is concluded. The auditors say: "There are grounds for suspecting that the leafleting of the green form scheme has led to clients being asked to sign a number of green forms but receiving advice on one matter only."

The Audit Office suspects fraudulent signatures and dates on some green forms. "Firms are suspected of exaggerating the time worked and claimed on the green form scheme." Despite repeated attempts over almost a decade to tighten up green form legal aid, £142m, or 12 per cent of the total legal aid budget last year, applications are still not properly checked before payment, the Audit Office warns.

Russell Wallman, head of professional policy for the solicitors professional body, the Law Society, said yesterday most of the 80 firms investigated were not for fraud, but for contested applications of the rules. Most of the amounts of money were very small, and only three solicitors were convicted of legal aid fraud in 1994.

Legal aid entitlement has been progressively restricted by the Government since 1979 so that now only those on very low incomes can qualify. Yet despite tougher guidelines introduced in 1993 after criticism from the Audit Office, more than one-third of applicants for legal aid are still not providing documentary evidence of earnings, and only 6 per cent of other items, such as benefit or housing costs, are supported by documents.

The Legal Aid Board has responded to the criticisms by introducing a more stringent application form. They are also trying to increase the number of solicitors' firms given a franchise, effectively a quality seal of approval to be paid for legal aid work carried out, and who will continue using the old forms. At the moment, a fifth of legal aid goes to franchised firms.

In addition, the board is to put all green form bills on a new computer, so its managers can check the patterns of claiming and levels of earnings of individual firms.