Block horror!

Hostile, angry, dismayed, appalled - just some of the comments of lawyers invited to take part in a legal aid block-funding pilot project. The Legal Aid Board has invited 145 solicitors' offices to take part in a two-year research project into different ways of funding the green-form scheme, which enables low-income clients to seek advice about a case.

The board, which hopes to start the project in June, is now waiting to see whether the new Labour administration will want to continue with it, given its promise to review legal aid funding.

The board's chief executive, Steve Orchard, said it was waiting for a steer from the Government but would continue to work on the pilot contracts. "My position is if we can present the Lord Chancellor [Lord Irvine] with something worthwhile and sensible, without committing him to anything, we would be rather happier with that than if we sat around doing nothing," he said.

However, the project's development has been far from smooth.

Last month, the Law Society advised firms not to take part unless the board met their concerns, which it will raise at a meeting at the board's London headquarters this afternoon.

The prime concerns are that the costs of disbursement, such as medical and other reports, are to come out of fixed fees for cases and that the board is not offering any payment for the extra administration work firms will be required to do for the researchers. One solicitor estimated it could take half an hour per form.

Russell Wallman, the Law Society's director of policy, said: "We have held meetings over the last few weeks in the four pilot areas - Leeds, Liverpool, London and Nottingham - and the overwhelming view of those meetings, which were attended by about half of the firms invited to take part in the project, was hostile, given the present terms."

On the issue of disbursements, Mr Wallman said the society was concerned that practitioners could find themselves in a conflict of interest with their clients.

"At the moment, solicitors apply to the board to fund disbursements as they are needed. But under the pilot contracts, they will be included in the contract price. This will mean they are capped. If the money for disbursements runs out before the end of the contract, the cost of any further reports will come straight out of the solicitors' pocket."

Under the project, the law firms will be split into three groups. The first will effectively be the control group, operating basically as at present.

Group two firms will be given a fixed amount of money to provide as much advice and assistance as possible. They will be paid monthly in arrears.

Group three firms will be paid a fixed amount of money monthly to carry out a fixed number of cases.

Mr Orchard said the board was "quite relaxed" about the threat of a boycott, which he said was based on the first draft of the contract. The later version sent to individual law firms was a "perfectly reasonable contract" and the only comments he had received were requests for more time to consider it.

On the question of payment for the research work, Mr Orchard said: "There is still plenty of talking to be done. As far as I am concerned, there are certain things which you would expect recompense for quite legitimately and others where it is not so clear cut."

That was why a blank space had been left in the contracts for negotiations, he said.

He added that the board would include the cost of disbursements, based on a firm's past payment profile, when it set the fixed fees for cases. "If disbursements increase or the pattern of work changes, firms can come back for more money."

However, Mr Wallman said: "Any of the changes offered by the board so far have been on very minor matters of drafting rather than on issues of substance. But we are not despairing as we are nowhere near the end of discussions."

Angus Andrew, a Law Society council member and senior partner of the London firm Osbornes, which has been asked to join the control group, said: "We are very concerned about disbursements, which could put some solicitors in an impossible conflict of interest situation.

"For example, immigration lawyers often need to get interpreters and psychiatric reports. It then becomes a question of do I do a thorough job and take no money or provide a second-rate service and get by. If it is then a question of being open to action for negligence if you don't get all the reports, solicitors are going to say they cannot act for a client."

Mr Andrew also felt the board was giving the voluntary "not for profit" sector, such as Citizens' Advice Bureaux, preferential treatment in their parallel project.

"We got the two-inch thick contract with 10 days to respond. The voluntary sector has until August to respond. Also their block contract is very sensible. The board is proposing to fund a casework to do green-form work. We would love to be able to do that. We could make more profit, do the work more efficiently and provide more advice."

But Mr Orchard was unperturbed. "I am sure the advice sector would not say they had been given preferential treatment - we have had enormous negotiating meetings with them. They made some very sensible points. It is very difficult to get the Law Society to be as specific about the problems that concern them."

For the Legal Aid Practitioners Group, the problems were sufficient to prompt them to write to members advising them not to take part.

Andrew Wilson, the groups' chairman, said: "The green-form scheme involves a large amount of high volume, low cost work. The financial incentives being offered are more apparent than real."

In Liverpool, Andrew Holroyd, managing partner of Jackson & Canter, which has been asked to join the control group, said: "We were very willing to look at the project because funding green form case by case is very difficult to administer and we thought the project might help to cut it down.

"But we were quite appalled at the contract, which appeared to treat us as somebody who could not be trusted in any way."

Angela Donen, legal aid franchise representative with Bryan and Armstrong in Mansfield, which has been asked to join group two, said she and other local firms were writing jointly to the board outlining their concerns.

Her experience as non-executive director of a hospital trust had given her an insight into block contracts. The only reasons for them were to do with rationing and controlling costs, she said.

She was concerned that the blank spaces left in the contract would be used to play one firm off against another.

"I have suggested we should have an open account box policy or we will find the project is the thin end of the wedge in a move towards compulsory competitive tendering."

Those opposing the contracts are concerned that some firms will agree to the terms for fear of missing out in the future if they do not, prompting one to comment: "It will only be people who cannot look beyond currying favour with one board who will see no problem with this contract"n