Abandoned Two Tier Legal Aid Contracting: Can I Claim Compensation
We have been approached by a number of firms who have suffered losses as a result of the MoJ and LAA’s decision to cancel the tender process and withdraw from two tier contracting in crime.
It is possible that the LAA may try to fend off compensation claims by referring to two provisions from the information for Applicants document. The tender rules provide as follows:
- “The LAA has the right to vary or cancel the procurement process in its entirety or in part, and not to proceed to award Contracts at any time at its absolute discretion.” and
- “The Applicant Organisation is solely responsible for the costs and expenses incurred in connection with the preparation and submission of a Tender or associated with any cancellation or suspension of this procurement process by the LAA.”
However we believe that neither of these can properly be relied upon where there is clear evidence of maladministration or negligence.
Costs of Litigating against the MoJ / LAA
This note is not intended to cover the issue of the legal fees and courts costs of those firms that issued proceedings against the MoJ / LAA. Costs should be pursued in accordance with the Civil Procedure Rules and subject to the advice of the lawyers representing the litigant firms.
The LAA Ex Gratia Scheme
The LAA operate a discretionary ex gratia compensation scheme where damages may be awarded if an applicant can prove that there was maladministration that directly lead to identifiable and quantifiable loss. It is therefore possible for compensation claims to be made under this scheme.
It is however also possible that the LAA may refuse to entertain such claims, either referring to the terms of the IFA set out above or generally.
Notwithstanding this we believe that the proper avenue to pursue claims is through the ex gratia scheme, not least because any subsequent ombudsman compliant or legal proceedings will require that the applicant has sought to exhaust internal remedies first. Also pursuing an ex gratia claim will be far less costly than pursuing a damages claim through the Courts.
In making any ex gratia claim it will be necessary to prove maladministration (which is not clearly defined but can be considered similar to negligence) and to show both loss and causation.
It is, in our view, very difficult if not almost impossible to demonstrate that the decisions to pursue the two tier scheme and to launch the tender process were maladministrative. However there seems to have been clear evidence of maladministration in the evaluation / scoring process. It is, of course, possible that the LAA and MoJ may seek to suggest that the decision to cancel the process was as a result of a change of policy and the costs of litigation rather than any acknowledgement of maladministration though, for now, we can but anticipate their likely response.
It is therefore more likely that claims from successful bidders who incurred costs preparing for the new contracts (opening new offices and taking on new staff) or firms that were refused contracts (giving notices on existing offices or scaling back firms) will succeed.
Sadly claims for costs involved in preparing tenders (including fees paid to consultants etc.) are unlikely to be considered to have been caused by any provable maladministration but this would depend upon the precise circumstances of the case.
What if the LAA Refuse the Claim
If the LAA refuse to allow you to pursue an ex gratia payment or if you are unsuccessful in pursuing such a payment then there are two further options.
The first is possibly to pursue a complaint to the Parliamentary and Health Service Ombudsman who has the power to investigate a complaint of maladministration and to award damages. However such a complaint would need to be brought by your MP (as you cannot complain to the Ombudsman directly) and will take some considerable time to conclude.
It is more likely that the next stage, after pursuing an ex gratia payment, will be a damages claim against the LAA through the Courts.
We have unrivalled experience in pursuing and agreeing claims for maladministration against the Legal Aid Agency and its predecessor bodies.
Examples of claims that have been successfully pursued include a claim of maladministration for not awarding a civil contract in error, revoking a Prison Law contract in error and wasted time and costs following inappropriate audit activity.
Whilst the Legal Aid Agency resist the idea of offering formal compensation, they will often offer individual ex-gratia payments to providers. In an earlier tender, a decision not to proceed with a tender led the LAA to offer an ex-gratia payment to an entity that had spent dozens of hours working on their tender. However, where there is a large group of providers that have been affected by maladministration, the LAA may resist the ex-gratia route and instead a formal claim for compensation may need to be lodged.
Matthew Howgate, Melanie O’Brien and David Gilmore handle all potential claims on behalf of DG Legal.
Matthew was a Senior Legal Adviser to the Legal Services Commission where he was responsible for amongst other things, deciding whether to pay ex-gratia claims or offer compensation.
Melanie O’Brien was a senior litigation solicitor for Herbert Smith where she was responsible for pursing very high value claims against defendants.
David Gilmore, a former Senior LSC Manager, is the founding Director of DG Legal and has conducted countless appeals against the LAA including claims for ex-gratia payments.