Reconciliation of contractsReconciliation of contractsFinancial and contract managementContract managementReconciliation of contracts:reconciliation protocolReconciliation of contractsFinancial and contract managementContract managementReconciliation of contracts:reconciliation protocolReconciliation of contractsFinancial and contract managementContract management
20.9You should always keep your own figures for the value of your monthly submissions and monitor them against your payments. You can obtain more information and check the LAA’s figures at
www.gov.uk/legal-aid-management-information-online. The LAA will do the same, and periodically will seek to adjust the payments to ensure that your contract remains on course. As a result of the adjustment, your payments may go up or down. The purpose is to ensure that at the end of the contract, claims equal payments, or at least that the difference between them, is within an agreed band. This process is known as reconciliation, and where parity has been achieved the contract has been successfully reconciled. Where it hasn’t, arrangements will need to be made to resolve the outstanding balance, either by payment of a lump sum or recovering the balance during the schedule. The LAA is usually reluctant to allow recovery over more than one schedule or six months; but it can be done.
The reconciliation protocol
20.10The reconciliation protocol sets out the approach the LAA will take which can also be downloaded at
www.gov.uk/government/uploads/system/uploads/attachment_data/file/340267/LAA-monthly-payments-protocol.pdf (or see appendix I). The key is that the target is always reconciliation to 100 per cent (though the reconciliation protocol confirms that crime providers can choose instead to have a one-month ‘pull-forward’ – ie to reconcile to 92.5 per cent instead of 100 per cent) – that is, for claims to equal payments over the course of the schedule. It is recognised that in practice it will often work out that 100 per cent is not exactly achieved. Therefore, the LAA will look at the position twice a year – April and September – and determine whether the contract is within the acceptable margin of 90 to 110 per cent (calculated over the shorter of the life of the contract or the last 12 months). Where it is, no action will be taken. Where the contract is outside the acceptable margin, the monthly payment will be revised with a view to paying off any balance within six months.
20.11It is important to remember that each month you claim less than your standard monthly payment (SMP) then the closer to the 90 per cent trigger point you will be. You need to try to avoid any cumulative decline in performance that takes you below 90 per cent. Once you go below the trigger point, the reduction happens automatically and the LAA would not warn you about this in advance. The new payment would remain in place for three months to monitor that it would achieve the desired effect. You would have to ensure that claims stayed at or around the level of the previous SMP, otherwise it could trigger a further reduction at the three-month review stage.
Case study
My firm has Criminal and Civil Contracts. The Civil Contract is currently paid at £10,000 per month. After 12 months, we have claimed £102,000. The Criminal Contract is paid at £5,000 per month and after 12 months we have claimed £64,000. Are we in band? Are the LAA likely to change our payments?
Civil: Total claims = £102,000 over the life of the contract. Payments are £120,000, so the balance on the account is £18,000 owed to the LAA. This is a margin of 82 per cent, so outside the acceptable band (ie below 90 per cent). The payment will be amended. The target is 100 per cent. Average monthly claim is £8,500 (£102,000/12) and you owe the LAA £18,000, which must be repaid over the next six months. The new payment will be £8,500 – (£18,000/6) = £5,500 per month.
Crime: Total claims = £64,000, and payments are £60,000. 10 per cent of claims = £6,400, so the acceptable band is £60,000 ± £6,400 – between £53,600 and £66,400. Therefore you are within band and the LAA will not automatically amend your contract payment. However, you are entitled to ask the LAA to amend your payments at any time and may want to ask for an increase. The LAA do not have to agree, but if you can demonstrate that you are likely to continue to claim more than you are paid, they should do so.