Contract noticesFinancial and contract managementContract noticesContract managementFinancial and contract managementContract noticesContract managementFinancial and contract managementContract noticesContract managementFinancial and contract managementContract notices:appealsContract noticesContract managementFinancial and contract managementContract notices:appealsContract noticesContract managementFinancial and contract managementContract notices:appealsContract noticesContract managementFinancial and contract managementContract notices:contract compliance auditsContract noticesContract managementFinancial and contract managementContract notices:contract compliance auditsContract noticesContract managementFinancial and contract managementContract notices:contract compliance audit outcomesContract noticesContract managementFinancial and contract managementContract notices:contract compliance audit outcomesContract noticesContract managementFinancial and contract managementContract notices:extrapolationContract noticesContract managementFinancial and contract managementContract noticesContract managementFinancial and contract managementContract notices:costs appealsContract noticesContract managementFinancial and contract managementContract notices:costs appealsContract noticesContract managementFinancial and contract managementContract notices:points of principleContract noticesContract managementFinancial and contract managementContract notices:points of principleContract noticesContract managementFinancial and contract managementContract notices:points of principleContract noticesContract management
20.33Contract managers may, and almost invariably will, issue a contract notice, even though the organisation does not accept their interpretation of whether a file has met the relevant contract rule and whether any review or appeal process has been invoked. This appears to us to be poor practice; but is usual.
20.34A contract notice requires a significant improvement in performance in relation to the relevant issue within six months, when the contract manager will come back to see whether improvements have been achieved. Clause 24 of the Standard Contract (all versions, both civil and crime) allows the LAA to suspend or even terminate contracts for ‘persistent breaches’, that is three breaches of the same term in a 24-month period (or six different breaches). It is very rare indeed for the LAA to invoke this clause; but it has been known and undoubtedly gives practitioners cause for concern.
20.35The contract manager will also recoup money against any overpayments or ineligible payments.
Appeals
20.36If you disagree with your contract manager see Contract Compliance Appeals below.
20.37You cannot actually appeal against a contract notice as such. It is not an appealable decision under clause 27 of the Standard Contract Terms. What you can do is appeal against any wrong decision which has led to a contract notice, and therefore undermine the basis on which it was issued.
20.38If you accept that you made an error, and so there was a breach of the contract; but it was minor, say on one file, you should write to your contract manager stating why you consider a contract notice to be disproportionate in the circumstances. It probably will not make any difference in the short term; but may be useful in the long term if the LAA wishes to suspend or terminate your contract under the ‘totting up’ provisions in clause 24.
Contract compliance audits
20.39If they have concerns, the LAA may choose to carry out a contract compliance audit (CCA). A minimum of 30 and maximum of 50 files will be assessed, depending on the level of claims you have made across the 12-month sample period. The LAA employs a formula devised by the National Audit Office to select samples to test the accuracy of assessments.
20.40CCAs are carried out off-site on the LAA’s premises. They check compliance with the civil/crime contracts, guidance, the criminal bills assessment manual, and civil costs assessment guidance. The LAA assesses whether there is appropriate evidence of eligibility, work done and disbursements on the file, costs incurred are reasonable and the bill is in line with the appropriate guidance.
Contract compliance audit outcomes
20.41Files are either nil assessed, because the file should not have been funded at all (eg the client was not financially eligible or the matter was out of scope) or reduced by a percentage because a higher fee was claimed than was appropriate (eg a Family level 2 fee was claimed when the LAA says it should have been level 1).
20.42Firms used to be given a categorisation, depending on the outcome of a CAA. The LSC stopped doing that and the LAA simply applies reductions in fees and takes action as follows:
Final % value assessed down | Action and sanctions | Old rating name | |
0.00%–10.00% | Recoup or credit value of incorrectly claimed files within audit sample. | Category 1 | |
10.01%–20.00% | Extrapolation of % reduction. Re-audit to be scheduled. Contract notice/s. | Category 2 | |
20.01% or more | Extrapolation of % reduction. Re-audit to be scheduled. Contract notice/s (Further action, including possible termination, to be taken on an individual basis if result of re-audit not improved). | Category 3 | |
Extrapolation
20.43Extrapolation is one of the reasons that CCAs are dreaded by practitioners as an audit of a relatively small sample can result in significant sums having to be repaid. The Standard Contract allows the LAA to apply the findings of a controlled work costs audit back to the date when the file sample was requested for the previous CCA, or 12 months prior to the date the sample was requested in the current CCA, whichever is the most recent. For example, suppose the file sample of 20 files was requested on 01 July 2017 and the eventual reduction was 25 per cent. If the value of claims 1 July 2017–30 June 2016 = £146,000, the recoupment would be 25 per cent of £146,000, ie £36,500.
Contract compliance audit – appeal process
20.44The appeal process is the same as other types of costs appeal, see below.
Costs appeals
20.45The first stage of the appeal process (see eg the Standard Contract 2013 Specification para 6.67 et seq; and the Standard Crime Contract Specification 2017 para 8.19 et seq). The substantive provisions in relation to the initial stages are the same in the different contracts (only the paragraph numbers differ). The first is an internal review by another member of the LAA’s audit team. You must set out the reasons for the appeal in writing within 28 days and send the file(s) back with the appeal. If you need an extension of time, you must have a ‘good reason’ and request the extension within 21 days. It is likely to be granted; but only up to a further 14 days. If the initial stage is not successful, you move to independent costs assessment. Independent costs assessors (ICAs) are solicitors or barristers who are members of the LAA’s Review Panel; but are contracted on a sessional basis and are not LAA employees.
20.46ICA appeals are generally considered on the papers only, although in exceptional circumstances either party can apply to the assessor for an oral hearing, although these are rarely granted. The assessor reviews the assessment and may confirm, increase or decrease the amount assessed. In contracts issued after 2013, the process ends here. Any further challenge would need to be brought by way of judicial review.
Points of principle
Civil and Crime contracts up to 2013
20.47In contracts issued up to and including the Standard Civil Contract 2013, there is a further appeal after the ICA’s decision. At any point not later than 21 days after receipt of the final decision, you (or the LAA) can seek clarification on the costs rules. You do this by applying for a certificate of a point of principle of general importance (PoP). It is important to note that your PoP must deal with an issue which is generally applicable, you cannot appeal on the basis that the ICA has simply made a mistake, for example. Applications can be made to the LAA or direct to an assessor if one has been appointed. The application must set out the exact wording of the PoP sought. However, these are rarely certified. There is more information at
www.gov.uk/legal-aid-points-of-principle-of-general-importance-pop/.
20.48The LAA will decide whether the matter should progress to the Costs Appeals Committee. Applications for PoPs are considered on the papers only. You will be sent the LAA’s and/or the Costs Appeals Committee’s decision.
Civil and Crime Contracts after 2013
20.49These have no further costs appeal process after the ICA process described above. The only recourse would be by way of judicial review.