The Ministry of Justice will press ahead with two-tier contracts for criminal legal aid and implement a second fee reduction of up to 8.75% next summer.

In its response to the Transforming Legal Aid consultation, published today, the MoJ said it will increase the proposed number of tender contracts from 525 to 527.

The two-month tender exercise began today. Bidders will be notified of the outcome in June 2015, with contracts beginning in October 2015.

Law Society president Andrew Caplen said solicitors were ‘extremely disappointed’ with the decision and questioned the government’s suggestion that criminal legal aid work will be sustainable in future.

Practitioner groups the London Criminal Courts Solicitors’ Association, and the Criminal Law Solicitors’ Association said this afternoon that they are investigating the possibility of fresh legal action to thwart the plans.

The consultation was started days after the high court had ruled it had acted unlawfully when introducing criminal legal aid reforms, following a challenge by the practitioner groups.

It was specifically targeted at consulting on the reports undertaken by Otterburn Legal Consultating Ltd and KPMG in February 2014 and the assumptions used to decide the number of duty provider contracts to offer.

In its summary, the government said the new model will give firms the confidence to invest in restructuring ‘in the knowledge they would be in receipt of larger and more certain volumes’.

The summary added: ‘This contracting approach also gives the government the assurance it needs that those accused of a crime will have access to a lawyer by maintaining a sustainable legal aid service.’

The MoJ explained KPMG had been asked to analyse the consultation responses and compared them to evidence previously heard.

Based on responses to the consultation, the MoJ recommended the number of contracts increase to 527, but otherwise found respondents had provided no new evidence which would require them to amend its report.

Respondents cited the Otterburn analysis that only the most profitable providers at present will survive under the new model and with a 17.5% cut in fees.

But the MoJ largely rejected that conclusion, saying Otterburn had come to its conclusions ‘in the context of the current unconsolidated market’.

The government added: ‘Consolidation of the market will give organisations the opportunity to access a larger share of work, enabling them to explore economies of scale which will in turn help to mitigate the fee reduction and give them the best possible opportunity to make a sustainable profit.’

The department will pay expenses for travel time over 90 minutes in a bid to help firms in rural areas.

The consultation received 3,942 responses, but the Ministry of Justice said they did not provide ‘any new evidence’ about the viability of the dual contract model.

Law Society president Caplen warned some areas of the country could be left with no legal representation, depriving members of the public from access to justice.

’We are very concerned that the ministry has not taken into account the views of the overwhelming majority of our members who responded to the consultation, or to the independent consultants who raised concerns about the economic impact on the supplier base.’

Shadow legal aid minister Andy Slaughter said the ‘pathetic’ response was ‘another slap in the face’ to legal aid practitioners.

‘This does very little to fix the growing crisis in legal aid and only further highlights how this out of touch government are belligerently sticking to their already failing program. Cuts to legal aid have led to justice increasingly becoming a privilege for the wealthy few.’

The LCCSA has said it expects two-third of legal aid firms to close as a result of the decision. Jon Black, president, said it was a ‘depressing day’ for practitioners which will cause ‘terrible collateral damage’.

‘A fair defence for those who aren’t wealthy will become a lottery,’ he said.

‘As firms start to close or cut corners to keep afloat we’ll see plummeting standards of defence and miscarriages of justice. It would seem that the government is unconcerned by this.’

A Ministry of Justice spokesperson said: ‘Legal aid is a vital part of our justice system. We must ensure it is available for the individuals who need it, sustainable for the lawyers who provide it, and affordable for the taxpayers who ultimately pay for it.

‘Nothing will change for anyone accused of a crime, they will still have the same access to a legally-aided lawyer as they do now.

‘When we began reform, we had one of the most expensive legal aid systems in the world at around £2bn a year. Given the financial crisis this government inherited, we had no choice but to make significant savings. However, we do understand reform will not be easy for some lawyers, so we have introduced a range of measures to support them.’