The Law Society has welcomed the Ministry of Justice’s decision to ask the Legal Services Commission not to proceed with its planned pilots for best value tendering (BVT).

The proposals, which would have seen firms bidding against each other in an online auction for contracts for police station and magistrates’ court work, were fiercely opposed by solicitors. Many firms in the pilot areas refused to participate without a TUPE indemnity and said the exercise would result in firms going out of business.

In a press release issued yesterday, the MoJ said justice secretary Jack Straw and legal aid minister Lord Bach had listened carefully to representations made by the Law Society and by legal aid firms. They were persuaded that the scheme as currently proposed was ‘unlikely to lead to the efficient, restructured legal services market envisaged by Lord Carter in his 2006 Review of Legal Aid Procurement’.

The statement added: ‘Ministers remain fully committed to developing tendering processes with a more ambitious scope, which reduce the overall costs for criminal legal aid and by increasing the opportunities for innovation and efficiency to enable suppliers to be profitable and sustainable.’

The MoJ said ministers had asked their officials to work closely with the LSC, the Law Society and individual practitioners to develop an outline of improved proposals by the end of March 2010. Law Society president Robert Heslett said: ‘The Society praises the wisdom and statesman-like approach of the MoJ in reaching its decision.’

‘For the issues faced by law firms in Avon, Somerset and Manchester, this is a great Christmas present. The Society has campaigned against this tendering scheme from its infancy, and so we especially welcome this news. We now look forward to working afresh with the Legal Services Commission and the Ministry of Justice for a new way forward in 2010.’

Carolyn Regan, LSC chief executive, said: ‘The decision not to go ahead with the BVT pilots announced in July 2009 presents the opportunity to develop a more ambitious programme of competitive tendering for England and Wales. This will enable the introduction of simpler processes, while retaining a focus on improving the quality of legal services for the public.

‘The considerable work already undertaken in preparation for the pilots puts us in a strong position to develop the new proposals in conjunction with colleagues in the MoJ and the legal professions.’

She said the LSC’s overriding priority remained the delivery of high-quality legal aid for those who need it most at the best possible value for public money.

Franklin Sinclair, senior partner at Manchester firm Tuckers, said: ‘We’re hugely relieved because BVT could’ve spelt disaster for practitioners and the government. The press release from the MoJ gives us encouragement that any future tendering will be more sensible and offer a workable solution that won’t endanger our firms’ future.’

But he added: ‘We’ll still suffer greatly from the cuts imposed and we’ll be close to breaking point if there are any more.’

Speaking to the Gazette, Bach said it was too early to say what would replace the scheme, but added: 'Anyone who thinks we're abandoning BVT is quite wrong and so is anyone who thinks we've done this because of the threat of a judicial review.'

He said that, after discussion with the Law Society and solicitors, the MoJ came to the view that this particular pilot was not it line with Carter. 'We came to the view that it was too narrow in concept and we wanted more time to think it through.

'We feared the result might be that those firms who were successful in bidding would not be able to innovate and make savings in the manner envisaged by Carter.'

Another factor that prompted the move, Bach said, was the ongoing consultation on Crown court fees. It was asking 'quite a lot' of firms to make judgements about what bids to make without knowing what fee cuts they would be facing for Crown court work.

'They could argue that they didn't know the full picture when putting in bids. That was a view that played with me quite a bit.'