The ‘extraordinary’ results of the Legal Services Commission’s mental health tender have left established firms facing bankruptcy and could trigger the ‘collapse of representation’, solicitors have warned.

The tender outcomes, which were published to providers last week, have resulted in many experienced providers being given less than a third of the volume of work they bid for, while newcomers with no experience won contracts.

The Mental Health Lawyers Association is to hold an urgent meeting to consider its response, including a possible legal challenge to the way the tender process operated.

Association chairman Richard Charlton said feedback from providers revealed the process had produced some ‘extraordinary’ results. ‘Some established providers have been given case allocations so far below the amount they tendered for that they are questioning whether it is viable for them to continue,’ he said. ‘Firms are facing bankruptcy and we’re potentially looking at a collapse of representation in some areas.’

Charlton said the situation is ‘particularly bad’ in London, where, despite a reduction in the overall number of matter starts (new cases) on offer, the number of providers almost doubled, with 34 new entrants being given contracts.

He said the process had been ‘dramatically skewed’ by ‘enormous speculative’ bids from some providers.

Law Society chief executive Desmond Hudson said the tender result is ‘clearly not in the public interest’, damaging supply to a vulnerable client group with experienced practitioners being ‘lost’ to make way for new firms of ‘untested quality’.

Hudson said the outcome was an ‘inevitable consequence’ of the LSC’s decision to base the structure of the system on the matter start as the unit of currency, and contracts with individual firms as the procurement mechanism.

‘In a judicial review 10 years ago many of these problems were foreseen,’ he said. ‘The main surprise is that it has taken so long for them to materialise.’

The LSC said contracts had been given pro rata to bidders that passed the pre-qualification questionnaire and met essential criteria.