Government proposals to cap payments made to acquitted defendants who have paid privately for their defence are the ‘final nail in the coffin’ of criminal legal aid firms, a leading practitioner group has warned.

The Ministry of Justice announced this week it is to press ahead with a plan to limit such payments to rates that would have been paid under legal aid.

Rodney Warren, director of the Criminal Law Solicitors Association, said legal aid firms rely on private rates – about three times as much as legal aid rates – to make their practices viable. ‘There’ll be a fall-off in private client work because people will only be able to recover a tiny proportion of the cost,’ he said. ‘This will amount to firms losing two-thirds of their income on this type of work.’

Combined with next year’s introduction of best-value tendering, the impact would lead to a point ‘where it is no longer sustainable to run a legal aid business’, Warren said. ‘This is the final nail in the coffin for criminal legal aid firms. The MoJ and the Legal Services Commission have shown they have no understanding of how firms operate at all.’

Ian Kelcey (pictured), chairman of the Law Society’s criminal legal aid committee, criticised the ‘institutional deafness’ of the MoJ in going ahead with the plan despite ‘overwhelming responses’ in favour of the status quo. Kelcey said the change could cause some defendants not qualifying for legal aid choosing not to contest cases.

The MoJ also announced it will introduce Crown court means testing from January 2010. Any defendant with an annual disposable income of more than £3,398 will have to contribute towards their legal fees. If they are acquitted, the money will be repaid.

Lord Bach, legal aid minister, said the reforms would enable legal aid funds to be redirected to those most in need. ‘The government strongly believes that those convicted of a crime, and who have been ordered to make a contribution, should pay some or all of the costs of their publicly funded defence,’ he said. The MoJ will consult shortly on draft regulations for Crown court means testing before it is introduced at five early adopter courts – Bradford, Preston, Swansea, Blackfriars and Norwich – in January 2010.