Legal aid solicitors have been overpaid by almost £77m, according to a report published today by public spending watchdog, the National Audit Office.

Qualifying the Legal Services Commission’s accounts for the second year running, the NAO estimated a total of £76.5m had been overpaid to legal aid providers in 2009-10; up from an estimated £24.7m in 2008-09.

The NAO said solicitors had overclaimed £43.6m, while £32.9m was erroneously paid to claimants without evidence that they were eligible to receive legal aid.

It said in many cases the error resulted from an incorrect claim by the solicitor regarding the level of fee.

The highest level of error was in relation to family and immigration claims, where 35% of the claims examined were incorrect or not fully supported. Head of the NAO Amyas Morse said the LSC faces ‘significant challenges’ in administering a complex legal aid system in a cost-effective way.

He said: ‘In an environment of much tighter resources and significant staff reductions, although disappointing, it is not surprising that many of the problems I identified in my previous report have continued this year.

‘The commission has recognised the need to strengthen its financial management and I welcome the action that it has taken so far.’

However, Morse added: ‘There needs to be a sustained focus at senior levels within the organisation in order to deliver its financial stewardship plan, as well as the cultural changes necessary to support effective financial management across the commission’s activities.’

LSC chair Bill Callaghan said: 'Over the last year we have made significant changes to our financial management and this has led to better audit trails, risk management and the recovery of money.'

He said: 'Most providers do an excellent job in delivering legal aid and managing their business. However, a small minority continue to over- or mis-claim for the work they do. This impacts the legal aid budget significantly each year and can’t be tolerated.'

Callaghan said the LSC had introduced more stringent eligibility checks and put in place a programme to audit providers where billing anomalies occur, and would continue to invest time and money to help providers improve the accuracy of their claims. 'In the long term we plan to introduce automatic, electronic checks and controls that are less resource intensive,' he said.

Law Society chief executive Desmond Hudson said it was unclear ‘how a simple file review can determine what is the right judgement in individual cases’. He added that the Society had ‘complained long and loud about the unnecessary complexity of this system’, and offered ‘time and time again’ to work with the NAO and the LSC to find a ‘simpler, more transparent and cheaper way of distributing public money. That offer remains on the table.’