The Legal Services Commission notified the Law Society today that it will be delaying payments to solicitors due in March until the start of the next financial year in April.

Chancery Lane said the LSC had said this was due to the ‘cash position’ in which it found itself due to obligations demanded of it by the Ministry of Justice.

The Law Society has written to the main clearing banks alerting them to the problems that legal aid firms may face as a result of this. It will also be writing to the MoJ to request that the payments are made on time.

Law Society director of policy Mark Stobbs said: ‘This appears to be a breach of the Prompt Payment Code – to which the MoJ is a signatory.

‘The Society does not see any good reason why the profession should bear the burden of the LSC’s poor financial management. It is bad enough that firms are not entitled to be paid for the work they do until a case has concluded, often months or even years later.

‘To delay payments even further after that, for work that firms have done and are entitled to be paid for, solely for reasons of government cashflow, is at odds with a purported government policy of supporting small businesses and is completely unacceptable,’ he said.

Stobbs added: ‘It is not acceptable for government bodies to treat its suppliers in this arbitrary way and with less than a month's notice. I very much hope that the MoJ will agree and be able to insist that the LSC returns to the payment schedule that it had promised and should honour.’

An LSC spokesman said: ‘The LSC commits to paying bills within 30 days of an assessment being completed and in fact pays the majority of bills well within this period.’

Moreover, he said the LSC started weekly payment runs in January 2009 in recognition of the tough economic climate firms are facing.

He said: ‘Delays will only affect some bills and all such bills will be paid in full in the first week of April.’

He added: ‘If this short delay is likely to create serious financial problems for a firm, we urge them to get in touch with their normal contact at the LSC at the earliest opportunity.’

An MoJ spokeswoman said: ‘This is an operational matter for the LSC.’