The Legal Services Commission has fended off the threat of litigation from firms that failed to get family and housing contracts, by announcing a licence-only tender to give firms a final chance to secure a contract.

The Law Society welcomed the LSC’s ‘pragmatic and sensible’ decision, reached after negotiations with the Society, the Legal Aid Practitioners Group and Resolution.

The move follows concerns about the number of firms failing to get a contract in the 2011 tender round because of clerical or technical errors in their applications. At the time of the bid round, the LSC said it would not point out or correct any errors in bids.

Around 70 current providers failed to get new contracts in the 2011 bidding exercise, and between 30 and 40 had sought legal advice on a judicial review of the LSC’s decision.

The new tender will allow firms to do certificated work, enabling them to undertake public family cases. However, it will not award matter starts for more basic legal help, because it awarded a sufficient number in the previous exercise.

Only providers which do not already have a contract should apply for the contracts, which will take effect from 1 April.

The LSC said further details will be published on its website and reiterated its advice that bidders should check their tender documents thoroughly before submitting them.

Law Society chief executive Desmond Hudson said: ‘I welcome this pragmatic and sensible decision from the LSC.’ He said he hoped the tender process would be straightforward. ‘In these uncertain times for the LSC’s supplier base, anything that encourages firms to continue legally aided work is to be welcomed.’

The Association of Lawyers for Children also welcomed the announcement, but said a ‘big question mark’ still hangs over the integrity of the LSC’s electronic tendering platform. Alan Bean, co-chair, said that many of those who failed to secure contracts maintain that they correctly uploaded fully completed tenders.

He said: ‘We hope that the LSC will now work with the providers affected and family representative bodies to ensure that these difficulties are properly addressed and eliminated, before the LSC embarks upon a new tender round for the 2013 family and other civil contracts.