The new civil legal aid contracts could result in large numbers of family firms exiting the market and leave a single social welfare law provider in some areas, consultants have predicted.

David Gilmour, founder of consultancy DG Legal, which specialises in legal aid, said: ‘I predict a fair number of firms will have to close down because they won’t get a contract.

‘There are a finite number of matter starts in each procurement area, and even though the Legal Services Commission has said there must be at least five family law providers in each area, in a typical area you might have 20 firms, so some will lose out.’

Gilmour said firms specialising in either public or private law would find it challenging to score highly on the selection criteria and could fail to secure contracts as a result.

‘Firms are nervous. The larger the city the bigger the issue will be,’ said Gilmour, although he predicted London may not be as hard hit as there will need to be five providers in each of its 32 boroughs.

Vicky Ling, a consultant specialising in legal aid at Partnership Quality Services, said: ‘It’s very likely that a lot of firms will stop doing social welfare law as a result of this bid round.

‘Unlike in family law, the LSC has given no undertaking that there will be more than one provider in an area, so it could be possible for one firm or organisation to win the only contract in an area and everyone else will be out of the market.’

Ling added: ‘It’s a worse-case scenario, but it could happen. And there are high levels of anxiety as firms are terrified they won’t get contracts.’

Director of the Legal Aid Practitioners Group Carol Storer said: ‘The new contracts will reduce the number of providers. We don’t know how many firms will go, the number could be massive.’

She said London boroughs, where there are currently six or seven providers, could see that number drop to one or two. ‘And even if firms do get contracts, they may not get allocated enough new matter starts to make it viable,’ said Storer.

Adam Makepeace, practice manager at Duncan Lewis, one of the largest and most rapidly expanding firms in London, said the contracting arrangements would make it more financially viable to have a smaller number of larger providers, but his firm had ‘absolutely no desire’ to be the only provider in any geographical area.

The LSC’s impact assessment on the bid round said the requirements for obtaining a new contract were not very different from current requirements, so most providers should be able to obtain a contract.

But it added: ‘Some providers may not meet the requirements, and in the areas where there is high demand for work we will [choose] between providers to ensure the best service for clients, so some current providers may not be awarded contracts.’