Lawyers’ groups have warned that firms will be forced out of business and vulnerable clients turned away as the shortage of new matter starts for social welfare work hits ‘crisis level’.

Carol Storer (pictured), director of the Legal Aid Practitioners Group (LAPG), has called on the government to find more money for legal aid as the recession has fuelled the need for legal advice, particularly on social welfare, debt and family issues.

She said LAPG is hearing from firms across the country, in both rural and urban areas, who have exceeded their case allocation – known as new matter starts – and been refused more by the Legal Services Commission, as the LSC has run out of money.

‘The problem is now hitting crisis level. We are very worried about the effect on clients as well as our members. It is an inadequate response for the government to say there is no more money. Money has to be found,' she said.

Family lawyers’ group Resolution is due to meet legal aid minister Lord Bach this week to discuss the growing problem.

In a letter to Bach, David Emmerson, chair of Resolution’s legal aid committee, said that with five months to go before firms are able to take on new cases, many ‘will go out of business and will have to shut their doors to needy and vulnerable clients’, including children and victims of domestic violence.

Richard Miller, head of legal aid at the Law Society, said: ‘The budget was set before the impact of the recession was known. The Treasury has to take account of its effect and fund legal aid properly.’

A Ministry of Justice spokesman said providers of face-to-face services had reported 20,000 more matters started between April and August 2009 compared with the same period last year. This year it expects to deliver 1.1 million acts of assistance – almost double the number in 2004/5, while the civil legal aid budget has risen by only 8% to £914m over the same period.

He said the LSC has undertaken an exercise to remove any surplus new matter starts from providers who are unlikely to use their current allocation, and will then see if it can afford to reallocate them to areas where demand is highest.