Up to 75% of criminal legal aid firms will be removed from the market under far-reaching provider reforms set to be implemented from next summer.

The plans, announced by the Ministry of Justice this week, envisage a consolidated market in which contracts for larger volumes of work are given to a smaller number of providers. The move is aimed at enabling firms to take advantage of economies of scale and deliver services more efficiently.

Legal aid minister Lord Bach told the Gazette: ‘These proposals are likely to affect a large number of small and medium-sized firms, but the current arrangements are unsustainable. Solicitors have been telling us for some time that the amount they get from legal aid is not enough to keep them profitable. These plans will generate greater efficiencies for suppliers, help people access good advice, and get a better deal for the taxpayer.’

He estimated that no more than 500 firms will get contracts, which would mean that up to 75% of the 1,700 firms doing criminal legal aid work face an exit from the market. ‘The earliest date we envisage starting the new contracts in selected areas would be summer 2011,’ he added.

Firms will tender for the new contracts against fixed prices ‘set at a discount to current rates’, in contrast to the reverse auction envisaged for the now-abandoned best value tendering plans.

Justice secretary Jack Straw said the plans are ‘likely to create a more secure long-term base’ for lawyers dependent on public funds. Releasing the latest figures showing which firms earn most from legal aid, Straw also pointed out that the number of lawyers has almost tripled since the 1970s. He added: ‘We are in grave danger of becoming over-lawyered and underrepresented.’

However, Mike Jones, chairman of the Criminal Law Solicitors Association, said the increase in the number of lawyers cited by Straw belies the fact that only 5,500 solicitors are qualified to do criminal legal aid work – the same number as 40 years ago.

‘We could argue that, given the number of new laws and procedural hurdles in recent years, we have been over legislated and underrepresented by our politicians,’ he added.

The Law Society said it accepted that reform is necessary but questioned the viability of the plans. President Robert Heslett said: ‘The model proposed by the ministry bears little resemblance to the market as it is currently structured, and it is not clear how, or how quickly, any move to such a model could be implemented without causing serious disruption to service provision.

‘We do not have an economic environment in which firms will find it easy to make the necessary investment to expand as much as would be required.’

The short timescale will bring to an end after only a year the three-year contracts that firms have just signed. Chancery Lane urged the MoJ to identify locations where the new scheme will initially be implemented as soon as possible to give maximum notice to those affected.

Three of the largest criminal legal aid firms – national firm Tuckers, London firm Kaim Todner and northern firm Switalskis – welcomed the proposals. Tuckers senior partner Franklin Sinclair said the changes ‘are long overdue and urgently required’.

But Ian Kelcey, chairman of the Law Society’s criminal law committee, said the plans were ‘unfocused’, having no regard to issues of coverage or conflict, and amounted simply to ‘making a lot of noise’.