The Legal Aid Agency needs to change the way legal aid is run in housing cases because so many courts across the country are closing, the High Court has heard, as a row over a controversial procurement enters a second day.

The Law Centres Network is hoping that Mrs Justice Andrews DBE will quash the Legal Aid Agency's tender for new contracts under the housing possession court duty scheme. The Ministry of Justice is consolidating 113 schemes into 47 larger schemes. The ministry also introduced price-competitive tendering, which has led some law centres to battle each other for the new contracts, which come into operation this autumn.

Representing the network, Jason Coppel QC of 11KBW told the court that the scheme enables law centres to make contact with vulnerable clients at a time when they most need help. 'It goes to the heart of the mission of law centres to use their legal skills to address underlying problems of poverty and social injustice. This is not a commercial matter,' he said.

Law centres require income and the scheme is an important source, Coppel added. The scheme also provides follow-on legal aid work. To receive grant funding, law centres and not-for-profit organisations need to hold a contract with the Legal Aid Agency. The procurement was weighted in favour of larger commercial organisations, Coppel said.

However, Landmark Chambers' Fiona Scolding QC, for the lord chancellor, told the High Court that the 'comprehensive nature' of the government's court closure programme 'has to impact the way the Legal Aid Agency makes its decisions'. 

Scolding said a quarter of housing possession schemes have been affected by the 'significant' number of courts that have closed. Dozens of country courts closed about three months after the procurement process ended, the High Court heard.

Scolding said: 'An additional court closure programme is going on at the moment, including the possible closure of Wandsworth County Court, during the course of this tender process. The Legal Aid Agency was required to halt two schemes because no one was sure where work from Lambeth is going. The result of the [Wandsworth] consultation is not clear. This is not a situation whereby it was possible for the Legal Aid Agency to say everything should stay as it has.'

Scolding said there was nothing to stop law centres from continuing to provide the work that takes place before and after the service provided at court. She questioned how the government can judge the 'wraparound' service that law centres provide. 'What you're asking is for the Legal Aid Agency and Ministry of Justice, when they're reaching their decisions, taking into account things beyond the scope of what they're tendering for,' she said.

The hearing is expected to conclude today.