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NEWS & CAMPAIGNS - CARTER REVIEW Right to unilaterally amend the Unified Contract - update on Law Society action There has been a major development in relation to the action which had been brought by the Law Society against the Legal Services Commission. You may recall from previous briefings that earlier this year the Law Society had issued judicial review proceedings against the LSC targeting its claim of a unilateral right to amend the Unified Contract. The Court of Appeal has today handed down its judgment upholding the Law Society's claim. It held that the LSC's reserved power to insert new technical specifications and to amend any existing specifications without any restriction was in breach of procurement rules as it did not allow a potential service provider to determine in advance the performance and functional requirements it may in fact be obliged to comply with during the contract period. What this means? It would appear that the LSC cannot now exercise the power which it had reserved to unilaterally amend the unified contract in the way it had previously anticipated. If the LSC wishes to make amendments which affect the economic balance of the contract, it may need to go through a new procurement procedure (for instance by instigating a period of re-tendering for new contracts). The judgment does not appear to set out precisely the kind of amendments that the LSC can make to the existing contract and the kind that would require the LSC to issue a new contract (which would need to be re-tendered for). The Law Society is currently taking legal advice and has said that it will look to give providers further information on the precise effect of the judgment. We will let you know if there any developments. For those of you who want to know more information or, if like us, you only had a vague recollection of the issues raised by the parties, I have set out below a summary of the background to this claim. Summary The matter was heard in July with Judgment on this matter being given at first instance. The Law Society was partially successful in this case as the Judge ordered that unilaterally amending the contract was not compatible with regulations 9(2), 9(4) and 9(7) of the Public Contracts Regulations 2006 and therefore, restrictions were placed on the ability of the LSC to unilaterally amend. However, the extent to which the LSC was so restricted was disputed. The challenge did not succeed in preventing the LSC from amending the unified contract to introduce the new civil legal aid fee schemes and these were implemented, as planned, from October 2007. The Judgment did however affect the ability of the LSC to amend any 'technical specifications' in the contract, relating to quality or performance levels. The judge identified these as relating to quality and performance levels and including peer review requirements and key performance indicators and the Specialist Quality Mark, but not fee levels and structures. The judge held that in relation to these 'technical specifications' the amendment provisions needed to be much narrower and based on "objective criteria". As we understand the position, the Law Society's interpretation of the judgment was such that it restrained the LSC from introducing any changes to the Contract that altered the economic balance of the contract such that it causes an 'economic disadvantage' to firms or to some of them. To the extent that it did so, the LSC may not be able to implement those amendments unless it undertakes a new contracting procedure. It appeared that the LSC did not agree with this interpretation of the judgment. In any case, the LSC indicated that it did not agree with the decision on any level, especially with regard to the judge's interpretation of some aspects of EU and domestic procurement law, and therefore announced that it would proceed with an appeal. Criminal Contract The Judgment certainly posed some problems for the LSC in terms of what amendments it could now make and to which provisions. By the time the judgment was handed down, the Unified Contract (for civil practitioners) had already been signed by practitioners. However, as it had yet to be signed, the Judgment did raise particular problems in relation to the General Criminal Contract. Prior to the judicial review, it had been the LSC's intention to issue a notice of amendment to the existing General Criminal Contract from October 2007 so as to bring criminal providers onto the Unified Contract. However, the General Criminal Contract was entered into some time before the legal aid reform program was announced and providers would not have been aware of the proposed reforms at the time they signed. In view of the uncertainty arising from the Judgment, the LSC had to accept that it could not introduce a unilateral right to amend the contract into the proposed Unified Contract for criminal legal aid services . Instead, it has taken the option to introduce a short term contract for six months only to start in January 2008 and to run a tendering process for contracts including the changes. Appeal The Law Society issued the appeal in order to obtain clarity on the restrictions on the LSC's ability to amend the Unified Contract and to appeal in respect of the declaration where it was not successful. The LSC was also appealing against the decision taken in the original judgment. The appeal was heard in the middle of October and the judgment was handed down today. The court has upheld the Law Society's challenge to the LSC's unified contract. It also rejected the LSC's appeal and refused the LSC permission to appeal to the House of Lords and ordered it to pay Law Society's costs. The court held that the power unilaterally reserved by the LSC was not simply to make technical specifications but to rewrite the performance standards of the contract. In this 'extreme case', this power to insert new technical specifications and to amend any existing specifications without any restriction was held to be in breach of the procurement rules as it did not allow a potential service provider to determine in advance the performance and functional requirements it may in fact be obliged to comply with during the contract period. The Law Society is consulting with counsel on the precise ramifications of this judgment and will advise providers of their advice in due course. For more information,you may wish to read the Law Society's press release which also attached a copy of the judgment: http://www.lawsociety.org.uk/newsandevents/ |
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