Cuts to Standard Monthly Payments – guidance to firms

We’re aware that some firms may be having their Standard Monthly Payments (SMPs) cut by the Legal Aid Agency (LAA) as a result of low billing over the past few months due to coronavirus (COVID-19).

We’ve asked the government to provide comprehensive support for cashflow for legal aid firms, but so far this has not been forthcoming. We would recommend that firms do not rely on any such help being offered.

We've contacted the LAA to clarify the position regarding the SMP protocol and the reconciliation of contract payments more generally. It has confirmed that there is some limited flexibility within the process of reconciliation contract payments which might help some individual firms. However, the LAA is only able to consider this in light of the full facts of the individual circumstances.

The LAA suggests that organisations contact their contract manager in the first instance if they have queries about changes to their SMP, and if they believe that they can demonstrate ‘exceptional circumstances’. If after speaking to your contract manager you cannot resolve the situation, the LAA advises speaking to the Reconciliation team.

Note that organisations citing the pandemic restrictions as an ‘exceptional circumstance’ will not be demonstrating sufficient cause as to why the protocol should not be applied. Organisations will also need to provide details about why an intervention in the usual reconciliation method would cause them financial difficulty and how any reconciliation balance would be cleared.

If you’re facing a cut to SMP, we strongly advise you to speak to your contract manager in the first instance, and we suggest raising the following points. If you're not successful please contact us at defendinglegalaid@lawsociety.org.uk.

Guidance to the protocol governing the SMP regime

Guidance to the protocol governing the SMP regime states that “there may be exceptional circumstances where it is appropriate to vary the action required to reconcile an account. Any exceptions are subject to agreement on a case by case basis with the Operational Assurance Reconciliation team…”

You may wish to ask your contract manager in your individual case whether the exceptional circumstances provision may apply.

See section 2 of the guidance (PDF)

Public Procurement Notes

Public Procurement Notes (PPN) 02/2020 and 04/2020 require public authorities to take specific steps to protect their suppliers during the pandemic.

You may wish to draw your contract manager’s attention in particular to the following obligations from PPN 04/2020:

“All contracting authorities should:

  • Review their contract portfolio, including where they are providing any contractual relief due to COVID-19 and, if appropriate to maintain delivery of critical services, continue or commence measures in line with PPN 02/20.
  • Work in partnership with their suppliers and develop transition plans to exit from any relief as soon as reasonably possible. This should include agreeing contract variations if operational requirements have changed significantly.
  • Work in partnership with their suppliers, openly and pragmatically, during this transition to ensure contracts are still relevant and sustainable and deliver value for money over the medium to long term.
  • Continue to pay suppliers as quickly as possible, on receipt of invoices or in accordance with pre-agreed milestone dates, to maintain cash flow and protect jobs.”

View PPN 02/2020

View PPN 04/2020

If you’re in this situation we would like to hear from you about the impact this is having on your firm. Email us at defendinglegalaid@lawsociety.org.uk.

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