Lawyers are warning the changes mean less money to pursue negligent accountants, while the English ICA has responded by saying it has no evidence the reform of legal aid has created an obstacle.
The government’s legal services commission, which introduced the reforms to legal aid in April, confirmed many areas of professional negligence no longer qualify for legal aid.
Patrick Reeve, legal adviser at the commission, said that the reforms came about following a perceived need to focus funds on areas of need, such as human rights cases and issues involving families and children.
‘It was felt that businessmen could fund their own legal cases in context to the allocation of public resources,’ said Reeve.
However, the reforms are ‘too general’, according to Louise Sykes, head of the professional negligence team at Irwin Mitchell solicitors,
‘New exclusions from legal aid funding will affect many potential claimants.
People whose livelihoods are in ruins due to bad accountancy advice on business deals are to be excluded,’ she said.
The two areas of reform that have led to criticism are the exclusion of access to legal aid in cases involving the running of a business and ‘disputes over partnerships, companies or trusts’.
‘This means that in many areas of business and private life there may be hundreds of cases in which accountants’ advice or behaviour ought to be checked and yet they will simply get away with their misdemeanour because the potential claimant may not be able to find a way of funding his claim,’ said Sykes. She said that there is particular concern about small companies.
Peter Burton, head of regulatory policy at the English ICA, dismissed the warning: ‘Users of accountancy services can still complain to an accountant’s professional body. All of our members have professional indemnity insurance.
‘And besides I am unaware of anybody who cannot take a claim forward against an accountant through lack of legal aid,’ said Burton.
But he said a claimant would not receive monetary redress from a professional accountancy body.
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