LAG learnt yesterday that the Immigration Advisory Service (IAS) has folded due to financial problems. The trustees of IAS, which is a charity, took the decision to put the organisation into administration from Friday last week. We believe that in recent years IAS has been suffering cash flow problems caused in large part by its dependence on legal aid income. Like Refugee and Migrant Justice (RMJ), which went into administration in June last year, these cash flow difficulties were caused by the change to fixed fees for legal aid work three years ago, which resulted in reduced income and delays in payment. The charity also carried large liabilities for the costs of interpreters, experts and other third parties, who carried out work on cases for it.
LAG understands from a statement on the charity's website that it was trying to negotiate the repayment of money owed to the Legal Services Commission (LSC), but the Board took the view that it would not have sufficient cash in the future due to the pending legal aid cuts to pay off this debt. LAG believes that around 30 per cent of IAS's work involved non-asylum immigration advice, all of which is due to be cut from scope. The organisation would also have been badly hit by the ten per cent reduction in fees due to be introduced in the autumn.
It is thought that IAS has over 25,000 live cases (over double the number which RMJ had when it was placed in administration). IAS employed around 300 staff. It worked from 14 offices and had a further 12 outreach services hosted in other locations. A message on the LSC's website requests that clients check the IAS website for updates on the transfer of their cases.
LAG believes that in some areas of the country, for example Greater Manchester, up to 80 per cent of the supply of immigration legal advice funded by the legal aid system was provided by IAS. Many firms and not for profit organisations either lost some or all of their work to IAS in the last tender round two years ago. Due to procurement law and the reduction in capacity among firms which lost out in the last tender, it will be extremely difficult to find alternative representation for all of the IAS clients. LAG believes the government could be in danger of breaching international law which requires that legal advice services are provided to refugees seeking asylum.
What has happened to IAS illustrates the folly of pursuing a strategy of trying to concentrate legal aid work between fewer larger suppliers, which is what the LSC has been trying to do in immigration law. Also, in the last year, the legal aid system has lost its two biggest suppliers of immigration law services due to financial difficulties, in large part caused by cuts to the legal aid system. This begs the question when will the government take heed of what the market appears to be telling it - that the fees paid for many types of legal aid work are not sustainable.