Members of Parliament have called on the government to clarify compensation arrangements for solicitors affected by the recent cyber attack on the Legal Aid Agency (LAA).
The Commons Justice Committee has formally requested answers after evidence submitted to its access to justice inquiry highlighted widespread uncertainty surrounding the emergency funding measures introduced following the incident. Legal aid providers across civil, family, and criminal sectors have raised concerns about whether contingency payments should be treated as loans, advances, or grants, and how they should be taxed.
In correspondence to legal aid minister Sarah Sackman, the committee’s chair noted that many firms remain unclear about the VAT implications of these payments and the long-term financial consequences for providers already under significant pressure.
The committee also heard evidence that the cyber attack has placed a substantial administrative burden on legal aid firms. Solicitors have been required to rely on paper applications, manage cases outside digital systems, repeatedly interpret changing guidance, and maintain parallel records to prepare for future reconciliation. Providers report that this additional work has not been remunerated.
MPs have urged the government to urgently engage with HM Revenue & Customs to issue a clear and authoritative position on the tax treatment of contingency payments. They are also seeking confirmation on whether the government will assess the extra time spent on disrupted casework and consider introducing a compensation scheme for non-billable administrative work caused by the attack.
