The vast majority of legal aid civil and housing work is loss-making according to concerning new figures on the sector.

Over 80% of housing and family legal aid work is undertaken at a loss, with all of the providers of housing advice through legal aid in the sample making a loss on these cases.

This new data is a stark reminder of the fragility of the sector, underscored by the dearth of providers, including legal aid ‘deserts’ in many parts of the country, and vast numbers of people leaving the market.

Providers of housing and family legal aid are a mix of not-for-profit organisations and private solicitor practices. The data revealed all the not-for-profit enterprises sampled in both areas of law were making a loss.

Law Society president Nick Emmerson said: ‘This research reveals an untenable situation where reductions in fee levels by successive governments mean fee-earning staff cannot even recover the costs of providing legal aid, let alone generate a profit to make the organisation sustainable.

‘Those who remain in the market are only able to do so by cross-subsidising from other areas and relying on the goodwill of staff to regularly work overtime, leading to real difficulties with recruitment and retention – especially at senior levels of the profession.

‘Others are taking the decision that legal aid work is simply no longer viable and exiting the market, leaving areas of the country with no legal aid provision at all.’

He added that the government needs to take this new data seriously if it is to continue to commit to providing legal aid services: ‘With the Civil Legal Aid Review now in its final stages, this research provides a model for future analysis and setting of fee rates at a realistic and sustainable level that is fair to both providers and taxpayers.

‘Moving money around within the existing fee structures or between areas of law will not work and will only make other parts of the system even less sustainable.’