The fundholders, who would not necessarily be lawyers, were proposed by the Social Market Foundation, the centre-right think tank, which said the legal aid scheme risked collapsing under the burden of escalating costs.
The idea was immediately denounced by legal sources, who insisted it was a jumble of Thatcherite ideas that would mean semi-privatisation of the Legal Aid Board, which administers the civil scheme, while imposing cash limits.
The authors - Tony Holland, a former Law Society president, and two Bristol University academics, Gwyn Bevan, a health economist, and Martin Partington, professor of law - propose that fundholders need not be solicitors 'and would have no vested interest in using traditional legal services'.
They would seek 'the most cost-effective means of access to justice, which in many cases would involve a new breed of lay ombudsmen and arbitrators.
The fundholder, similar in status to a GP fundholder, would resort to lawyers and courts 'for complex cases', the paper suggests.
The authors call for the Legal Aid Board to be able to negotiate block contracts with selected 'fundholding' firms who would be assured a significant volume of work in return for reducing their prices.
Legally-aided people should be made 'more cost- conscious by developing the idea of co-payment between the client and the state'.
Russell Wallman, head of professional policy at the Law Society, the solicitors' professional body, said: 'These proposals would be likely to be a means of rationing legal aid to which we are strongly opposed.'Reuse content