The president of the Law Society yesterday described legal aid provision as "very, very fragile" as a study predicted hundreds of city firms would go to the wall over the next two years.
Fiona Woolf, appointed in July, said sweeping changes to the way the legal aid budget was administered meant double the number of businesses predicted would fail because of Lord Carter's reforms.
She was speaking on a fact-finding mission to Birmingham to discover the views of the local legal community on the proposed reforms.
Government troubleshooter Lord Carter announced a string of measures to make the legal profession more cost effective, including price competitive tendering for all aspects of criminal work.
He believes #100million can be saved if a greater volume of work is allocated to a smaller supplier base and that firms holding smaller contracts - up to 63 per cent of existing businesses - will merge to meet any minimum contract size criteria that may be levied.
But his merger idea is viewed as optimistic by those in the legal profession - most, it claimed, would either cease doing legal aid work or opt out of the business entirely.
According to a new study commissioned by the Law Society, the maximum profit a legal aid case generates is two per cent while many are operating to a profit loss of six per cent.
"The supplier business is very, very fragile," said Ms Woolf.
"Here in Birmingham you have a lot more legal aid firms than London and a lot of firms doing this work out of a sense of public duty.
"They also do other work so that they can stay in business and make a living. But they like to do the work, it's part and parcel of being a lawyer.
"Some have wound it down in the last couple of months, and some have stopped completely. People are voting with their feet."
Lord Carter predicted, nationally, that the number of firms going out of business would be roughly 400 - the Law Society's LECG report put it at 800, and up to 100 Birmingham firms could be at risk.
The advent of fixed fees for family law practitioners - due to come in next year - and the reduced number of lawyers prepared to do this sort of pro-bono work would disastrous for clients such as battered wives and the homeless, whose cases are often hugely complex in terms of emotional ties and human rights issues.
"It is the worst possible scenario for the most vulnerable," said Ms Woolf.
"But why would people actually do that work? The big problem is it can't be done economically.
"Areas of the country, like Kent, are advice deserts in criminal and civil work," she said. "It is like the corner shop and the supermarket problem. In rural areas you have to travel 100 miles to find a lawyer who will be able to do legal aid work.
"If you get it wrong that person is going to get caught up in the justice system, go to prison and live a life of crime for the rest of their life."
It seems the desertification of legal aid is already happening.
A recent survey by the Law Centre Federation found that nine out of ten law centres regularly turned away clients eligible for legal aid while seven out of ten reported that their ability to offer legal advice was deteriorating. Three out of ten also reported problems finding help for victims of domestic violence.
As well as the cost to public service and small businesses, Ms Woolf said there was a question mark over how much the reforms would save the Government.
"Lord Carter has not been able to explain the economies of scale. There's a limit to how much you can commoditise legal aid work. Computers can't build in the amount of face-to-face time will be needed or the time in court you will have to spend.
"One of the main failings of Tony Blair's premiership has been not to put enough money into the justice system to sort the courts out and he has not put enough money into legal aid. That essentially means he has ignored the third limb of the 1945 reforms of health, education and access to justice."
* CASE STUDY: A duty to the community - click here