Legal aid’s $308m runs partly on rules nobody wrote down

The High Court has done what the Ministry of Justice would not. It has let taxpayers see how part of a $308 million-a-year spending programme is actually run. Justice Victoria Heine has ruled that Stuff can publish parts of a confidential audit into how legal aid cases are assigned to law firms, while still restraining material supplied in confidence by Auckland firm Thode Utting, along with personal and commercially sensitive detail. The parties now have to agree which sections can run.

The courtroom fight over the injunction has drawn most of the attention. The more important story is what the court has unlocked, a finding that a government department handing out hundreds of millions of dollars has been running a key part of that process on informal discretion.

Discretion without a rulebook

The audit, by KC Todd Simmonds, examined how the ministry assigns legal aid cases outside its standard rotation. He found that process was governed by “general and informal processes within the ministry that are out of step with the intent and provisions of the expected process”. Grants officers received no formal guidance on non-rotational assignments. Instead, informal policies were applied inconsistently from office to office. Simmonds recommended the process be revised and formalised.

That sits awkwardly beside the rest of the system. Rotational criminal assignments run through an electronic roster that weights allocation by prior volume, availability and policy exceptions, with the Public Defence Service automatically given 50% of rotational assignments in the courts where it operates. The front door is structured. The side door, it turns out, was not.

The sums are not small

The ministry paid out $308 million in legal aid in 2024/25, up $23 million on the year before, across 1,437 firms. Its own figures show costs climbing from $192.5 million to $304.7 million over five years, with Budget 2026 adding $30.4 million that is time-limited to the current financial year.

The money does not all go on lawyers’ hours either. In 2025, the Herald reported that about half of legal aid spending went to disbursements such as expert witnesses. That is precisely where the other half of the Simmonds audit landed.

A related-party arrangement worth asking about

The audit was triggered by a whistleblower complaint about Thode Utting’s use of Integral Reports Ltd, a company owned by principal Sumudu Thode and senior associate John Moroney, to produce cultural and alcohol-and-drug reports used in the firm’s own legally aided cases. Simmonds found the report writers had not been specifically influenced by Thode Utting staff, but concluded a potential conflict of interest still arose from the structure. His specific recommendation on that point was redacted.

Fairness matters here. The firm, through barrister Linda Clark, argued the report contained procedural and factual flaws and risked unwarranted reputational harm, and the ministry itself told the firm no wrongdoing by the providers had been identified. Nobody has been found to have broken a rule. The problem is that in the non-rotational space, there were barely any rules to break.

Suppression was the ministry’s first instinct

The Attorney-General, acting for the ministry, sought an urgent injunction to block publication of anything in the report, and in September won an interim order doing exactly that. Media Law Journal argued that decision applied the wrong test, using the ordinary arguable-case threshold instead of the “clear and compelling reasons” standard required in free-speech cases, and failing to engage with the Bill of Rights Act at all.

Heine’s ruling went the other way on the substance. The assignment findings were “government information in the true sense”, relating to a department’s “practices in distributing public money, and the effectiveness or otherwise of its policies”, and she was “not satisfied that such information has the necessary quality of confidence.” That is a judge telling a ministry that its own process failings are not its secret to keep.

Why business should care

The legal profession has made its own economic case. In 2025, the Law Society argued that for every $1 invested in legal aid, $2.06 in benefits are generated, and that remuneration was inadequate. That case is far easier to make when allocation is transparent. Firms competing for public work, and taxpayers funding it, are entitled to know that work is distributed on published criteria rather than local habit.

Any business that has bid for government contracts will recognise the pattern. Informal discretion is where favouritism, real or perceived, takes root, and where honest providers lose out without knowing why. Fixing it costs almost nothing. Write the rules down, train the grants officers, publish the policy.

The next test is whether the ministry does that without a judge making it. The parties are still negotiating what can be published. The ministry does not need permission to accept Simmonds’ recommendation and formalise its non-rotational process now. If it waits for the next court order, it will have learned the wrong lesson.

Sources

• ausnznet: 高院裁定：司法部法援分配审计报告可公开报道 (2026-10-25)
• Media Law Journal: Stuff gagged, wrongly? (2026-09-18)
• Ministry of Justice: Legal aid payments to firms (2026-02-26)
• Ministry of Justice: What’s new for lawyers providing legal aid (2026-02-26)
• Ministry of Justice: Criminal legal aid assignments information and criminal case reports (2026-03-11)
• NZ Herald: Legal aid spending climbs, Government seeks efficiencies in review (2025-05-16)
• New Zealand Law Society: Legal Aid Review 2025 submission (2025-08-01)