A leading asylum advice charity has gone into administration following a legal aid cash-flow crisis.

The Ministry of Justice has blamed the charity for causing its own demise by refusing to adapt to modern funding models.

Trustees of the Refugee and Migrant Justice (RMJ) have signed the responsibility for its remaining clients over to administrators BDO, just two weeks after a high profile petition was launched for the government to step in and help.

Caroline Slocock, chief executive of RMJ, insisted the charity’s books were balanced, but blamed the time it took for legal aid cheques to come through for the closure.

“We expect to receive sufficient income to cover our costs this year,” said Ms Slocock, adding: “The reason we are facing administration is different. It is because of a new payment system in which we only get paid on completion of case stages.

“If a representative does a proper job, it can take months and sometimes years to complete an asylum case. No charity can afford to wait so long for payment.”

The charity’s decision comes two weeks after an open letter was sent to the Justice and Home secretaries, signed by the legal aid lawyers as well as Liberty director Shami Chakrabarti, the Archbishop of Canterbury and children’s charity Barnado’s, demanding payment for the RMJ.

The MoJ has insisted it did everything it could to help RMJ stay afloat, but added that it was a case of ‘survival of the fittest’ in what it considers to be an oversaturated market.

“We fully appreciate the value that organisations like RMJ bring in providing this service to particularly vulnerable clients. They have received substantial support to help them transfer to the current payment system,” it said in a statement.

“However, it is also crucial that the government achieves value for public money. The fixed-fee system introduced three years ago is already being successfully used by the vast majority of not-for-profit organisations in this area of law. As other organisations have successfully made this transition, it is only reasonable to expect Refugee and Migrant Justice to do the same.

“We are confident there is widespread provision of legal advice in this area, with more than 250 offices nationally providing this type of service. Providers are also currently bidding to handle more than double the amount of cases currently available.”

The RMJ argues that is has worked hard to meet new funding levels and currently breaks even despite a 40 per cent cut in income. But the charity, which also runs support centres in detention centres, claims other firms are not providing real value for money with their case loads.

Hitting back at the MoJ’s belief that the market is oversaturated, Ms Slocok added: “[other groups] make massive profits by closing cases having done little work to advance their clients interests. They earn the whole fixed fee and they minimise their work in progress. Providers like RMJ that try to do a proper job earn far less and then have to wait years for payment.

“The MoJ is also categorically wrong to imply RMJ is the only provider to be suffering. The Law Centres Federation and many others, including the Law Society, have all publicly stated the payment system is not sustainable, and if our working capital problems are just passed on to others it will only make things worse.”