Dame Margaret says up to 80 per cent of legal aid lawyers at Manukau District Court are `gaming the system'. Photo / Kenny Rodger

Dame Margaret says up to 80 per cent of legal aid lawyers at Manukau District Court are `gaming the system'. Photo / Kenny Rodger

The justice system has been undermined by more than 200 corrupt lawyers who are rorting taxpayer-funded legal aid, says a damning report by Dame Margaret Bazley.

Dame Margaret found lawyers taking backhanders, charging illegal "top-up" fees and grouping together to defraud the legal aid system, which costs New Zealanders $123.9 million a year.

Dame Margaret said she was horrified as she visited courthouses and found lawyers and defendants "abusing the system to the detriment of clients, the legal aid system, the courts and the taxpayer".

She said a small but significant core of lawyers, paid between $105 and $182 an hour, were bringing their profession into disrepute.

Asked how many corrupt lawyers she believed there were, she said "as high as 200 or even more".

Every court was affected, but Manukau District Court was the worst with up to 80 per cent of lawyers "gaming the system".

Dame Margaret said the system was so broken that the only way to fix it was to shut the Legal Services Agency, which administers legal aid, and shift its functions to the Ministry of Justice.

The Law Society has been given three years to clean up the profession or face regulation by the Government.

"The longer I talked to people, the more I found," Dame Margaret said. "I think I could have gone on forever."

Law Society President Jonathan Temm said it could have the accreditation process Dame Margaret recommended set up in six months.

But he criticised the lack of concrete evidence in her report, saying that not naming lawyers left the society "boxing with shadows".

Dame Margaret said she was not able to verify a lot of what she was told, but this was part of the problem as "everyone knows what is going on but no one complains".

She said some matters should be investigated further, including by police.

But the best option overall was to fix the system and get rid of the corrupt lawyers as soon as possible.

She criticised "car boot lawyers" who operated with a phone, and met clients at court with no preparation.

And she said many lawyers simply failed to turn up for cases, usually because they were double-booked.