The Legal Aid Commission is cracking down on clients dodging their dues, with one in four defendants not paying their debts.
But the commission's head has warned that while he expects to see some increase in money recouped from cash-strapped clients, the payback will not be significant.
ACT Auditor-General Maxine Cooper on Wednesday released a report into the commission's grant system.
The report found the commission's governance and administration of more than 2000 grants handled each year was ''effective overall''.
But Dr Cooper's office said the commission made ''substantial financial losses in recent years'', with more lean years on the horizon.
The auditors called for the management of in-house work to be scrutinised with the same rigour as that outsourced to private practitioners.
The commission's chief executive, Andrew Crockett, has repeatedly warned his office faces mounting financial pressure.
As recently as last month the commission, in its annual report, spoke of the ''stark reality'' of having to cut services unless its base revenue grew.
The commission provides representation to thousands of needy Canberran. It had income of almost $11.4 million last financial year.
And in the coming 12 months it faces ongoing financial challenges.
These include several murder trials and the costly inquiry into David Eastman's conviction for the murder of federal police officer Colin Winchester.
Legal aid clients are required to pay a $90 contribution for the service unless their money situation renders them eligible for a waiver.
''One of the problems we face is that our client base is typically fairly impoverished,'' Mr Crockett told The Canberra Times.
Dr Cooper's office reviewed 50 successful legal aid grants.
It discovered 25 per cent of the commission's eligible clients failed to pay their $90.
In the past four financial years the commission was forced to write off as unrecoverable more than $370,000 in owed contributions. The auditors recommended the commission improve the recovery of client contributions, and Legal Aid agreed.
In April the commission rolled out a new policy involving follow-up letters and better communication.
But Mr Crockett was doubtful significant inroads would be made in the amount owed by needy clients.
''I would expect there will be some increase in the amount we recoup.
''But it's not going to be a significant figure,'' he said.
Mr Crockett described it as ''a fairly positive report that recognises the improvements to our business practices'', while noting there was more work to be done.
But the report found the commission's in-house lawyers weren't subject to the same level of management as private practitioners brought into to help with the caseload.
The auditors said the in-house services did not provide regular progress reports on client services, and did not use an electronic ''eGrants'' management system. The commission said it would roll out eGrants to in-house practitioners, but warned about the potential for rising overheads relating to extra progress reports.
And it ''sounded a note of caution'' about making cost comparisons between in-house lawyers and private practitioners.