Defendants could be forced to choose between a solicitor and barrister for criminal matters under tightened controls on grants by the ACT Legal Aid Commission.
But a peak legal body fears the move is a sign the commission is so underfunded it can no longer perform its vital role representing the territory's most vulnerable people through the court system.
The commission informed the legal fraternity last month that budget pressures meant it had to cut costs. Criminal law grants were identified as a target for savings.
Statements published in legal newsletters explained measures would include restrictions on the briefing of barristers and the provision of a solicitor when counsel had been instructed.
Legal Aid chief executive John Boersig said solicitors would be replaced by paralegals during trials where appropriate. Dr Boersig insisted the changes would not sacrifice service.
But the ACT Bar Association said both measures had the potential to seriously undermine the administration of justice.
Association president Greg Stretton, SC, said the move was akin to a patient undergoing surgery without the appropriate personnel.
"Likewise, the removal of either solicitor or counsel from serious matters carries significant prejudice for a litigant in relation to matters that may impact on the rest of that person's life and their family's lives," Mr Stretton said.
ACT Law Society president Martin Hockridge said lawyers often did Legal Aid work at a loss and the move could reduce the number of practitioners willing to volunteer their expertise. "The more it gets tightened up, the more firms will look at whether they are in a position to help out by running criminal matters," Mr Hockridge said.
The cost cutting measures come only months after Legal Aid ACT president Michael Peedom used the 2012-13 annual report to warn services would suffer if it could not secure additional funding in the coming years. The commission is co-funded by both the ACT and federal governments.
Commission figures show a 17 per cent fall in the number of grants of legal assistance in the past five years despite the ACT population growing by 10 per cent over the same period.
Dr Boersig said the commission had to make do with its limited resources.
"We get X amount of dollars from the government … and we've got to try and spend it in the most efficient way," Dr Boersig said.
"We're looking inside this organisation first [and asking] where can we make savings?
''Where can we run more efficiently? And we're trying to do that in a variety of ways. What we're after is a percentage change, between a 5 to 8 per cent improvement."
Mr Stretton said the failure to properly fund Legal Aid was unacceptable and undermined the administration of justice.
"It seriously disadvantages those in need and burdens the courts with self-represented litigants," Mr Stretton said.
"This not only prejudices the delivery of a just outcome to the individual, but brings significant inefficiencies to a court system already the subject of well-publicised delays."