The Lord Chancellor has announced a more competitive approach to the way lawyers are paid in criminal trials, in an effort to curb legal aid spending.
Lord Falconer announced some of his proposals for reform in May
Lord Falconer said Lord Carter had been appointed to investigate bidding between lawyers for legal aid cases.
Lord Carter will also look at making one lawyer per case responsible for ensuring it meets an agreed budget.
The proposals have been published in a Department for Constitutional Affairs' paper "A Fairer Deal for Legal Aid".
FAIRER DEAL PLANS
Judge to estimate how long a case should last - before it begins
Lawyers to bid for legal aid cases
Establishment of Very High Cost Case Review Board
New payment methods for 'competitive pressure'
Prosecution disclosure specialist to look at disclosure issues in complex cases
The document noted that solicitors in Crown Court cases were paid by the hour.
"This means that volume of work, rather than efficiency, is rewarded financially," it said.
"A competitive approach means firms who work more efficiently could be rewarded with an increase in their market share.
"Greater competition would reward those firms who are more innovative and efficient and thereby promote a sustainable supplier base."
Lord Falconer said agreeing a budget before the trial began would make it "financially unrewarding" for lawyers if it overran as they would have to absorb the extra costs.
Asked if he expected smaller law firms to face closure if the proposals came into force, he said: "I wouldn't expect them to go out of business but to go into mergers or join bigger firms."
Lord Falconer admitted some of his proposals would be "controversial", adding: "But I make it clear that I am determined to tackle the problem of legal aid."
Earlier, he said 1% of criminal cases accounted for 50% of legal aid spending.
The paper published on Tuesday also announced the establishment of a "Very High Cost Case Review Board".
After long trials, "key players" from the criminal justice system will examine the reasons for the length of time taken, and agree ways that the management of the cases could be improved.
Response to plans
Since Labour came to power eight years ago, the legal aid bill has increased by more than a third to more than £2bn.
Shadow constitutional affairs secretary Oliver Heald said Lord Falconer's announcement was "another example of the government belatedly responding to a crisis of its own creation".
He said earlier reforms, such as the abolition of means testing for legal aid had led to an "escalation in costs".
"As a result, many small firms of solicitors are going to the wall and it is becoming increasingly difficult for the public, particularly the most vulnerable, to find lawyers able to take on legal aid cases."
The Bar Council has said barristers are not adequately paid for preparatory work, which shortened the length of trials.
In June, 97% of more than 1,000 barristers asked by the Criminal Bar Association said they could take action over pay for cases lasting 10 days or less.
On Tuesday, Lord Falconer said that Lord Carter would also consider the fees structure for such cases.
But Bar Council chairman Guy Mansfield QC said: "This announcement does nothing for the vast majority of hard-working barristers prosecuting and defending in trials lasting up to 10 days.
"They earn modest sums and have had their pay frozen for eight years, a cut of 23% in real terms.
"The failure to make immediate provision for these cases is unjust and hits young barristers hardest."