The Law Society has called for the Government's controversial legal aid reforms to be put on hold amid media scrutiny of justice minister Jonathan Djanogly's alleged links to the claims management industry.

The responsibility for the regulation of claims management companies was passed from Djanogly to Justice Secretary Ken Clarke yesterday (17 October), following a review by Cabinet Secretary Sir Gus O'Donnell after The Guardian claimed that Djanogly could stand to personally profit from his own legislation.

O'Donnell said that while there is "no suggestion of any impropriety… for the avoidance of doubt decisions about the regulation of individual (claims management companies) should henceforth be handled by another minister".

The move has been welcomed by the Law Society, which warned that the controversy should not distract from the "vitally important task" of improving the Legal Aid, Sentencing and Punishment of Offenders Bill.

The Bill was unveiled by the Government in June this year in a bid to significantly reduce the £2.1bn annual legal aid budget by £350m, largely through a major withdrawal of civil legal aid. The Bill also includes the abolition of referral fees in personal injury cases, which Djanogly has argued force insurance companies to raise premiums.

Law Society chief executive Des Hudson said: "The decision for the Cabinet Secretary to insulate the minister from regulation of the claims management sector appeared to be a straightforward one. The Justice Secretary on the other hand has a bigger decision to make.

"Does he press on regardless with this substantially flawed legislation or does he take the opportunity for a pause to examine the evidence which indicates that, unless substantially amended, it will fail to deliver the hoped-for savings and may wreak havoc on access to justice for thousands each year."

In a statement, the Ministry of Justice said that it had found no evidence that Djanogly "acted in any way other than in the public interest".

A spokesperson said: "Mr Djanogly retains ministerial responsibility for civil justice policy. He has requested that the Claims Management Regulation Unit be overseen by a different Justice Minister, to avoid any possible distraction from this important issue. The Ministry of Justice has agreed to this change."

Djanogly (pictured), the Conservative MP for Huntingdon, was handed the legal brief for legal services and civil law in May last year. He was formerly a corporate partner at SJ Berwin, before quitting in 2009 to focus on his political career.

He became embroiled in controversy last year following reports that he had hired private detectives to investigate an alleged leak of information about his parliamentary expense claims.