NSW is on the brink of a legal aid funding crisis and risks replicating the United Kingdom experience where strikes by lawyers over low fees have plunged the justice system into chaos, according to a confidential report to government.

Prepared by Legal Aid NSW in February and obtained by the Labor Opposition, the report said the delivery of legal aid "is increasingly under threat" and the hourly rates paid to lawyers are "significantly lower" than other states.

The confidential Legal Aid report calls for an urgent funding increase. Credit:Peter Braig

It called for an urgent $59.2 million funding increase this year – $236.8 million over four years – to "avert the crises experienced in other jurisdictions, such as the United Kingdom, where private lawyers have withdrawn their services and created a crisis in the justice system".

Funding for the NSW Legal Aid Commission dropped this year to $362 million, including capital expenditure, compared with $379 million last year.