The Commonwealth and the states are negotiating a new national partnership agreement (NPA) on government-funded legal assistance services, including federal funding for legal aid commissions across the country.

Legal Aid NSW chief executive Bill Grant said it would be "one of the losers" under the agreement as a new funding formula reallocated funds between the states and territories.

"Legal Aid NSW will receive less funding under the proposed agreement," he said.

Mr Grant said that as a result of last week's federal budget, funding for Legal Aid NSW would be $16.7m less in real terms over the next five years.

He warned this would result in a cut in frontline family law services.

Legal Aid runs family law advice clinics and its lawyers also appear for women and children in Family Court disputes, many of which involve child custody and access issues.

"The terms of the proposed national partnership agreement will see some cost shifting from the Commonwealth to the state which will also mean a reduction in frontline services," Mr Grant said.

"Given that the funding for legal aid commissions nationally has not increased, the distribution resulted in winners and losers under the new funding formula. Legal Aid NSW is one of the losers."

The state and territory attorneys-general will meet their federal counterpart George Brandis in Canberra on Friday. They are expected to sign off on the new agreement by June 30.

NSW Attorney-General Gabrielle Upton has said the government is "deeply concerned about the Commonwealth's funding cuts to Legal Aid NSW and Aboriginal Legal Services next financial year".

"The Commonwealth is asking NSW to do more with less," she said.

Senator Brandis said: "NSW has an overall increase in Commonwealth legal assistance funding under the proposed new NPA.    This includes an increase to funding for community legal centres."