Mr Justice Pritchard overturned a ruling from the Legal Services Commission - the body that decides who is entitled to legal aid - in which it said it had no power to fund the claim.
The judge said a "serious wrong-doing by a public authority" - a key criterion for the granting of aid - may have taken place because the parent alleged she had repeatedly asked for help from the council over a period of two years.
The mother claims the council's failure to put the boy in secure accommodation led to a foreseeable head-on crash as he drove a stolen car while being pursued by police. The teenager, who cannot be named, was left with serious injuries.
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