24 September 2012

LSB’s “open debate” on cost of regulation throws spotlight on practising fee split

The possibility of the Law Society and other representative bodies being cut off from any of the money raised by practising fees has been raised by a Legal Services Board (LSB) call for an “open debate on the cost of regulation”.

In a letter to new justice minister Helen Grant, LSB chairman David Edmonds said there needs to be “a better understanding of the costs of the LSB and OLC [Office for Legal Complaints, the formal name of the Legal Ombudsman], the regulatory costs of frontline regulators, the costs for ‘permitted purposes’ other than regulation which approved regulators can levy on individual lawyers, and compensation and other related costs”.

He highlighted it as one of the issues the LSB will address following the government’s triennial review of how the board is functioning, which gave the regulator a clean bill of health.

This year the Law Society as the approved regulator (encompassing both its representative work and regulation through the Solicitors Regulation Authority) is raising £103.5m. Some 24% of this – £25m – goes to the Law Society for the cost of work that is not regulatory in nature but the Legal Services Act still allows it to levy on the profession for a ‘permitted purpose’.

Permitted purposes include giving support and advice about practice management, promoting human rights and public legal education and “the promotion of relations between the approved regulator and relevant national or international bodies, governments or the legal professions of other jurisdictions”.

The rest of the practising fees goes to the Solicitors Regulation Authority (51%), the LSB/OLC (19%) and the Solicitors Disciplinary Tribunal (3%), with 3% going into a contingency fund.

The other bodies where there is an internal split between regulation and representation face the same issue.

Also in the letter, responding to the review’s recommendations on possible changes to the LSB’s corporate governance, Mr Edmonds rejected the idea of having an open board meeting – a frequent request of this website.

Though he said the LSB understood the arguments for open meetings, “the board has concluded that the free and frank provision of advice to board members, the need for confidential and unfettered exchanges of views between board members and the board’s commitment to cabinet responsibility for board decisions necessitates private session”.

 

By Legal Futures

Tags: Law Society, Legal Services Board, Office for Legal Complaints, practising certificate fee, Solicitors Disciplinary Tribunal, Solicitors Regulation Authority