[1]Neale: Crisis has increased workloads
The Bar Council and Bar Standards Board have announced a series of measures – including furloughing – to make savings of more than £200,000 to aid the profession during the Covid-19 crisis.
However, this is against a background of an overall budget for 2020/21 of more than £18m, and the Bar Council said that “further savings measures may well be required”.
Both bodies have implemented a pay and recruitment freeze, while their chairs, vice-chairs and chief executives have all taken a voluntary temporary 20% pay cut ahead of an expected fall in income.
In addition, the Bar Council – which is making £98,000 of savings in all – has so far furloughed seven of its 35 staff, whilst also reducing the activities in its business plan for the year and doing “as much as possible online”, including training courses and major events such as the pupillage fair.
The Resources Group – the shared services team that provides both bodies with finance, IT and HR support – has furloughed six out of 41 roles.
The BSB said that regulatory demands, such as the need to make new arrangements for Bar students whose exams have been delayed and to help the Bar to maintain pupillages, meant it has been “unable to furlough staff now”. The other staffing measures should save £110,000.
The two bodies’ budgeted income for 2020/21 is £18.7m, of which £15.4m comes from the practising certificate (PC) fees. It was anticipating an £807,000 surplus.
The BSB receives two-thirds of the PC fees, the Bar Council 28% and the rest goes to pay for the Legal Services Board and Legal Ombudsman.
The Bar Council’s reserves policy is that they should be the higher of four months operating costs or £3m; the most recent figures show it currently holds the latter.
Bar Council chief executive Malcolm Cree said: “Right now, our focus is on supporting the profession we represent through this crisis. We have been working flat out to ensure that the vital public service and contribution to society and the economy that the Bar provides is recognised and supported. The scale of the challenge for practitioners and chambers must be addressed.
“As the Bar Council (including the BSB) is funded by the Bar, with fees based on earnings in the previous year, we are anticipating a significant drop in income next year, hence the need to cut costs early so we do not become a greater financial burden on those we are trying to support…
“We are a very small organisation, which relies heavily on our dedicated staff and some 400 volunteer barristers, and punches well above our weight, but we know that we need to be as lean as possible, especially now.”
BSB director-general Mark Neale said the crisis “has actually increased workloads in several areas… but we shall continue to seek savings wherever we can”.
The Law Society and Solicitors Regulation Authority (SRA) are yet to make any similar moves. A Law Society spokesman said: “We are talking to our members about a wide range of issues and our focus right now is on supporting them through this crisis. The society is reviewing its own situation as part of our response to the crisis and will continue to do so.”
An SRA spokesman added: “We, like other organisations and law firms, will be considering the longer-term impacts of the pandemic in due course once they are properly understood.”
We reported recently that the most recent figures show that the Law Society is sitting on reserves of £73m [2].
The Council for Licensed Conveyancers (CLC) was the first regulator to offer financial support, allowing the firms it regulates to defer the regulatory fees [3] they pay.
A spokesman said: “The CLC has always sought to be as efficient as it can in its budget management as well as being an effective specialist regulator so maintaining high standards of compliance.
“Owing to this, we are currently in a position that so far as is possible within the government’s social distancing requirements we are able to operate business as usual.
“The CLC’s council and senior management team are keeping matters under close review and, while we have put new recruitment on hold, for the moment we do not expect to need to make any significant changes.”
A spokeswoman for the Chartered Institute of Legal Executives, which is the other main legal regulator, said: “We continue to review our resourcing model given the circumstances of Covid-19 and as its impact on our markets continues to evolve.
“Our priorities remain the wellbeing of our staff and continuing to provide the best possible service to our members and customers.”
In contrast to its southern counterpart, the Law Society of Scotland yesterday unveiled a £2.2m package of financial support in response to the coronavirus, reducing the PC fee for every solicitor by 20%, and the ‘accounts fee’ levied on partners by the same amount for the coming year.
Further, the client protection fund contribution for law firm partners will be reduced to zero for the year.
Subject to approval at what is likely to be a virtual general meeting of the society next month, these changes will save solicitors up to £380 a year.
The society has already furloughed 20% of its staff, imposed a recruitment freeze and identified other savings for the current operating year.
John Mulholland, president of the Law Society of Scotland, said: “We know that 90% of law firms have faced a reduced turnover as a direct result of coronavirus. Almost a quarter of solicitors in private practice have been furloughed including over 200 trainees.
“This is why the Law Society is responding with a significant package of financial support at this critical time. It means individual solicitors will save up to £380 compared to last year and save many law firms tens of thousands of pounds.”
Mr Mulholland said the society has had to make “tough choices” and that it would be “cutting deep” into the society’s reserves.
He added that the society was able to suspend new payments into the client protection fund because it has reserves of over £5m.
Meanwhile, the Law Society of England and Wales has welcomed confirmation from the Ministry of Justice that solicitors who are key workers are eligible for Covid-19 testing [4].