The cost of practising as a solicitor is to fall by 6.7% in the coming year, although it may have to rise in future once the Law Society sets a new reserves policy.
The individual fee is dropping £12 to £266 in 2021/22, while the amount that firms pay – which makes up 60% of the money raised from practising fees – is staying the same, after the figures were approved by the Legal Services Board (LSB).
SRA Compensation Fund contributions will fall from £50 to £40 for individuals and from £950 to £760 for firms holding client money.
This means that individual solicitors will pay £306, down from £328 this year.
In all, the Solicitors Regulation Authority and the Law Society in its representative capacity will raise £104.3m from the fees, a £3.1m increase on the current year.
The continued rise in the number of practising solicitors – to around 158,000 – means that the individual fee can still be reduced.
Of this, £56.8m will go to the SRA and £28.5m to the Law Society, while the remaining £19m covers the profession’s contributions to the Legal Ombudsman, Legal Services Board, Solicitors Disciplinary Tribunal and the Office for Professional Body Anti-Money Laundering Supervision.
Practising fees are largely to pay for regulatory activities, but the Legal Services Act 2007 allows the Law Society in its representative guise also to use them for ‘permitted purposes’ – certain prescribed non-regulatory activities, such as law reform.
It has to fund activities not covered by permitted purposes from other income – Chancery Lane expects to raise a further £12m this way, with budgeted commercial income of £11.5m a decrease from last year’s £14m due to the impact of the pandemic.
The society also intends to draw £2.2m from the current £54.5m of reserves it holds.
In the notice approving the fees, LSB chief executive Matthew Hill said the Law Society expected to record a deficit of £8m for 2020/21.
He reported that, when asked what corrective action it was planning to address this, the society said it would set a new reserves policy at the end of the year that would “make clear the level of reserves it will aim to hold for permitted purposes and how that level will be achieved, which may involve a future increase in the [practising certificate fee]”.
The SRA recently became a separate corporate entity within the Law Society Group and how the reserves will be split is the subject of ongoing debate. “Early discussions” indicate that the SRA is likely to receive around £18m of these, Mr Hill said.
The LSB praised the consultations both the SRA and Law Society carried out on their budget plans – separately, for the first time.
Some 1,007 members took part in the Law Society’s, by far the best ever – more than four times the number who engaged last year and over 10 times more than the previous year.
Most were from a survey but 80 came from 17 focus groups that society held with groups it had identified as needing to hear from more.
These included the largest 200 firms, in-house practitioners, solicitors in Wales, junior lawyers, B2B firms and non-commercial organisations.
Most members (53%) felt the society should keep the amount of money it received from the PC fee the same at £28.5 million; 14% said it should seek more and 18% less.
The LSB said the society also learnt that there needed to be more education on who receives funding from practising fees and how those organisations spent the money.
Meanwhile, Nick Emmerson has been elected as the Law Society’s next deputy vice-president.
He will take office in October, becoming president two years later.
A Law Society council member since 2015, representing Leeds, he is a partner and head of capital markets at City firm Lewis Mathys Emmerson, specialising in cross-border mergers and acquisitions as well as international capital markets transactions.
Mr Emmerson has spent much of his career working in Asia, including five years working in Japan – where he worked in the Tokyo office of Herbert Smith Freehills with the other name partners, Steve Lewis and Nick Mathys – and two and a half years in Hong Kong and Shanghai with Eversheds (as it then was).
He was subsequently a partner at Gateley in Leeds – and is the immediate past president of Leeds Law Society – before joining Lewis Townsend, renamed Lewis Mathys Emmerson last month, at the start of this year.
He is qualified to practise in England and Wales, California, Hong Kong and the Republic of Ireland.