Law Society: replenishing reserves slowly
The cost of practising as a solicitor will rise well above inflation this year, mainly to ensure the Law Society has the funds to compensate the victims of fraud, but also to make up the cost of IT project overruns.
The Law Society council yesterday decided that the individual practising certificate fee will rise 5% in 2012/13, from £328 to £344.
The council also approved the Solicitors Regulation Authority (SRA) board’s recommendation to increase individual Compensation Fund contributions from £60 to £92. The contribution for firms will rise from £722 to £1,340.
As reported yesterday on Legal Futures, the society is to run at a £10m deficit this year. Law Society chief executive Des Hudson, whose remuneration package went up 6.8% in 2011, said: “The funding requirement to meet the budget for 2013 would have been just over £100m, but during the current year, the Law Society group has accessed £10m from reserves, mainly to meet overrun costs on certain IT projects.
“In order to gradually rebuild those reserves, the proposed 2013 net funding requirement has been set at £103.5m. The alternative, to replenish those reserves in one go with a large increase in the PC fee, would have placed an unnecessary burden on the profession.”
The society pointed out that last year PC fees dropped from £428 to £328 after reducing the net funding requirement of the Law Society Group.
SRA chief executive Antony Townsend said: “We recognise the imperative to keep regulatory costs to the minimum required to regulate effectively and to protect the public interest. The SRA’s net funding requirement for 2013 has reduced. The increase in Compensation Fund fees follow a period of historically low fees, and is necessary to ensure that we have sufficient funds to cover predicted claims, and to minimise the likelihood of us having to seek further funding in-year.”
The proposals, which were discussed and agreed behind closed doors when in years gone by budget debates were in open session, will be submitted to the Legal Services Board for formal approval.
Meanwhile, Lucy Scott-Moncrieff, managing partner of Scott-Moncrieff and Associates LLP (also known as SCOMO), has become the new Law Society president. SCOMO is a virtual law firm that undertakes legal aid work on behalf of vulnerable children and adults as well as privately paid work for individuals and businesses, and has applied to become an alternative business structure.
