
LSB: Contingency budget proposal
The Law Society and the Bar Council have strongly attacked plans by the Legal Services Board (LSB) to increase its budget by 14% to over £6m for the year ahead.
But the society also urged the oversight regulator to keep a closer eye on the Solicitors Regulation Authority (SRA).
Responding to a consultation on the LSB’s draft business plan for 2025/26, the society said that, given the “significant increase” in the budget last year – 10%, reduced from 14% – and “the slimmed-down profile of expected policy work this coming year”, it was “difficult to see the justification for another significant increase in resources and budget”.
The LSB had “acknowledged that efficiency savings should be sought where possible” and that costs must be monitored to ensure the pressure placed on the practising certificate fees for lawyers was kept to a minimum, but the proposed budget “does not reflect that intention and should be reconsidered”.
The proposal for a further contingency budget of £200,000 for ‘unknown unknowns’ was “not supportable”, the Law Society went on.
“It is not clear how the LSB has arrived at the figure of £200,000 except as a round number.
“Whilst we acknowledge that there may be events that occur in the coming year that need to be addressed, this has been the case for every year of the LSB’s existence.”
The society went on: “Many lawyers are continuing to face the negative repercussions of the recent high inflationary economic climate, the additional charge on each lawyer in practice following the Axiom Ince collapse and the increased costs of employer National Insurance contributions, as well as the usual increases in the cost of doing business.
“This additional, un-evidenced financial burden will have an unacceptable additional negative impact on smaller firms particularly.”
The Bar Council said it “respectfully but firmly” disagreed with the planned budget increase.
“This comes on the back of successive above-inflation increases since the 2022/23 budget year. As the LSB notes in the consultation paper, inflation for the coming budget period is forecast at 2.4%. This means that they are proposing a huge real term increase to their budget.
“Although it is said that this will represent a £3.84 increase to the practising fee of each authorised person, this comes on top of the £3.40 increase last year and the £2.11 increase the year before.”
This represented “yet another increased compliance cost borne by barristers” and would “impact those barristers whose annual earnings place them in the lower income bands particularly hard”.
The consultation said the LSB has prioritised five key policy work programmes to complete and implement during the year, starting with ensuring regulators uphold high standards of professional ethical conduct.
But the Bar Council said it did not consider that direct or specific regulation was the most suitable tool for addressing the ethical concerns that have arisen in recent years. Issues such as strategic litigation against public participation (SLAPPs) and non-disclosure agreements were best addressed by Parliament through legislation.
The Bar Council was “aware that some recent high-profile cases where lawyers’ compliance with their ethical codes have been called into question has the potential to damage public confidence”, but it had not seen evidence that public confidence had been damaged.
“There is a risk that an unbalanced discourse on this issue will itself damage public confidence in legal professionals.”
On the LSB’s intention to introduce a new policy on equality, diversity and inclusion, the Bar Council said it would like the LSB to “to firstly justify any change to the regulatory framework and secondly to demonstrate what benefit any new intervention or initiative would deliver based on success elsewhere”.
The Bar Council said the LSB did, however, have a role in monitoring the use of artificial intelligence in legal services to ensure the interests of consumers were protected.
The Law Society suggested the LSB should focus on “greater monitoring” of the SRA, having highlighted the profession’s concerns about its “internal investigation processes and the length of time it takes before matters are transferred to the SDT [Solicitors Disciplinary Tribunal]”.
As the SRA’s internal fining powers had increased and it was likely that fewer cases would be referred to the tribunal, the LSB should focus on greater monitoring “to ensure that matters are being fairly and properly triaged, investigated and decided, in a timely manner limiting the detriment to people’s well-being”.
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