Law Society: Budget remains static
The cost of practising as a solicitor is set to fall marginally in the coming year as a result of lower compensation fund contributions, while the Law Society’s £134m budget for 2020-21 remains virtually static.
Under proposals put out for consultation [1] yesterday, the individual practising certificate (PC) fee will stay at £278 for a fourth year, while individual contribution to the Compensation Fund will fall from £60 to £50, with the firm contribution reduced from £1,150 to £950.
Unlike its counterparts in Scotland or at the Bar [2], the Law Society Group – made up of the Law Society representative body and the Solicitors Regulation Authority – has not offered any specific reductions or made any cuts in recognition of the difficulties Covid-19 has caused fee payers.
The consultation shows a proposed budget of £133.6m to run the two organisations in 2020/21 – £700,000 lower than the current year.
With £30.5m coming from other sources – Law Society commercial income (£14.1m), SRA regulatory income (£3.1m), recoveries (£12.3m) and other income (£1m) – the group has a total net funding requirement from practising fees of £103.1m.
The society proposes to use £1.9m of reserves, meaning £101.2m needs to be collected from solicitors and firms, £1.3m less than last year.
The SRA will receive £54.8m of this, up £700,000 on last year, and the Law Society £30.4m (down £1.1m) under the ‘permitted purposes’ provision of section 51 of the Legal Services Act 2007. These are non-regulatory activities – such as law reform – for which the Law Society can nonetheless levy the profession.
The rest of the practising fees will go to pay the levies imposed on the profession for the Legal Services Board (£3.3m), Legal Ombudsman (£10.6m), Solicitors Disciplinary Tribunal (£3.2m) and Financial Conduct Authority (£800,000 for anti-money laundering purposes).
Once signed off by the Law Society council and SRA, the fees have to be approved by the LSB.
The consultation paper hinted that the group may have to raise more money in the future, however.
It said: “During 2020/2021 the group will be continuing its significant IT investment programme for both the Law Society and SRA. This will help our longer-term aim of reducing the PC fee whilst also improving the experience for members and facilitating an improved digital offering for all our services.
“Although we have managed to keep the PC fee the same, there is likely to be funding required, subject to our progress, over and above the sums available and detailed in this document. These funds will be drawn from the reserves of the group, as and when required, and subsequently replenished in future years.”
There remain questions, not least from the SRA itself, about whether the society should have the continuing power to place a compulsory levy on solicitors for its representative work.
This year, the Legal Services Board is planning review the PC fee approval process, including the approach to the permitted purposes.
Writing earlier this year, board chair Dr Helen Phillips stressed that the review was not necessarily seeking to reduce the funding available for regulation and other permitted purposes.
“Rather, it is looking to improve transparency – particularly for those paying the fee, but also in the public interest more widely – and to promote a better-quality debate about what regulation is for, its benefits and its costs.”