The Law Society recorded a deficit of £11.5m on a budget of £116m in the last financial year, compared to a surplus of £6.7m in the previous 12 months, its annual report has revealed.
The report, which will be presented to today’s annual general meeting, said a deficit had been expected and was due to budgeted spend on the society’s IT transformation project – which is costing £61m over four years – and a “lower than expected return on investments”.
When the IT spend – which was scheduled to run from 2017 to 2020 – was approved three years ago, it was agreed that part of the funding would come from historical reserves in order to smooth out the cost and not cause a spike in practising certificate fees in any year.
The net cost was projected to be £37m after accounting for “the realisation of programme benefits”
The financial review in the annual report, which covers the year to 31 October 2018, said there have been delays with the project, but these were not expected to lead to any additional cost.
Though the Law Society part of the report did not discuss the new technology, the Solicitors Regulation Authority’s (SRA) did.
It said: “We continue to work towards our goal of having a modern and efficient IT estate. Although we expect the costs to be in the order previously forecast, some overspend cannot be ruled out at this time. We are committed to absorbing this within our overall budgets with no additional cost to the profession…
“Having introduced our new digital workplace, so that staff have access to up-to-date software, a new intranet and recognition portal, we will start to introduce our new systems to the profession and the public once we are confident that they will work well.
“Our priority is getting it right for everyone who uses our systems. We know we have more to do and are planning to take additional time to meet people’s expectations.”
The Law Society group’s net assets were £94m at 31 October 2018, compared to £106m a year earlier, although £22m of them relate to indemnity insurance operations.
The annual report also revealed that SRA chief executive Paul Philip was paid £348,000 in salary and benefits in 2018, up from £330,000 the previous year.
Law Society chief executive Paul Tennant was paid £231,000, plus a pension contribution of £3,000. This was his first year in post.
The SRA employs 593 staff and the Law Society 354, while there are 66 in shared services, making a total of 1,013 – just eight fewer than the year before. The total wage bill was £55m, up from £52.3m in 2017.
Meanwhile, Simon Davis will take over as the 175th president of the Law Society today, succeeding Christina Blacklaws.
A senior litigation partner at global giant Clifford Chance, he is also a former president of the London Solicitors Litigation Association.