The Law Society recorded a £33m surplus last year, its annual report has shown, while former chief executive Des Hudson received a pay packet of £407,000 in his final year.
However, the society has proposed retaining the practising certificate fee (PCF) at £320.
In the year to October 2014, the Law Society’s income was nearly £145m, a like-for-like increase of 20% on the previous year, predominantly due to the higher level of the PCF (£384) in 2013/14.
The £33m surplus compared to £7.7m in last year’s annual report, but that only covered 10 months of operations as the society was changing its year-end to bring it in line with the practising year.
Mr Hudson left the Law Society at the end of August 2014, and it is not clear whether the £407,000 attributed to the highest-earning member of its management team during the financial year included the one-off payment we revealed that he received upon his departure.
In the 10-month period covered by the 2012/13 accounts, he received £355,000. The 2007 accounts, Mr Hudson’s first full year as chief executive, had him on a package worth £230,726.
The accounts, as always, highlighted the sharp contrast between the pay of the society’s chief executive and that of the Solicitors Regulation Authority (SRA), who despite controlling a significantly higher budget and more staff than his counterpart in Chancery Lane, received a package of £221,000 in 2013/14. The head of Corporate Solutions, who oversees the services shared by the two sides of the organisation, was paid £217,000, including pension contributions.
As at 31 October 2014, there were 1,001 people working within the Law Society Group (up from 944 a year earlier): 541 at the SRA, 295 at the Law Society and 165 in Corporate Solutions.
On Friday the Law Society launched a two-week consultation with members on its approach to using practising fees and whether they represent value for money. The majority of the society’s income comes from firm fees, rather than the PCF.
The proposed budget for 2015/16 is nearly £141m, of which £71.5m would go to the SRA and £52.7m to the Law Society (including the cost of shared services), with £16.5m in levies for the Legal Services Board, Legal Ombudsman and Solicitors Disciplinary Tribunal.
About 75% of this (£106m) will be met by practicing fees, with the rest coming from other regulatory fees, costs awarded and the Solicitors Compensation Fund on the SRA side, and £15m of commercial income from the Law Society. Some costs are also met from group reserves.
The proposal is to freeze the PCF at £320 for a second year. The consultation said entity fees are based on turnover and are set in bands, “therefore it is not possible to provide a simple comparison figure for the likely 2015/16 levels compared to 2014/15”.
Other interesting facts in the accounts included:
- Mastek, the minority partner in the Law Society’s Veyo operation, made a £1.7m loan to the company that runs Veyo. It is non-interest bearing and unsecured with no set date for repayment, but repayment is expected to take place between 2017 and 2019. The Law Society paid £600,000 for its 60% share in the joint venture company;
- The estimated value of the Law Society’s main building in Chancery Lane has gone up considerably following a detailed reassessment by surveyors, from £21.9m to £31.7. The building round the corner in Carey Street was valued at £5.9m, up from £5.4m; and
- The £200,000 the Law Society invested in Riliance, the compliance support software, back in 2012 was repaid in October 2014.
The Law Society consultation can be found here. Some 200 solicitors responded to it last year.