Legal Services Board adds £1.75m to levy on legal profession

LSB: Lower inflation has helped

The Legal Services Board (LSB) is trimming back the increase in its budget for the coming year to 10%, while also approving a 7% rise in the Legal Ombudsman’s (LeO) budget.

These amount to an extra £1.75m to be paid by the legal profession, which funds both organisations through a compulsory levy paid as part of practising fees.

The LSB’s draft 2024/25 business plan set out a budget of £5.3m, £650,000 (14%) more than in the current year, in a bid to strengthen its “direct oversight” of the frontline regulators’ performance.

The amount, which would add £3.40 to the practising fees of every authorised lawyer, was subject to criticism from some stakeholders in response to the consultation. The LSB’s cost per authorised lawyer is currently £22.81.

Papers for Tuesday’s meeting of the LSB’s main board, where both increases were approved, said it has been able to pare this back by £100,000 to a 10% increase and seek members’ approval for the final figure.

This reflected lower inflation since the provisional budget was prepared and confirmation that the number of people regulated under the LSB’s oversight has increased by 3.4% in 2023 (from 186,000 across the legal profession to 192,000).

“In this context, we consider that a levy increase of around 10% is reasonable given the need to secure sufficient resources to meet the scale of the challenges facing the legal services sector, while ensuring any increase is proportionate.”

The LSB is required to approve the budget of the Office for Legal Complaints (OLC), the body that oversees the Legal Ombudsman.

After consultation, the OLC maintained its request for a 7% budget increase (or £1.2m) to just shy of £18m, and the LSB’s executive has asked the board to approve this.

This is despite acknowledging that, while LeO’s performance had improved, it continues to struggle with reducing the queue of cases awaiting investigation. We reported in January that the 31 March 2024 target for the queue had been revised upwards for a third time and was now 3,000 cases. This is in part due to rising demand.

The LSB paper said it recognised the improvements achieved in the current year and that LeO would “increasingly realise” the benefits of the changes to the complaints scheme in the coming year.

There was also strong support in the consultation for the OLC’s business plan and budget for 2024/25.

“We are, however, concerned about the underlying increase in demand and the risk this poses to LeO’s transition to phase two of its performance improvement journey and transformational change that delivers what the public expects from a good, modern complaints resolution service…

“In the year ahead, we expect the OLC to continue to analyse the drivers of increasing demand and use all of the levers at its disposal to address these.”

The OLC has also told the LSB that “additional in-year funding may be required to respond to increased demand”.

Further, the LSB said there was “a clear role for regulators in ensuring providers improve first-tier complaints handling, which evidence shows is not meeting consumers’ expectations currently” – in 2022/23, LeO judged providers’ handling of first-tier complaints to be inadequate in 45% of cases.

Separately, the LSB also voted to approve a statutory policy statement that would require regulators to do just that.

For solicitors, £25m of their practising fees fund the work of the LSB, LeO, Solicitors Disciplinary Tribunal and the Office for Professional Body Anti-Money Laundering Supervision.

    Readers Comments

  • Allan Murray-Jones says:

    a stunningly ineffective regulator which makes little effort to understand the practise of law. In our terms, the SRA often gets the blame for the LSB’s inadequacy.

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