The cost of practising as a solicitor looks set to increase significantly this year after the Solicitors Regulation Authority (SRA) chair warned yesterday that it would be seeking more funding from the profession.
This is on top of an increase flagged last year by the Law Society as well as rising budgets for the Legal Services Board (LSB) and Legal Ombudsman (LeO), both of which are paid for by lawyers.
Practising fees jumped by 10%, or £10.4m, for 2022-23, with the individual practising certificate fee rising £20 to £286.
Firms paid 60% of the total sought by the Law Society and SRA, which was £114.7m in the current year, of which £60.5m (53%) was for the SRA. This was up from £56.8m. The SRA’s total income was budgeted at £87.3m, as it has income from other sources.
The Law Society took £32.8m (29%) from the fees, with the remaining money (£21.4m) covering the compulsory levies to pay for the LSB, LeO, Solicitors Disciplinary Tribunal and the Office for Professional Body Anti-Money Laundering Supervision.
Speaking to the media yesterday after the most recent SRA board meeting, chair Anna Bradley said it had worked “very hard” to keep fees steady over recent years – last year’s increase in the fee was offset to some extent by a reduction in the contributions to the SRA compensation fund – but “the reality is that everyone’s battling with inflation and we have new demands on our time”.
These included issues such as anti-money laundering and sanctions compliance, while last autumn the SRA made a one-off cost-of-living payment to staff totalling £550,000.
Further, with the SRA a separate legal entity since July 2021, it has to maintain its own reserves. Its first full-year accounts – which are about to be published – show that its reserves at 31 October 2022 were £16.6m, of which £14.8m were unrestricted reserves once fixed assets were excluded.
The SRA’s policy is that reserves should be between £15.7m and £22.5m and so they need to be increased too.
The SRA is currently drafting a new three-year strategy. Ms Bradley said she wanted to give the profession an early warning: “All of that means that people can expect to see an increase in fees associated with our new strategy…
“It’s quite clear there’s no room for manoeuvre in the current budget. There’s just not a lot of flex – it’s been very tightly managed.”
She said there was no figure yet but the SRA would be consulting on the strategy, probably in May, along with the proposed budget as usual.
We reported last week that LeO’s budget for its new financial year was increasing by 9.6% to £16.8m, the equivalent of £7.20 per solicitor.
The LSB’s budget for the coming year – as outlined in its draft business plan – is £4.7m, a 9.1% increase – although actually a fall of 2% after inflation. The final figure has yet to be confirmed.
In increasing the money it took from practising fees for non-regulatory activities, the Law Society last year flagged further rises for the next two years as it looked to boost its income by £8.4m to £36.9m in 2024-25.
The likely budgets for the other bodies paid for by the profession are not yet known.