The Law Society has set aside £5 million to pay for the closure of the Legal Complaints Service (LCS), its 2009 annual report has revealed.
The report also said the society spent £600,000 in legal fees on its unsuccessful attempt under TUPE to force the new Office for Legal Complaints (OLC) to take on LCS staff.
The £5 million – which is on top of the many millions the society is having to pay towards the opening of the OLC – is likely to be incurred on a staged basis, the report says. The OLC opens on 6 October, but will only consider complaints lodged from that date, meaning the LCS will need to stay open until it resolves existing complaints. This is expected to take around six months.
As reported exclusively on Legal Futures in May (see story), the society has been incentivising LCS staff to apply for jobs at the OLC, offering “bridging payments” which will go some of the way to making up the difference between their current salary and the lower wage on offer at the new service, for the first year of employment. This may be a cheaper option than having to pay staff redundancy.
The annual report shows that although practising certificate fee income rose 22% in 2009 to £126 million, this was because of specific amounts levied on the society to set up the Legal Services Board, OLC and Solicitors Disciplinary Tribunal (which as a result of the Legal Services Act 2007 now has control of its own budget).
The flipside of the move to shutting down the OLC was the reduced cost of operating it, saving the society £2.1 million last year. Overall, the underlying costs of the society fell 10% to £109 million. The key reasons for this included “a focus on budgetary discipline and value for money”, coupled with volume-related costs that fell as commercial activity reduced (by 32% to £9 million). The society also made a successful claim for the repayment of £2.6 million in VAT.
Representative and law reform services cost solicitors £10.7 million (£11.4 million in 2008), with government relations and government policy accounting for £4.5 million; supporting council, committee, board and office holders £3.6 million; and communications £2.6 million. The proportion of the practising certificate fee taken by the Law Society in its representative guise fell from 33% to 22%, although this is presumably in part attributable to the higher amount raised through the practising certificate to pay for those new external costs.
In all the society reported a surplus of £23 million for 2009 (as against £18 million in 2008), adjusted to £16 million after actuarial assumptions on the Law Society’s pension scheme, which remains in substantial deficit. This meant the society’s accumulated funds stood at £67 million at 31 December 2009.
The accounts show that Law Society chief executive Des Hudson received pay, benefits and pension contributions of £334,895 in 2009 (£304,849 in 2008), Solicitors Regulation Authority chief executive Antony Townsend £224,051 (£205,445 in 2008) and LCS chief executive Deborah Evans £196,620 (£160,821 in 2008).