Lawyers’ practice fees are to rise by 10%, or £10.4m, next year, with the Practice Certificate Fee (PCF) rising by £20, the Law Society and Solicitors have proposed Regulatory Authority (SRA).
Following separate consultations, their joint request to the Legal Services Board is to raise £114.7m from the profession in 2022/23, up from £104.3m in the current year.
Businesses will pay 60% – £68.8m, up from £62.6m – and individuals 40%, £45.9m down from £41.7m.
Of this, £60.5m (53%) will go to the SRA and £32.8m (29%) to the Law Society, with the balance (£21.4m) covering levies requirements of the Legal Ombudsman, Legal Services Board, Solicitors Disciplinary Tribunal and Office for Professional Body Anti-Money Laundering Supervision.
The increase will be offset to some extent by reductions in contributions to fund the SRA Compensation Fund, which are treated separately from the exercise fee, with the fee for individuals being £10-£30 lower and for businesses holding customers’ money from £70 to £690. .
The Law Society had consulted on a PCF of £284 for next year, up from £266, but increased it slightly due to levies rising more than expected. The figure is based on the equivalent of 161,000 lawyers paying a full PCF.
This comes ahead of further rises over the next two years as the Law Society seeks to increase its revenue from £8.4m to £36.9m in 2024/25.
Although practice fees largely pay for the regulatory structure, the Legal Services Act 2007 allows the Law Society, in its representative form, to also use them for “permitted purposes” – certain prescribed non-regulatory activities , such as law reform.
It must finance activities not covered by the authorized purposes from other income. Its overall budget for the coming year is £44m, up from £5.4m, of which £4.1m will come from exercise fees. He intends to augment the rest by increasing revenue from “member experience and services” and business sales.
Lawyers do not need to be members of the Law Society to practice, but are required to pay through the PCF.
The app said: “TLS [the Law Society] in 2019/20 reduced its overall collection by 10%, recognizing the difficulty faced by the profession through Covid 19. This fee reduction was maintained in 2021/22 as the pandemic continued to impact the economy British. TLS used its reserves to ensure that it could provide services to its members.
“This position is not sustainable in 2022/23 and therefore TLS has consulted on a 15% increase.
“From the SRA’s perspective, we were aware of the need to balance any increase in our funding requirements with the need to continue to regulate effectively.
“We recognize that any increase in costs is unwelcome, but the impact of inflation within the wider economy and increased regulatory activity necessitate an increase this year. We have consulted on an increase in 6.5%.”
The company said the continued increase in the attorney population has enabled it to lessen the impact on individuals, with fees increasing by only 7.5%.
“We also knew that the contribution to the individual compensation fund would have to go down by £10 per person, so the combined effect of the two charges is an increase of £10 or 3.3% per person.”
The PCF has fallen or stayed the same for the past nine years. The company noted that it was still below the 2016/17 level and that if the fee had risen in line with inflation it would now be around £350, “indicating the efficiency savings that have been made in recent years”.
The SRA is now a separate legal entity and the application revealed that its reserves stood at £15.4 million, of which £14.7 million was uncommitted (i.e. excluding fixed assets).
The regulator’s reserves policy calls for a level of free reserves of between £15.7m and £22.5m – representing between three and five months of expenditure – and the proposal for 2022/23 includes an increase of £700,000 pounds sterling as it increases the amount. organized in the years to come.
The Law Society has reserves of £42 million, made up of £12.7 million of committed reserves, £15.5 million of uncommitted reserves and £13.8 million of “reserves”. unauthorized”, which can pay for activities not covered by Section 51. The company expects to make £1.5m from the latter in 2022/23.
Both reported support for their budget proposals following their consultations.
The Law Society received 1,461 responses, both directly and through focus groups. Two-thirds backed the proposals – 17% of members opposed – with 57% also accepting CPF increases over the next two years.
An impact assessment said there was “a small potential impact” of the proposed fee increase on lawyers who were overrepresented in small businesses and businesses in less profitable legal services such as criminal law.
This included men, lawyers of black, Asian and minority backgrounds, Muslim lawyers, lawyers from lower and middle socioeconomic backgrounds, and older lawyers.
The assessment said: “Given the positive impact of the equality, diversity and inclusion work that the SRA and TLS plan to take forward in 2022/23 and the steps we have taken to mitigate the he impact of the proposed fee increase on individuals, we are confident that our proposal for a slight PC fee increase is proportionate and justified. »
The Commission des services juridiques will now decide whether or not to approve the application.