Professional bodies over-taxing solicitors to tune of £2.4 million, says top regulator

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By Jonathan Ames on

Practising fee remains steady despite tumbling Solicitor Regulation Authority costs, as Law Society wants a bigger slice of pie


Solicitors are being over-taxed this year by £2.4 million, according to the profession’s uber-regulator.

In a strongly worded recent letter to the Law Society and the Solicitors Regulation Authority (SRA), a senior official at the Legal Services Board (LSB) has questioned why the practising certificate fee is to remain static when the cost of regulating the profession has fallen for the last three years on the trot.

While the LSB approved the joint Law Society-SRA bid to set the PC fee at £320 per solicitor for 2015-16, the main legal profession regulator’s strategy director, Caroline Wallace, expressed concerns that solicitors were being unfairly milked.

Writing to Law Society and SRA chief executives Catherine Dixon and Paul Philip, respectively, Wallace said:

We are pleased that the level of the PCF [practising certificate fee] for individuals and firms will not be increased for 2015-16. Nonetheless, we are concerned that this is against the background of the total SRA budget falling for the third successive year.

Indeed, Wallace went on to point out that the SRA’s budget had fallen despite it handing over ever more cash to fund the Law Society, which effectively acts as the de facto trade union for solicitors.

Wallace also pointed out that the cost of practice was not decreasing despite a reduction in the levy imposed on the solicitors’ profession by the LSB itself as well as a lowering of the Legal Ombudsman’s levy. Likewise, costs at the Solicitors Disciplinary Tribunal had also fallen.

Warned Wallace:

In the context of wider concerns about the cost of regulation, it may become more difficult to justify increasing (or even not decreasing) the level of PCF when the operation expenditure of the SRA appears to be falling.

Wallace added: “collection of fees at the approved level is expected to result in an over-collection of approximately £2.4 million”.

The LSB highlighted the convoluted and complicated funding structure underpinning the Law Society and SRA. Under provisions of the Legal Services Act 2007, the SRA sets the practising certificate fee to cover what is describes as “the Law Society Group budget”, which is actually arrived at by the Law Society Council.

However, the SRA effectively dictates to the council its requirements, which currently account for no more than half the overall budget. The remainder is allocated to so-called shared services between the SRA and the society, as well as funding as much as 75% of the Law Society’s representative functions.

The fact that the SRA budget is falling, and yet the fee has remained static, therefore opens a hornets’ nest within the solicitors’ profession. Commentators have speculated for some time that ultimately the regulator will lose patience with having to do the Law Society’s dirty work by collecting the latter’s funding from practising solicitors.

That conflict probably accounts for the SRA’s approach to queries about the LSB’s warning — which was to push any questions firmly over to the Law Society. However, Chancery Lane declined to comment on Wallace’s concerns that current PC fees could be out of kilter with actual expenditure requirements.

Presumably, the society is keeping its head down as the view among many solicitors is that if the Law Society were forced to raise and collect its own funding through a voluntary membership fee, it would rapidly move from its palatial neo-classical home in London’s Chancery Lane into the history books.

Read the Legal Services Board letter in full below:

LSB Decision Letter 2015