Cost of practising to rise sharply as SRA and Law Society unveil budgets

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Law Society: Budget rising by less than the SRA’s

Solicitors’ practising fees are set to increase substantially this year, with the Solicitors Regulation Authority (SRA) and Law Society needing an extra £9.3m to fund their work.

A consultation issued yesterday by the SRA proposed a £10m increase in its budget for 2023/24 to nearly £98m, of which £67.6m – an increase of 11.7%, or £7.1m – will come from practising fees levied on firms and individuals.

The rest will come from other sources, such as Solicitors Qualifying Exam fees. The SRA flagged up the likelihood of a significant fee rise earlier in the year.

Staff costs are expected to rise by 13%, or £5.3m, with headcount to increase by more than 30 to 770 in 2023/24.

This reflects plans to increase resource in the investigation and enforcement team in a bid to reduce delays and government demands to increase the regulator’s anti-money laundering (AML) activity.

Though practising fees largely pay for regulation, the Legal Services Act 2007 allows the Law Society in its representative guise also to access them for ‘permitted purposes’ – certain prescribed non-regulatory activities, such as law reform.

The Law Society is currently seeking views on its plans for the practicing certificate fee, essentially seeking confirmation of the results of a consultation last year on its three-year business plan that suggested a £6 increase in the fee for 2023/24; 57% of members backed it then.

The society’s current consultation does not specify what this would mean for its budget but a spokeswoman told Legal Futures it represented an increase from £32.8m to just over £35m, a 7% increase. There is no detailed budget available at the moment.

Practising fees jumped by 10%, or £10.4m, in 2022/23, raising £114.7m. Of this, 53% was for the SRA, 29% for the Law Society and the rest covered the compulsory levies to pay for the Legal Services Board, Legal Ombudsman, Solicitors Disciplinary Tribunal and the Office for Professional Body Anti-Money Laundering Supervision.

The first two of those have already flagged rising budgets for 2023/24, which will increase practising fees yet further.

Firms pay 60% of the total sought by the Law Society and SRA, with individuals the rest.

Last year, the individual practising certificate fee rose £20 to £286. It is not clear what the final PC fee will be this year. The SRA said its proportion would increase £11 to £192; this is a 7% increase, lower than the headline figure because it is based on growth in the number of solicitors.

The SRA said: “Over the last nine years we have absorbed inflation and driven efficiencies, while making improvements to our operations through a continuous improvement programme.

“This is at the same time as we have taken on considerable new responsibilities, for example in relation to AML. We will continue to maintain focus on efficiency and cost control.

“However, it is not possible to continue with this approach alone without impacting on the quality of our core regulatory activity, customer service and ability to deliver on our strategic priorities.”

The SRA has also published a draft corporate strategy for 2023-26 and said it expected the proportion of its budget funded through practising fees to increase by no more than inflation plus 2% each year, “with an aim of limiting any increases beyond the first year to inflation”.

The Compensation Fund contribution for individuals is set to remain static at £30 in 2023/24, and fall by £30 to £660 for firms.

A Law Society spokeswoman said: “In line with the Legal Services Board (LSB) guidance, in 2022 we consulted on a three-year cycle which included our corporate plans for the three-year period from November 2022 to October 2025.

“Within the consultation process we discussed the likely uplift of 7% in PC fee for 2023/24, and as such our approach this year seeks to confirm that position, subject to approval from the LSB.”