The Law Society

Your Law Society: better value than ever

From November 2010 important changes were made to the way in which practising fees are apportioned. Instead of collecting all the practising fee income from charges made in respect of individual solicitors, only around 40 per cent of the costs of funding recovered from such fees, while 60 per cent come from a new fee charged to private practice firms.

This change means a significant reduction in the cost to the employed sector:

the Crown Prosecution Service
local government
commerce and industry
law centres

as more is paid by private practice. The change reflects the fact that many regulatory processes, particularly concerning client money, are only relevant to private practice.

Individual practising fees for 2010/11 were set at £428 (2009: £1,180). The firm fee paid by private practice firms is based on their turnover in England and Wales. The proportion of turnover charged declines as turnover increases. The effect of this is that each segment of private practice (in terms of size of firm based on the number of partner bandings) will bear the same proportion of overall cost as before, although the impact on individual firms will depend on their turnover and composition. Broadly speaking, firms who have a comparatively high turnover in relation to the number of solicitors within the firm will pay more than before, while those with a comparatively low turnover per solicitor will pay less. We believe this is a fairer approach.

This year’s practising fee also includes levy payments for the Legal Services Board, the Legal Ombudsman and the Solicitors Disciplinary Tribunal.

Reducing our cost base

It is a key commitment of the Law Society to reduce its cost base and therefore significantly drive down the net funding requirement assessed on the profession from 2012. This will be reflected in a significant reduction in the level of practising fees, agreed by the council in July 2012.

A major component in this cost reduction plan will be action in respect of the defined benefit pension scheme. This was closed to future accrual several years ago. The scheme has now been subject to a buy-out, funded from the Society's reserves, so the annual budget will no longer need to meet the cost of funding a deficit in the scheme. 2010/11 has also seen a very significant investment in transforming the culture and systems used across the Law Society. It is intended that 2012 will see a substantial reduction in such spend compared to the two previous years and will also see the financial and operational benefits that the new systems, processes and approaches will bring.