Submission to the Treasury ahead of the 2021 Budget

The UK’s legal services sector is an economic powerhouse, one of the largest in the world, while England and Wales is renowned internationally as a global legal centre.

Yet many areas of legal practice have been hit hard by the pandemic, and with the imposition of a new national lockdown many will again face a struggle to survive.

Access to justice too has suffered throughout the crisis, as already underfunded legal aid providers have struggled to stay afloat, with consequences for the integrity of the justice system on which so many people in this country rely.

With the right interventions from the government, legal services can, and will, play a substantial role in driving the wider economic recovery from the pandemic.

In our submission, we’ve set out a comprehensive package of recommendations designed to:

  • support firms and solicitors through the pandemic
  • repair access to justice
  • invest in training and skills
  • harness lawtech to build a UK scientific superpower
  • address issues in the property market
  • promote the English and Welsh jurisdiction globally

Summary of asks

Supporting firms and solicitors through the pandemic

  • Provide sufficient funding for the local authority discretionary grant scheme and engage with local authorities in England to ensure that grants are provided to all those high street law firms (including sole practitioners) that need them
  • Allow solicitors that are equivalent to self-employed workers, but who take all or part of their income in dividends, to benefit from similar support to that provided by Treasury support schemes for the self-employed. One potential option for achieving this could be to implement the Directors’ Income Support Scheme proposal put forward by Rebecca Seeley Harris, ACCA, FSB and Forgotten Ltd
  • Refrain from imposing a new economic crime levy on the legal services sector, and commit to funding the anti-money laundering system instead through fines, recovered assets and general taxation. If the government does move ahead with a levy, then an exemption for small firms should be included

Repairing access to justice

  • Provide sufficient funding to implement any uprating in fees recommended by the Criminal Legal Aid Review
  • Fund an immediate interim rates increase to legal aid fees, pending the outcome of the Criminal Legal Aid Review, in line with RPI inflation in 2020
  • End legal aid deserts by funding an independent review of the sustainability of the civil legal aid provider base and committing to investing in resolving any problems identified by the review
  • Provide sufficient funding to implement any recommendations of the legal aid means test review to increase eligibility for legal aid to all those who need it
  • Restore legal aid for early advice from a solicitor, to help clear the current courts backlog and improve outcomes for justice system users

Investing in training and skills

  • Work with the Institute for Apprenticeships on changes to the apprenticeship levy to give law firms the flexibility to spend apprenticeship levy money on:
    • lawtech seats and training in lawtech skills
    • training in secondary specialisations which will enable people to retrain in other practice areas
    • training contracts and placements to maintain the jobs pipeline for students about to complete the Legal Practice Course (LPC) or the Solicitors Qualifying Examination (SQE)
    • supporting other organisations (including in the third sector) by funding joint roles, which would enable firms to deliver pro bono work in partnership with legal charities
  • Fund the provision of a new loan scheme or an extension of an existing loan scheme to cover SQE applicants from September 2021 onwards

Harnessing lawtech to build a UK scientific superpower

  • Fund a grant scheme similar to that in place in Singapore to help small and medium-sized law firms cover the costs of adopting lawtech solutions that can unlock significant productivity gains. The Law Society can work with the government to help design such a scheme
  • Widen the eligibility criteria for the Future Fund to cover lawtech start-ups in England by extending the application window until the end of the financial year (instead of 31 January) and relaxing the minimum level of third-party equity investment required to £250,000 raised in the past five years (instead of three)
  • Fund the establishment of a legal data trust as part of the National Data Strategy to improve accessibility of data for those seeking to innovate in the legal services sector
  • Invest in upskilling the judiciary to ensure the business and property courts are able to deal efficiently with intellectual property claims arising from lawtech
  • Continue to prioritise the rollout of broadband and 5G across those regions of England which currently have very limited coverage, to ensure firms and consumers in all parts of the country are able to take advantage of the technology that will help businesses to thrive in the current environment

Addressing issues in the property market

  • Take action to address the cliff-edge presented by the 31 March cut-off date for the stamp duty land tax (SDLT) holiday. Possible solutions could include either extending the holiday, implementing tapered transition provisions for the end of the scheme, or introducing a grandfathering scheme for transactions which have not completed by the cut-off date
  • Conduct a comprehensive assessment of the expected cost of remediating buildings with unsafe cladding to make them safe, and once the full cost has been established, ensure that the costs borne by long leaseholders are kept to a minimum, and ideally zero

Promoting the English and Welsh jurisdiction globally

  • Ensure that there is a cross-government commitment to promote England and Wales as a global legal centre
  • Ensure that the Department for International Trade and other relevant departments treat legal services as an important component in negotiations for new free trade agreements
  • Work with the Department of International Trade to conduct a new virtual trade mission for legal technology firms, and ensure that lawtech is a central part of the Legal Services Virtual Trade Missions in 2021
  • Work with the Department for International Trade to support UK legal tech companies interested in expanding their business in priority markets with information, connections and advice through the embassies and diplomatic networks
  • Support the LawTech Delivery Panel with its project pioneering worldwide remote courts for commercial dispute resolution

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