Shujea Khatun
Policy Support Unit
Solicitors Regulation Authority
Ipsley Court
Redditch
Worcs B89 0TD

16 April 2010

Dear Shujea Khatun,

Legal Services Act: new forms of practice and regulation
Consultation paper 22 - fairer fee policy

As you are aware, the Association of Council Secretaries and Solicitors (ACSeS) has a close interest in the cost to local authorities of Practising Certificate fees, and we have carefully examined the third consultation paper towards securing the SRA’s fairer fee policy.

It is accepted that the proposals for fee moderation and discounted fees for new firms apply only to firms, and it is substantially a matter for firms to indicate their views on these proposals. ACSeS therefore offers no preference in relation to the options.

However, it is noted in paragraph 14 option 1, reference is made to the consequence of ‘increased costs for the rest of the profession as a result of a firm being granted reduced fees.’ In addition, in paragraph 25 there is reference to the possibility of ‘an overall fee burden shift on to the rest of the profession of £160k.’ We take the implication of the words ‘the rest of the profession’ to mean that it would be intended that the net costs of the fee moderation and discounted fees for firms under these proposals, if adopted, would be bourn across the whole profession, rather than being applied to firms only. In other words, individual solicitors, including those in local government, would also bear the net costs of these proposals within their practising certificate fees.

If this is intended, then it clearly flies in the face of the principle, already agreed, that firms alone should collectively bear the cost of regulation applicable to them. The financial effect is to bite into the 40-60 split between individuals and firms. In drawing attention to this apparent inconsistency in the proposals, we wish to make it clear in the strongest terms that we totally oppose any cost of these proposals falling on individuals. Any cost of moderated fees for firms or discounted fees for new firms must be part of the 60% split applicable to firms.

We have already made it clear that we regard the 40-60 split as temporary pending more accurate examination of the actual costs of the SRA in regulating solicitors in local government. The fact that the SRA accepts that ‘ between 60 per cent and 80 per cent of regulatory activity is focused on firms rather than individuals’ means that local authorities would continue to subsidise the regulation of solicitors in private practice under the current split. This is clearly not in the public interest. In the current economic climate involving close scrutiny of all local authority expenditure, both local government officers and their political masters are looking very closely at what they are getting for the public money being spent.

We therefore urge the SRA to commit itself now to reviewing the 40-60 split as soon as the 2010-2011 fees are applied, and in the meantime to ensure that accounting arrangements are in place to calculate the actual costs of regulating local government solicitors and all other sectors of the profession.

In respect of the proposals for moderated fees and discounted fees, if these arrangements are to be adopted, we would also urge that the costs of regulating the firms benefiting from them should also be clearly identified in order to take this into account in the event of such arrangements continuing or being repeated.

Yours Sincerely

A R Kilner

Tony Kilner
Policy and Development Officer
ACSeS