40/60 split will shift fee burden of 15% from in-house sector onto private practice
The practising certificate is to be split 40/60 between individuals and law firms under Solicitors Regulation Authority (SRA) proposals approved last week.
Under the new regime, due to come into effect in October, individual solicitors will pay 40% of the overall amount, and law firms will pay 60%. This will result in a shift in fee burden of 15% from the in-house sector onto private practice firms. Solicitors in commerce and industry and government posts will only pay the individual fee, likely to be about £511. Firms will pay according to turnover, calculated on a banded basis.
Under current draft SRA board proposals, not yet agreed, there would be ten bands, A-J. Firms would pay 0.67% on the first £20,000, 0.59% on the next £20,000 to £150,000, and 0.54% on the next level up to £500,000. Turnover between £1m and £4m would be charged at 0.8%. Individual solicitors will be required to put £9 towards compensation fund fees, while firms will contribute £140.
Legal consultant Simon Young says: “Overall, the burden for private practice will rise considerably as they mop up the 60% from the public sector and commerce and industry. “Those with a high ratio of non-solicitor fee earners to solicitors will be affected the most. If you have two or three solicitors and 40 legal executives then you are going to have to pay a considerable amount more. Whether the 60/40 ratio is correct remains to be seen, and the SRA has acknowledged this, but we have to start somewhere. This may be quite painful for some firms but they’ve all been given plenty of notice.”
Splitting the practising certificate fee between entities and individuals was recommended by Lord Hunt of Wirral in his 2009 review into legal regulation. The Legal Services Act 2007 required the Law Society to adopt firm-based regulation as well as regulating individual solicitors. The SRA board considers the current fee charging system to be unfair on in-house solicitors.
