Solicitors hit by £1,180 practising certificate fee

The practising certificate fee for solicitors has for the first time in history broken the £1,000 mark, rising to £1,180 from October.

The Law Society took the decision 'reluctantly' to compensate in part for an expected fall in the number of solicitors as projections prepared by the society's accounts department indicate that the number of PC holders will drop by approximately 3,000 next year, mostly as a result of new entrants not being offered training contracts or contracts being deferred.

According to the Law Society the increase is also needed to meet a number of additional regulatory costs, such as funding for the Solicitors Regulation Authority's IT project and set up costs for the Legal Services Board and the Office for Legal Complaints. But 'not one penny' of the increase is attributable to any increase in its own spending.

The society's own budget for its representative work for 2010 has been frozen at the 2009 level, a five per cent decrease on the previous year. As a share of the PC fee, this amounts to £256, unchanged from this year.

Legal Complaints Service costs accounts for £281, and £151 will go towards the Office for Legal Complaint's levy and the society's pensions costs.

The biggest share of the PC fee however goes to the SRA. At £492 this is understood to represent a 25 per cent increase from this year's proportion.

Law Society chief executive Des Hudson said the increase had been driven by external pressures alone and the implementation costs of the LSB and OLC.

'We are freezing the Law Society budget for representative work in 2009-2010 and we hope the SRA and LCS will follow suit with their budgets,' he said.

His intention is to bring the cost of the PC fee back down to last year's level within the medium term, but, he said, 'that ambition is dependent on the SRA and the LCS sharing the burden'.

A spokesperson for the LCS said the complaints body had been cutting costs for the past few years, reducing them from £30m three years ago to £20m last year.

Meanwhile, at the SRA a spokesman said the regulator was a cost-conscious organisation. Its IT costs, as well as other administrative costs, remained within the control of Chancery Lane, with the only extraordinary expenditure at the moment being a new, more efficient case management system for which an initial £3m budget had been approved.

He also said that the SRA's workload had increased significantly in the past year as the recession had led to more interventions and disciplinary proceedings.

The Ministry of Justice put the implementation costs of the LSB and the OLC at £19.3m, to be repaid over three years. Under LSB proposals, solicitors will shoulder 79.9 per cent of the costs, followed by the Bar at 11.08 per cent, and ILEX at 5.52 per cent.

The rise from the current £995 fee will see solicitors in private practice paying overall an additional £15m to Chancery Lane and comes at a time where law firms, in particular smaller practices, have been badly hit by the recession.

'The increase is quite significant for a small practice,' says Simon Shaffer, senior partner at Middlesex-based firm Moerans, a high street practice doing mostly conveyancing, will, probate and tax planning work. 'There are four lawyers at the firm, so for the four of us we are looking at just under £5,000, plus professional indemnity insurance. Before we open our doors for business that's about £2,000 a month in costs.'

Andrew Lund, senior partner at nine-partner firm Rees Page, in the West Midlands, said this would be one of a wave of costs about to hit law firms in the autumn, with PII also likely to go up, together with contributions to the compensation fund.