The Solicitors Regulation Authority (SRA) secures Legal Services Board (LSB) approval for a significant fee increase.
- The contribution to the compensation fund rises by 270% to mitigate the Axiom Ince intervention cost.
- The individual contribution will now be £90, and firms will pay £2,220 annually.
- An extra £10m banking facility is approved to bolster the compensation fund.
- The timing of the increase is contentious amidst an investigation into SRA’s handling of Axiom Ince.
The Solicitors Regulation Authority (SRA) has received approval from the Legal Services Board (LSB) to implement a substantial 270% increase in contributions to the compensation fund. This measure aims to address the financial strain caused by the intervention of Axiom Ince, a national firm that experienced significant misconduct issues.
For the 2024/25 year, contributions to the fund will amount to £31.6 million, a considerable rise from £10 million in the previous year. This increase includes raising individual contributions to £90, compared to £30 for 2023/24, and firm contributions to £2,220 from £660. These adjustments reflect the pressing need to replenish the compensation fund, which compensates clients financially affected by solicitors’ misconduct.
Alongside the increased contributions, the SRA has secured access to a £10 million banking facility intended to further support the fund’s objectives. This facility will provide a financial buffer to safeguard client interests and uphold confidence in legal services.
The decision to raise contributions is controversial, particularly as the LSB continues its investigation into the SRA’s management of the Axiom Ince situation. The timing is seen as precarious, given that the LSB’s review of the SRA’s performance is coming to a head. The LSB’s decision notice did not directly reference this investigation, focusing instead on the necessity of maintaining client protection and trust in legal services.
A point of contention remains in the equal apportionment of contributions, irrespective of a firm’s size. The LSB, aware of the inequitable impact this may have on smaller firms, has requested the SRA to review the fairness of this system.
The SRA has also expanded its senior executive team, incorporating additional expertise in financial management, to navigate these complex changes. The appointment of a new chartered accountant is part of this strategic enhancement, reflecting the increased complexity in handling substantial cash flows.
The Law Society has raised concerns about the fee hike, calling it ‘deeply concerning.’ Ian Jeffery, the Chief Executive Officer of the Law Society, emphasised the urgency for the LSB to release its findings regarding the SRA’s handling of Axiom Ince, underlining the necessity for transparency and learning from this incident.
The approval of a substantial fee increase by the LSB highlights the critical need to reinforce client protection frameworks amidst ongoing investigations.
