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Firms to meet bulk of PC fee

6 July 2010

Law firms will pick up 60 per cent of the practising certificate fee from October this year under proposals put forward by the Solicitors Regulation Authority.

The SRA board agreed at its latest meeting that solicitors will pay a “much reduced” individual PC fee of about £460, with firms paying a separate fee based on turnover.

Under this new hybrid mechanism, the overall fee for a firm with 45 fee earners and a £6m turnover will be £53,115. This would include £23,400 from the fee earners – or £520 each – and £29,715 from the firm – or the equivalent of £660 per fee earner.

In addition, all fee earners will be required to contribute £10 each to the Compensation Fund, and the firm £150. On the basis of last year’s PC fee, which was £1,180 per solicitor, the 45 fee earners at the same firm would, together, have paid out £53,100.

The new mechanism is still subject to approval by the Legal Services Board, which is expected to make a decision next month. The final amount will also depend on the Law Society deciding on the total funding requirement for next year.

The change is part of the wider move towards firm-based regulation under the Legal Services Act. According to the regulator, the banding of firms based on variable volume of work will more closely match the responsibility for payment with the “ability to pay” principle.

Most firms usually pay for their fee earners’ PC fee but the SRA says the new model will reflect more accurately the fact that most of the regulatory activity relates to firms rather than individuals.

The SRA sent letters to firms earlier this month detailing the likely fees.

The move has, in the main, been well received by lawyers. Karl Wingfield, CEO of 42-lawyer firm BP Collins, in Gerrards Cross, said he had “sympathy” with the idea that firms should pay according to the size of the fee income, as “headcount doesn’t necessarily reflect the regulatory risk that needs to be monitored”.

Wingfield added that the new calculation would change little to the overall amount the firm paid.

“Anything that makes it fairer is going to be good news,” said Philip Seymour, senior partner at 49-lawyer firm Field Seymour Parkes in Reading. Under the new calculation, Seymour said his firm would save £11,000.

David Pester, managing partner at 203-lawyer Bristol-based TLT, added the proposal was “a fairer way of calculating the regulatory fee as the cost will be shared equitably among firms depending on their size and turnover”. Pester expected the effect of these changes to be fairly neutral for the firm.

In the capital, 37-lawyer firm Cumberland Ellis should see its PC fee contribution drop from £52,000 to £49,000, while Russell Conway, Solicitors Journal columnist and senior partner at nine-lawyer firm Oliver Fisher, said the figure in the SRA’s letter was “roughly the same as last year”.

According to Jeffrey Forrest, sole practitioner in London’s West End, who employs two lawyers, the cost for his firm is unlikely to change.

“Firms likely to see an increase are those with a small number of partners, a high number of paralegals or non-solicitor lawyers, and generating a large turnover in the volume market,” he said. This would include firms operating in the commoditised sector, such as personal injury and debt collection.

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