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Legal aid funding reform threat to solicitors' charity

15 December 2010

The government's proposals for alternative sources of funding for legal aid could result in hundreds of destitute lawyers being deprived of support, the leading charity caring for solicitors has said.

SBA The Solicitors' Charity, formerly known as the Solicitors Benevolent Association, which provides financial assistance to solicitors or their families who have become unable to work due to illness or accident, derives most of its income from donations by lawyers.

Interest accrued on money kept on law firms’ client accounts makes up over 50 per cent of these donations, which are conditional, subject to clients asking for the interest to be returned – though there is no known instance of this ever happening.

The charity has been successful in securing regular donations from larger firms but it has recently found itself competing for funds with other organisations in the third sector that have become aware of this new income opportunity, according to business development director Phyllida Wilson.

Now the government is proposing that interest on client accounts should by law go towards the legal aid budget, posing a further threat to a critical revenue source for the SBA.

“Such comparatively small sums are not going to make an enormous difference to government income but the loss of this income to us in the form of conditional donations from firms’ client accounts will contribute to a huge and very severe shortfall,” said Wilson.

“We provide financial assistance to solicitors and their families for whom things have gone terribly wrong and who are no longer able to work through illness, accident or redundancy. It is just these individuals – who have committed their professional lives to securing justice for the vulnerable in society, and who now find themselves desperately in need themselves – who will incur a double hit from the government proposals – just at the time they most need our help.”

While lawyers in City or large commercial firms are usually seen as the most likely to be in need of assistance, Wilson said the charity’s effort primarily benefited lawyers in small firms.

“Out of some 400 current beneficiaries nationally, there are 30 beneficiaries in the Greater London area,” Wilson continued. “This is less than one might expect given population and number of firms in the area, which suggests that it is the high street practices in small and medium-sized towns and cities across the country and in the provinces where hardship is greatest.”

SBA records indicate that the distribution of beneficiaries is fairly even in proportion to the number of solicitors in a given area but Wilson said the charity rarely got applications from the City or from solicitors and families of the richer, more established provincial firms.

Last year the charity gave £900,000 in grants, together with about £500,000 in secured loans, but Wilson said the recession has been a challenge in fundraising terms. Most magic circle firms have made an annual donation to the SBA but reduced their donations by half or more.

At present only 13.5 per cent of law firms donate to the 152-year-old charity but Wilson said that if all lawyers gave just £5 a year it would “make a huge difference”.

To find out more about or donate to The SBA The Solicitors' Charity, go to www.sba.org.uk.

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