Law Society annual report: Budget savings and PC increase delivers surplus

15 June 2011

The Law Society has today published its annual report, reporting a surplus of £56.9 million.

There are four factors behind the surplus; first, higher than expected receipts from the first year of the operation of Fairer Fees, which have been ring fenced and set against next year's funding requirement; secondly, the decision to exercise a profit share agreement under the contract of re-assurance set up when the Solicitors Indemnity Fund was closed in 2000 (£16.5m before tax); thirdly, an under spend against last year's budget (being reduced costs of £15m and better income of £5m) and fourthly, a technical revaluation of the pension scheme driven by accounting standards (£10m).

The available cash elements of this surplus, plus the benefits of the investments made over the last few years in systems and a major cost reduction and efficiency programme, will enable the Society to target a reduction in excess of 15 per cent in next year's PC fee.

Law Society Chief Executive Desmond Hudson said:

'The new turnover-based element of practising fees for firms introduced in 2010/11 delivered a slightly higher value of receipts than had been assumed in the original fee calculation. This surplus was set aside to offset next year's funding requirement.

“This surplus is set against the backdrop of our ongoing intention to reduce the cost of the Law Society in the coming years. One of our key targets is to remove from the profession the burden and risk of the Society's final salary pension scheme.

'We are in advanced talks with the trustees of the scheme that, if agreed, may result in the closure to future accrual of the scheme and it being wound up. This would require a significant one-off payment in 2011 the cost of which can in part be met because of the 2010 surplus.

'This past financial year has seen the Law Society secure more wins for its members. The success of the Conveyancing Quality Scheme and our guiding hand for solicitors as the prospect of alternative business structures edges closer are just two important initiatives that we have developed with our membership in mind.

'Our commitment to protecting the rule of law and the regulatory needs of the profession have been illustrated perhaps more than ever in the face of planned cuts to legal aid and the changing regulatory landscape respectively.'

See the full financial review 2010

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