The increase in the practising certificate (PC) fee has come at a difficult time, as the recession continues to bite in most sectors of the legal profession. Members of the profession have the right to expect that the SRA will do its utmost to avoid placing an additional financial burden on them.

Several factors combined to make a significant increase in the PC fee inevitable. The predicted fall in the number of practising solicitors, meaning there will be fewer people to pay for regulation, representation and complaints-handling, accounted for £38 of the increase. Another £160 was attributable to increased regulatory costs, primarily relating to the establishment of the Legal Services Board and the Office for Legal Complaints. A further £41 was to facilitate capital spending on a programme to increase efficiency within the SRA – about which, more later.

The SRA component of the 2009-2010 PC fee is expected to be £492, 41% of the total. Clearly, solicitors are entitled to expect the SRA to be doing what it can to avoid unnecessary spending, delay what can be delayed, and to find more efficient ways of working.

Most of our work is unavoidable. In terms of cost (£101 of the PC fee), the biggest single area comprises inspections and investigation. The SRA would be failing in its duty if it did not investigate suspicions of dishonesty and serious malpractice. Delay in this area would damage public confidence in the regulation of the profession and create the risk of much bigger payouts by the Compensation Fund in later years. Nevertheless, we have refined how we classify risk and use the information we receive more consistently, so we can focus our resources more efficiently. This process will continue. We are also identifying areas in which our processes are cumbersome and add little value, and are removing these to ensure that resources are effectively targeted.

Since autumn 2008, the demands on the SRA – which were already rising – have increased greatly, we think due in large part to solicitors responding inappropriately to recessionary pressures. More cases are being transferred from the Legal Complaints Service to the SRA and, generally speaking, they are getting more complex. Reports of suspected fraud from lending institutions and anti-crime agencies have also increased. Inevitably, this means more inspections, investigations and, in the most serious cases where we believe there has been wrongdoing, interventions.

The SRA carried out 71 interventions in 2008; by the end of August 2009, we had implemented 61. We continue to expect more than 100 interventions this year – the highest number since 2000.

Interventions, even in practices with only a small number of solicitors, can involve massive amounts of work. Much of it concerns ensuring that the monies and papers held by practices are distributed correctly. The intervened solicitors will often be cooperative and the practice papers will be well ordered, but that is not always the case. There may be thousands of files to be sorted and checked. Because interventions can require a significant amount of resource, are largely unpredictable and can happen anywhere between Cornwall and Cumbria, we use a panel of external firms. The SRA does its utmost to recover the costs of interventions, but that can be a long process and success is not certain.

In a diverse business like the SRA, you cannot quantify productivity with a single measure. However, we have absorbed growth of around 20% in our caseworking and investigation areas in the past year. Yet demand continues to exceed capacity, so the levels of work in progress are growing. The inevitable consequence will be delays if we do not take action. To secure further improvement we need new ways of working and new IT to support it.

With funding approved by the Law Society, the SRA has started an Enabling Programme. Its aims are to improve our efficiency and effectiveness (for example, by removing duplication and unnecessary activity), raise levels of customer service and introduce IT systems to support our work better. The business case holds us clearly to account for delivering those benefits. In common with the current IT systems, the benefits of our new IT systems will be shared across the Law Society Group, with the SRA being the first to adopt them.

The SRA is preparing for the biggest legal regulatory challenge for 40 years – the advent of alternative business structures and a fundamental shift away from regulating individuals towards regulating firms. It is imperative that the rules and regulatory procedures are correct from the start. This work is complex and if we are to meet the Legal Services Board’s target of enabling the first ABSs in 2011, it cannot be delayed.

For the future, the whole question of how regulation should be paid for is in the melting pot. A new structure for funding the cost of the SRA, the work of the Law Society that is properly fundable through the PC fee, the Solicitors Disciplinary Tribunal, the Legal Services Board and the Office for Legal Complaints will be introduced in 2010. A joint Law Society/SRA consultation about this is under way and we want your views. The consultation is at www.sra.org.uk and closes on 28 September.

Antony Townsend is chief executive of the Solicitors Regulation Authority