A decade after Michael Gove floated the possibility of imposing a levy on large law firms to help fund justice, the Legal Services Consumer Panel this week resurrected the controversial proposal.
The consumer watchdog explored the feasibility of imposing the de facto tax at a workshop titled ‘Advancing access to justice through regulatory leadership’.
Dr John Sorabji, co-director of UCL Law’s Centre for Dispute Resolution, said: ‘One of the “cons” of this type of proposal is it can be viewed as yet another product of discrete reform which allows the state to avoid doing what it should do. Effective advice is the state’s responsibility. Access to the justice system is the state’s responsibility. Hiving it off to the private sector might be viewed as an unprincipled development along that route. These types of proposal could be described as yet another instance of papering over the cracks.’
Sorabji questioned what a ‘modest’ levy would look like, adding: ‘Modest to whom?’.
Eddie Coppinger, chief executive of the University House Legal Advice Centre, said that levies are not a new concept for corporate law firms: ‘We already have an apprenticeship levy. The interesting thing about the apprenticeship levy is if it’s not used, it gets forfeited to HM Treasury. Lots of corporates spit feathers about that.’
Up to 50% of the apprenticeship levy can be donated to third-party organisations, Coppinger noted. ‘Those of us who have a relationship with corporate law will get it donated to us.’
Rather than have two levies, ‘perhaps what would work better is to repurpose unused apprenticeship levy’, he added.
Sorabji questioned why the levy would be targeted at commercial law firms. ‘Why not all firms, particularly if you’re going to have a tapered approach? Why target one? Because they have the deepest pockets? That seems unprincipled.’
No one wanted to see levy cash go into Ministry of Justice coffers and simply be diverted to prisons – by far the department’s biggest expense.
Attendees were also concerned that firms forced to pay a levy might cut their pro bono budgets. One noted: ‘If you’re looking at a levy on profit, is that UK profit or international profit?’ Firms might restructure to minimise reported profit, another remarked.
Should the levy be seriously explored, attendees said a working party would need to be established and determine ‘where the line will be drawn between the winners and losers’, while assessing the impact of other similar levies ‘comparable to what’s on the table’.
Yesterday’s workshop also discussed government plans to seize interest on law firm client accounts, which are out for consultation until next Monday.
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