By Rachel Rothwell


Law firms will have to provide regulators with information on their turnover in each practice area from next year, the Gazette has learned.



The move is likely to lead to firms in higher-risk practice areas such as conveyancing and personal injury paying more for regulation than other firms.



The Solicitors Regulation Authority (SRA) is to consult next month on the kind of information it will require firms to provide. It will propose that firms should submit details of the types of work they undertake and the proportion of their turnover this represents.



The SRA is also likely to demand details of other risk factors such as referral fee arrangements and relationships with external bodies.



The new rules on what information is to be submitted are expected to be introduced by October this year. Under the Legal Services Act 2007, the SRA must move to 'entity-based regulation' - which means regulating law firms themselves as well as the solicitors in them - by next March. A radical change in fee structure, with most of the regulatory costs charged to the firm rather than individual practising certificates, will be in place by October 2010. However, it will be several years before the SRA has built up enough information to begin charging different fees according to areas of practice.



SRA consultant Alison Crawley said the new fee structure may be based on that used by the Financial Services Authority (FSA). She said it would redress the current imbalance where two firms with a similar turnover could be paying very different amounts for regulation, depending on their ratio of solicitors to paralegals. Firms with few solicitors but many paralegals pay relatively little for regulation, even though they arguably pose a greater risk, she said.



Ms Crawley added that the large City firms were likely to be paying broadly similar amounts for regulation under the new fee structure.



Solicitors warned that the SRA should not increase the burden on solicitors by asking for more information that it needs. Tony Williams, management consultant at Jomati, said: 'This will be a shock for some firms, but most practices should already have the information in some form.'



Mr Williams said many firms consider that they are 'already paying too-high fees to the SRA'. He added that solicitors must not end up paying both higher turnover fees and higher individual fees.



Law Society President Andrew Holroyd said he recognised there may be changes to the basis on which fees are paid, which must be consulted on.