The Law Society Group drew on reserves last year to help fund an IT transformation plan, which the organisation said averted a one-off hike in the practising certificate fee.
In 2017/18 the organisation spent £19m on the project, according to a newly published annual report which covers the 12 months to 31 October. This was up from £6.9m the year before and largely responsible for turning a group surplus of £6.7m in 2017 into a deficit of £11.5m.
The IT Transformation programme approved by Council in 2016 forecast a spend of £61.2m to be spent over the 2017 to 2020 financial years.
‘A deficit was budgeted for in 2018 at the time of setting the net funding requirement, primarily driven by budgeted spend on the IT transformation project,’ the report says. ‘The 2018 result was also impacted by lower than expected return on investments with a positive realised gain offset by unrealised losses in the portfolio.’
A Law Society spokesperson added: ’Like most organisations the effectiveness of our operation is contingent on the effectiveness of our IT which is why we are undertaking a root and branch modernisation of our infrastructure. To fund this, we have dipped into reserves which means we avoid a one-off hike to the PC fee. We will replenish the reserves as planned in coming years.
‘Our governing body, Law Society Council, approved for the IT spend to be funded in this way. The practising fee for 2019-20 is proposed to be frozen, subject to LSB agreement.’
The group’s net assets, incorporating both the representative body and regulator the SRA, dipped from £106.2m in 2017 to £94.7m last year.