Lawyers face a one-off £13 million hit to set up the new oversight structure for the legal profession, the Lord Chancellor revealed last week.

However, the professional bodies called for the government to foot the bill, whatever it turns out to be. A Bar Council spokesman said Lord Falconer's 'optimism turned out not to be the best guide' when it came to estimating the cost of the Millennium Dome.


The money will be used to create the legal services board - supervising the entire regulatory structure - and the office for legal complaints (OLC), handling all complaints against lawyers. They are at the heart of planned legislation to implement last year's Clementi report.


Lord Falconer made it clear that 'our general principle is that those benefiting from the regulatory system should bear the cost of that regulation. But in a legal services market with a turnover of around £18 billion annually, this one-off cost represents around 0.07%'.


Speaking at St Paul Travelers' annual On Risk conference in London, he told an audibly sceptical audience, mainly from large commercial firms: 'I hope you will agree with me that [this] is a price worth paying to secure a strong future for the sector, and better services for consumers.'


A Department for Constitutional Affairs spokeswoman said it is consulting on how to raise the £13 million. Options include dividing it between the professional bodies on the basis of membership size or complaints generated. 'There are several ways of doing it and they're all fair in their own way,' she explained.


The spokeswoman said a decision should be made by the time the White Paper comes out later this year.


Law Society chief executive Janet Paraskeva said: 'The government currently pays for the supervisory functions carried out by the Lord Chancellor and Master of the Rolls and there is no reason why that should change when the new supervisory regulator is established. We also expect the government to meet the start-up costs of the new arrangements.'


The Bar Council spokesman said it is concerned that costs may spiral. 'It doesn't take long for grand ambition to take hold,' he said.


From early on in the Clementi process, the smaller professional bodies have been concerned about the financial impact on them.


Diane Burleigh, secretary-general of the Institute of Legal Executives, said that 'if the government wants to make this change, it should pay for it'. There are ways to reduce costs, she added, such as locating both bodies outside of London.


It seems likely that the OLC will be based on the Law Society's existing Consumer Complaints Service in Leamington Spa.


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