Changes to the practising certificate (PC) fee charging system will see around £16m transferred onto private practice solicitors, to the benefit of in-house and local government lawyers, under plans due to be unveiled by the Solicitors Regulation Authority.

Under the new charging regime, 40% of the PC costs will be paid through an individual PC fee, and 60% through a firm-based fee. This will mean less money is recouped from solicitors in the employed sector, as they will not pay the firm-based fee.

This cost, which represents about 15% of total PC income, will instead be borne by lawyers in private practice.

SRA consultant Alison Crawley said that lawyers in commerce and industry (C&I) and local government cost considerably less to regulate. She said: ‘The 40/60 split between the individual and firm-based fee means that 15% of the budget that is now covered by C&I and local government solicitors will be moved onto the private profession. If it’s not 40/60, we will have irate local government and in-house lawyers, who make up about 25% of the profession.’

The paper will propose that the firm-based fee is calculated according to gross turnover, with a banded approach similar to income tax. The SRA notes that there will be ‘winners and losers’ under the new rules. Sole practitioners with turnover below £30,000 will pay less, while sole practitioners who have large numbers of non-qualified staff and turnover of more than £1m will be ‘significant losers’.

Richard Barnett, senior partner at volume conveyancing firm Barnetts, said the move to charge firms based on turnover could drive some firms to other regulators, potentially lowering income for the Law Society, and might be unfair on firms that had to pay out large amounts in referral fees. He said: ‘Is now the right time to do this, when alternative business structures are on the way and there might also be other regulators which might throw their hat into the ring?’

Former C&I Group chairwoman Carol Williams said the proposals were ‘excellent news’ for in-house lawyers. She said: ‘If you look at the risk to the profession of in-house solicitors, we are very low risk and very low maintenance, and that ought to be reflected.’

Law Society chief executive Des Hudson said: ‘I am confident the SRA will ensure that this consultation is as extensive and thorough as possible. These are potentially significant changes and that is why it is vital that the entire profession, from local authority solicitors, to sole practitioners and those in the commercial sector, engage with the SRA to give their views. We will be making representations to the SRA on the basis of our own consultation and examination of the proposals. A fairer fee policy for all was highlighted as a priority in the recent Hunt report of regulation of law firms. The SRA needs a full response to the consultation if it is to deliver on that.’