The Solicitors Regulation Authority is consulting on a proposal to lessen the impact of its practising certificate fee reforms on small firms and legal aid practices for this year’s renewal.

The proposal could mean around 3% of the profession would have the fee payable under the new regime reduced for the 2010 renewal, shifting a maximum of £160,000 on to the rest of the profession for that year.

The consultation puts forward an option for a transitional ‘fee moderation process’, which would address unfairness in the system caused by the use of 2009 turnover figures to calculate the firm-based element of the 2010 practising certificate fee.

The decision to use turnover figures from 2009 was made following consultation with the profession, which in general favoured the simplicity of that approach.

However, the use of 2009 data means that firms that have seen a significant reduction in turnover in 2010 could be paying an unfairly high PC fee.

The SRA has outlined a fee moderation process, which could be used to address this unfairness. The process would only be applicable for the 2010 renewal year and would be based on a set of pre-established conditions with no discretionary element.

To be eligible, firms must have a turnover below £500,000 in their most recent closed annual accounts. The total PC fee payable under the new system in 2010 must be at least 50% more than what they paid in 2009 under the current system, and they must have experienced a turnover drop of at least 30% compared to the figure they submitted to the SRA in 2009.

In addition, the SRA is considering removing the £500,000 turnover threshold for firms that generate at least half of their income from legal aid work. This means legal aid firms of any size could be eligible for a reduction if they face a 50% increase in PC fees and their turnover has fallen by 30%.

In its consultation, the SRA said it was considering this option ‘because some members of the profession have raised concerns about the impact of the new structure on firms with a high percentage of legal aid (these firms often have high turnover/low margin) and a possible impact on access to justice’.

The paper suggests the structure of the moderation process, which would be based on set criteria with no room for discretion, would make it a ‘robust, objective and transparent system which is both efficient and economic to administer’.

The consultation sets out the fee moderation process as one of two options, the other being to set up no transitional arrangements. It does not indicate which system the SRA prefers.

SRA board chairman Charles Plant said the proposed moderation process related ‘primarily to firms that can show their turnover has reduced significantly and therefore it could be unfair to base the 60% fee, which is based on turnover, relating that to last year’s turnover’.

From the 2010 renewal, 60% of the regulatory burden will be paid for through a firm-based fee, and 40% through a PC fee paid by individual solicitors.