Practising cost may rise by 13%

The Law Society Council will this week vote on a 13% rise in the practising certificate fee and a 96% jump in contributions to the Solicitors Compensation Fund (SCF).

The proposed increase in the practising certificate fee to 790 is the result of the expansion of the regulation directorate, agreed by the council last October and costed at 21 million over three years.

It would take the Law Society's budget to 97 million in 2004.

A Law Society spokesman said: 'This increase is wholly attributable to funding the expansion of the Society's regulation work to raise standards of customer service across the profession through a long-term programme of change which requires significant additional investment.'

The proposed rise in contributions to the SCF - which compensate the victims of fraud by solicitors - arises from its reserves dropping too low.

The 980 level is aimed at providing security against a large default.

The SCF paid out 18.7 million in 2002, the highest since the post-property crash peak of 29 million in 1994.

Solicitors with seven or more years' post-qualification experience will pay 980, if approved, while those with four to six years' experience will pay 490.

Solicitors up to three years qualified are exempt.

Last year's figures were 500 and 250.

The spokesman said: 'It is vital for the reputation of the profession that the fund is able to meet its obligations.

Since 1999, the fund's assets have fallen from 50 million to 14 million.

The fall has principally been caused by the high cost of interventions, agents' fees and the increasing complexity of fraud cases, requiring more detailed investigation.'

The SCF only pays out on the default of sole practitioners or of partnerships where all the partners are involved in the fraud.

In the event of there being an innocent partner, the default is covered by the firm's indemnity insurance.

Sole practitioners are usually blamed as the cause of most frauds.

A paper going to council says 'this may be unfair'.

Figures from the Solicitors Indemnity Fund show that it paid out 150 million over dishonest partners and employees between 1987 and 2000.

In the same period, the SCF paid out 179 million.

Neil Rose