The bar’s regulator is reviewing its fees after grossly overestimating the profession’s appetite for new business models.
Income has fallen well short of expectations, the Bar Standards Board admits in its annual report, after entity applications turned out to be just a fraction of the hundreds anticipated when it began licensing the new model in April last year.
By March 2016 the bar regulator received 201 expressions of interest in entity status. It had authorised just 46 entities by the end of the 2015/16, a small number of which are solicitor-owned and managed.
With regard to financial sustainability, the regulator said it had made a policy decision that the cost of funding its entity work would be borne not by the profession but by authorised entities.
The report adds: ‘Our resourcing plans and fees were based upon this application figure. We only received a tenth of our estimates for entity applications so our fee income was significantly lower than our forecasts.’
The report shows that entity regulation generated £28,000 in 2015/16, of income from all sources totalling £8.7m.
‘We were able to balance this shortfall by reducing the amount of staff time required in this area,’ the report adds.
‘This careful management has meant that we can continue to provide this service in a sustainable way, however we will be reviewing resourcing plans and fees going forward for all authorisation functions.’
In March the Legal Services Board also approved the bar regulator’s application to authorise alternative business structures.
The report states that the regulator is awaiting statutory designation and hopes to begin regulating ABSs this financial year. In the meantime, it is seeking ABSs to participate in a pilot programme to help it prepare for the forthcoming move.
BSB director of supervision Oliver Hamner said: ‘Broadening the scope of the BSB’s regulatory regime to include legal services businesses is testament to our commitment to promoting innovation and customer choice in the market.’