Impact of legal aid cuts on firms to be investigated by SRA
Law firms across the country could suffer 'significantly' if the UK Government implements its proposed 17.5% legal fee cuts by spring 2015. The Solicitors Regulation Authority (SRA) is extremely concerned about these cuts and is planning on investigating what impact they’re likely to have on firms of all sizes across the country and the future of the profession as a whole.
In an attempt to reduce the cost of running the current legal system, which currently stands at £2 billion a year, the UK Government is planning on cutting the fees paid to barristers and firms after a case by 17.5%. If these cuts come into force it will seriously reduce the income of barristers and solicitors, and smaller firms could fold under the new financial pressure. Should a large number of these firms go under, it would seriously harm the profession by reducing their ability to deliver legal aid and therefore leave many victims powerless in courts.
SRA may have to cover the cost of insolvency
It is widely accepted that should a large proportion of legal firms close, the debts, interventions and other consequences will fall on the profession, with rumours suggesting the SRA will have to pick up the biggest financial burden.
The SRA relies heavily on legal aid for their financial stability programme, and these cuts merged with debts from bankrupt firms could result in a serious financial strain on the SRA. However, the SRA has been quick to play down fears, suggesting it’s too early to tell what the impacts will be.
Mike Haley, director of supervision at the SRA, has said:
“Supervision have built into their plans for 2014 a project on the impacts of recent changes on criminal legal aid firms and how the risks are being managed by firms. The exact nature of the changes to be made by the MoJ are not yet settled and so it is too early to say what the impact will be”.
The Law Society met on the 17 th December to discuss the possibility of a no-confidence vote in their senior officials and their handling of the campaign to reduce legal aid fees. The Law Society has repeatedly stressed that its deal with the UK Government to reduce the cost of running the legal service has never included legal aid fees cuts.
Although many small firms are worried about the legal aid changes, the Ministry of Justice (MoJ) has stressed that the cost cutting measures are not aimed at closing small legal firms:
“There is no agenda in our legal aid reforms to close small solicitors firms. SMEs are the lifeblood of our economy. We do not believe the proposals we have presented would mean a crisis in criminal advice coverage as suggested”.
The issue of legal aid has rumbled on for months, resulting in barristers striking on the 6th January 2014. Here at Fonseca & Partners we want to reassure all our clients that regardless of the future of legal aid, we will provide accurate and professional advice. If you need help with a personal injury, contact one of our solicitors today.