Editors' Blog

LawSoc pensions overhaul is way overdue

Posted 5/12/2007 by Deal Comment

For many, news that the Law Society is embarking on yet another campaign to cut costs – this time by overhauling its pay and pensions system – will come as no surprise. After all, the body’s employees have enjoyed average pay-rises of more than 6% in a system that chief executive Des Hudson described as both “unaffordable” and “unfair”.

But how apt that the news broke in the same week as the body’s regulatory arm unveiled research showing the public thinks it is a poor regulator. The survey found that consumers do not think solicitors are properly regulated and are unsure where to turn when things go wrong.

A bad-news double-whammy like that – being called overpaid and ineffectual in the same week – is not a totally new experience for the society, although it does present it with some interesting questions.

For a start, if the Law Society was spending so much money, why wasn’t it hitting its performance targets? Secondly, why was the society making redundancies – as well as closing operations – while still handing out such generous salary-hikes? And how was the professional body able to offer pay-rises significantly above inflation when its pension deficit stood at £71m in 2004?

Finally, why has it taken the Law Society so long to close its final salary pension scheme when problems were first spotted in the scheme’s funding as far back as 1999?

The Law Society blames the pension deficit on the (upward) change in life expectancy. However, it seems likely the high salary increases had an equally important role to play in the funding problems.

Chancery Lane would find it easier to defend its position if its own track record as a regulator had been more impressive in the eyes of the public. And this is before all those missed targets for its complaints-handling function are taken into account.

One positive is that Hudson seems determined to address the above problems. Certainly his uncompromising language – “unsustainable, unaffordable, unfair and uncompetitive” – suggests he means business.

Throw in the very real prospect that the Legal Services Act could force the Law Society to compete with other bodies to retain its representative and regulatory functions and you can see why Hudson is suddenly talking so tough.

paul.hodkinson@legalweek.com