Why was turnover selected as a basis for calculating the firm fee?
Turnover is a sensible variable, as it is a figure that the profession already captures as part of their annual accounts processes, and it is often used when renewing indemnity insurance. For most firms, this should minimise additional cost or effort. However, this would depend on the insurers used and the information they collect. It also takes into account how much business a firm does, and allows for a good fit in terms of ability to pay. This is a particular benefit for firms with a relatively low level of earnings per practising certificate holder. The turnover model, in particular, allows for a positive impact for low income solicitors, in that those who were just above the threshold of £20,000 would previously have incurred much higher fees, whereas, under the new system, there is a more gradual increase in fees.
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