The Gazette 1993

GAZETTE

MWH DECEMBER 1993

Focus at AGM on Society's Finances

At the Annual General Meeting of the Law Society held on Thursday 11 November, 1993, questions were raised by some members of the Society about the increase in the Society's j expenditure and particularly the level ! of the Society's current overdraft. Geraldine Clarke , Chairman of the Finance Committee, summarised the Society's Statement of Income and Expenditure (as circulated to all members in the Annual Report). She said the Society's income had increased by 13% in 1992 while expenditure had increased by only 9%. The main area of increased expenditure was legal fees which was due to an increased number of cases presented to the Disciplinary Committee. However, there had been notable savings on controllable activities. She said the Society was very conscious of the fact that at the year end it had a high overdraft. However, for the greater part of the year the cash position was positive. The adverse cash position has arisen mainly from the capital expenditure programme in the past six years, in particular, expenditure of £1.7m on the maintenance and essential repair work on the building at Blackhall Place, refurbishment of facilities in the Four Courts, extension of the students' teaching centre, the computer system and photo copiers. The Council was examining measures to reduce the overdraft, including the possibility of a leasing arrangement or term loan. However, at the moment an overdraft was the most cost-effective form of | finance. This was under constant ! review. Ms. Clarke said that in the current year (1993) the Society was on target to achieve a surplus of income over expenditure. Jerry McCarthy made a number of suggestions about the Annual Report which, he said, was too long and did not present the information in a format Í which could be easily assimilated. He

suggested that pie charts should be prepared reflecting the sources of income and expenditure and bar charts which would show the variations in ! income and expenditure over a three to j five year period. He noted that while ( income was up 13%, further analysis I showed that income from practising I certificates had increased by 18% while income from membership subscriptions had increased by only 2% and admission fees had declined by 15%. On the expenditure side, while Í the overall increase was 9%, establishment costs had increased by | 14% and administration costs by 11%. I He noted that in 1988 the proportion of I total income received from practising ! certificates was 55%; by 1992 this had I increased to 72%. He noted that the expenditure on pensions in 1992 had increased by 48%. Arguing that it was essential to control expenditure tightly, j he said adequate budgetary control procedures should be introduced and supervised by the Council. A strategy group should be formed to look at financing the Society's long-term debt and, finally, a report should be prepared for Council setting out rolling financial plans on a three to five year basis which could then be reviewed on an annual basis.

for the increase in pensions was that the Society had received professional advice that, in common with many other employers, its senior staff pension scheme was under-funded. At this stage remedial action had been taken to provide the proper level of funding in order to comply with the Pensions Act and there was no question of expenditure on pensions increasing further. She explained that the main reason for the Society's overdraft was because of expenditure on premises. Over the past five years, £500,000 had to be spent on repairing the stonework. The advice received from the Society's financial advisers was that, at the moment, an overdraft was the most cost-effective strategy but other options were being assessed. Michael Nugent expressed concern about the progression in administration expenses. He noted that payroll costs had increased by £50,000 but expenditure on postage and telephone was down and he queried whether this meant that less work was being done. He noted that while in the past the Law Society had no vehicles there was now a figure of £79,000 in the accounts for motor vehicles and he questioned how this had arisen.

Replying, Ms. Clarke said the reason

He further noted that the building at

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