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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.
Replying, Ms. Clarke said the reason
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.
He further noted that the building at
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