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So much for the Global Law Summit – Gove floats £60m-plus tax on City law firms to fund criminal courts

New Justice secretary Michael Gove is set for a tussle with City lawyers after floating a plan to impose a multi-million pound tax on commercial law firms to pay for the abolition of a controversial criminal court charge on guilty defendants.

Gove’s plan has been floated as a means to replace the revenues generated by the court charge that was supposed to bring in between £65m to £90m annually.

A report in The Times today (22 October) says that a 1% levy has been floated as a means of appeasing the Treasury. Such a levy on the top 100 UK firms, which have combined revenues of £20.64bn, would potentially generate over £200m annually but promises to ignite controversy over arbitrary taxation of one industry. A Ministry of Justice spokesperson appeared to be struggling with their brief but made no effort to deny the proposals’ existence and Gove has previously hinted at such measures in speeches.

Such a move would also pitch the traditionally weak City law lobby against one of the most influential government ministers in Gove. Nevertheless the move will be highly unpopular among City law firms, who are already up in arms about rising court fees in civil cases. 

It would also stoke resentment in the City’s commercial profession following what was widely regarded as a mis-conceived attempt by the government to back the profession in this year’s Global Law Summit.

Gove has faced mounting pressure to scrap the unpopular criminal court charge dubbed ‘a tax on justice’ which included charges of up to £1,200 for adult offenders to pay towards the cost of running the criminal justice system. The compulsory levy is fixed at £150 but can rise if they deny wrongdoing and are found guilty, which critics warned encourages innocent but poor defendants to plead guilty.

Speaking at the Annual Bar Conference last Saturday (17 October), Bar Council chair Alistair MacDonald QC said: ‘Criminal court charges are unfair, unrealistic and likely to be highly inefficient. They are particularly harsh on vulnerable defendants. The government was only a day or two ago defeated in the House of Lords on a motion of regret about these charges and we must continue to press our opposition to them.’

This latest proposal resonates with previous sentiment by Gove who has been pushing for lawyers to ‘look into their consciences’ and do more work for free in the justice system, though there is widespread scepticism regarding using pro bono to fill the gap left by state funding.

Whether the City legal industry can this time generate anything like a united front or robust lobbying position with the government, though, will be open to question.

But a number of lawyers will be sharing the view of one veteran City litigator asked for comment on the proposals: ‘That can’t be legal.’

Update: An MoJ spokesperson subsequently provided the following statement: ‘As the Justice Secretary said in June, we have a two nation justice system at present. The wealthy, international class can access the gold standard of British justice, while everyone else has to put up with a creaking outdated system. Resources are rationed at one end while there are huge rewards at the other. Those who have benefited financially need to do more to protect access to justice for all and we are discussing with the profession how this can be taken forward.’

Many readers will note the bizarre conflation of a professional service paid for by institutional clients – and generating substantial tax revenues – with state obligations to fund a criminal justice system but there you have it. We’re through the looking glass. City law has a fight on its hands.

For more on the legal profession’s lack of public policy clout click here