The Law Society of Scotland slipped more than £500,000 into the red last year and has revised its budgetary plans in a bid to restore depleted cash reserves.

A steep hike in the Edinburgh-based body's wage bill was largely to blame for the loss.

In its annual report, the governing body for Scotland's 10,000 solicitors reported a deficit of £537,000 for the year to October 31. Income climbed £365,000 to just over £6m, mainly as a consequence of increased subscriptions. However, spending soared by £762,000 to £6.6m, after salary costs rose by £495,000 to more than £3.7m.

This increase came despite a slight fall in total full-time equivalents from 121 to 116. It includes some £88,000 in severance payments. Accounting rule changes also triggered a sharp rise in the costs of servicing staff pension plans.

Society treasurer Jamie Millar stressed in the report that although the balance sheet shows a cash surplus of £581,000, this is only because higher subs relating to the next financial year were banked early. He added: "If the advance income had been received (after the year end) there would have been a cash deficit of £851,000 at October 31. This deficit is hidden in the accounts due to timing...as the cash deficit worsens the bank overdraft is being utilised earlier and for longer each year."

Millar told The Herald: "The Society has stringent budgetary policies and procedures in place to manage our overheads and expenditures and is presently reviewing our strategic direction. We are planning further changes to improve our effectiveness."