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Junior Lawyers Division

Bare minimum: SRA's trainee wage victory could spark race to the bottom

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Alex Aldridge reviews the aftermath of the SRA’s decision to abolish the minimum salary for trainees.

In 2012, at the Solicitors Regulation Authority’s (SRA) unremarkable London offices, nestled in a side street round the corner from Monument underground station, a gaggle of journalists stood grouped in the waiting room grumbling about how late the body’s monthly board meeting was running.

These affairs don’t usually attract many members of the press. But May’s meeting was different. The main item on the agenda was the highly contentious issue of the trainee solicitor minimum wage - and a final decision was to be made about whether or not to scrap it that afternoon following a heated battle of words between the SRA and the Junior Lawyers Division of the Law Society (JLD), the latter having campaigned strongly in favour of maintaining the status quo .

Eventually, a door opened and the journalists were called into the room. An hour’s debate among the SRA board members about the rights and wrongs of having a minimum salary for rookie lawyers ensued, before the issue was put to the vote. It was decided unanimously to get rid of this long-standing protection to the solicitors’ profession’s new entrants.

A long history of disagreement

The trainee minimum wage was introduced in 1982 in order to, as former Law Society Trainee Solicitor Group (the TSG was the forerunner to the JLD) vice chairman David Dixon recalls, ‘protect trainees from unscrupulous and mean employers who used whatever devices they could to pay as little as possible.’

However, as time went by, the Law Society Council (some of whose duties would in 2007 be subsumed into the SRA) went off the idea of a minimum wage. According to University College London (UCL) academic, and former TSG chair Richard Moorhead, ‘a kind of annual sport’ developed where the TSG and its sister body, the Young Solicitors’ Group (also since incorporated into the JLD), wrestled with the Law Society Council to maintain the trainee minimum salary.

Writing on his blog, Lawyer Watch, Moorhead recalls:

‘Every time there is a recession, the solicitors’ profession likes to reconsider minimum salaries for its trainees. For a while this was a kind of annual sport. Chairs of the Trainee Solicitors’ Group and the Young Solicitors’ Group (I did both jobs back in the days when the Law Society Council was busy tearing itself apart) would be invited into the Law Society equivalent of smoke-filled rooms (biscuits and too strong, rather rank coffee) to be told that they were standing between hundreds of new training contract places and they should allow the abolition of minimum salaries.

At some point (usually at the then well-lubricated Council dinners) they would be approached by the Law Society Council member they were most friendly with to be told, don’t ask for an increase and everything will be alright. They duly, usually, did that and everyone claimed common sense had prevailed.’

As Moorhead acknowledges, there is nothing new in the oversupply of LPC graduates relative to training places - although the problem has become much more pronounced in recent years. Nor has much changed in respect of the discomfort felt by the Law Society Council, and later the SRA, at the idea of there being a minimum wage for trainee solicitors that is substantially above the statutory minimum wage when no other profession imposes such a requirement. So why did the powers that be finally get their way this time around?

The SRA prevails

In the end, it came down to a couple of major recent changes affecting the trainee solicitor recruitment market. The first is the difficult financial positions many smaller law firms find themselves in as a result of the recession, the Legal Services Act (opening up the legal market to big players like Co-op) and the Legal Aid Sentencing and Punishment of Offenders Act (which will soon bring about swingeing legal aid cuts).

If law firms didn’t have to pay a minimum salary to trainees, so the theory goes, they would be able to take on more trainees - clearing some of that oversupply and allowing them to compete more effectively in the tough new market place.

According to a survey conducted by the SRA earlier this year, 70 per cent of the firms that did not currently offer any training places would consider doing so if the minimum salary regulation was removed. The figure was cited during that fateful board meeting last month, as was a letter (and the ensuing comment thread) to the Law Society Gazette by jobless LPC graduates in favour of scrapping the minimum wage, which was discussed for around 20 minutes.

Of course, many dispute the theory that getting rid of the minimum wage will lead to more training contracts, pointing out that trainee salaries are merely one of a number of costs firms incur when they take on graduates.

The second factor was related to the work-based learning model that the SRA is set to imminently introduce following a successful pilot. Those coming through this route wouldn’t have been automatically eligible for the old minimum salary – meaning that if it had been preserved there would have been the possibility that a two-tier system may have been created, with some trainees earning more than others.

Writing recently in the Law Society Gazette, SRA chair Charles Plant stated that placing trainee solicitors ‘in a privileged position compared to those on other qualification pathways’ would be ‘neither in the public interest nor the interest of the broader profession’.

However, Oxford University law student Richard Ridyard contests the basic premise on which Plant bases his argument, stating that the work-based model’s viability for students ‘could be compromised, over time, by law firms employing less solicitors and more paralegals.’ He continues: ‘This risk is compounded by the fact that the SRA has failed to cap the number of paralegals a given solicitor can supervise. Consequently, one of the presumptions behind the work-based learning model - that law firms will want paralegals to become solicitors - could be false.’

The ‘D’ word

And where does diversity fit into all of this? As JLD chair Hekim Hannan and several other opponents to the scrapping of the minimum salary have pointed out, the number of students from poorer socio-economic backgrounds will surely drop if trainee wages fall below a level that enables them to pay back their hefty law school debts.

Hannan recently argued that in scrapping the minimum wage the SRA had ‘effectively slammed the door shut in the faces of those from lower socio-economic groups trying to enter the profession.’ He went onto ask how someone without parental support would ‘manage to fund the LPC and then, if they are lucky, obtain a training contract at minimum wage?’. He added: ‘The loan repayments on the LPC are in the region of £300-£400 a month. That leaves a little over £400 a month to live on, not taking into account any overdrafts, credit cards or other student debts that maybe immediately due.’ Finally, he concluded that those from lower socio-economic groups “will have to work one, two or three jobs while they are studying, which will inevitably have an impact on their results and their future careers.’

For its part, the SRA insists that a trainee minimum wage is not the best way to promote diversity in the profession – one of the body’s statutory remits. However, it has still not set out any plans on how it intends to make the profession more diverse in the wake of its decision.

With a recent survey by recruitment firm Laurence Simons finding that socio-economic diversity has worsened in the legal profession over the last few years – in 1958, just over 40 per cent of lawyers grew up in families with an above average income, but 60 per cent of British lawyers who were born in 1970 grew up in families with an above average income - the SRA’s inaction in this respect is a concern.

Certainly, if the body is to do anything about the fact that 15 per cent of lawyers are from the UK’s 250 public schools (compared to just 2 per cent of the general population), it will need to make to do something to make the route into law a viable one for those whose families do not have deep pockets to support them through a training contract.

Looking ahead, as the impending undergraduate tuition fee hike - from around £3,000 to £9,000 a year - puts another barrier in front of working class people hoping to enter the law, the depressing likelihood is that the social mobility situation in the profession will get worse. This would be a concern for any profession, but for the one which supplies the judiciary - who, as one of the pillars in a democracy, are meant to reflect the electorate over whom they preside - it is doubly worrying.

Twist in the tail

Judging by the murmurings being emitted by legal education bigwigs, the most probable response to the diversity issue is that a greater emphasis will be placed on part-time study in the future, meaning students can work while they complete their degrees and, subsequently, their LPCs - thus enabling them to minimise the debts they incur.

Hopefully, this would allow them to survive on less money as trainee lawyers. But faced with such a gruelling route into law, will students from less wealthy backgrounds continue to choose to become solicitors when there are other careers, like accountancy and medicine, where salaries are higher and vocational training costs covered by employers to a much greater extent?

Before the profession faces such issues, though, it will first have to confront a possible a twist in the tail of the decision to scrap the trainee minimum wage. Why would a law firm take on a trainee in September 2013, and be required to pay them the existing trainee solicitor minimum wage, when it could put them off a year and get away with paying them the national minimum wage 12 months down the line?

Don’t be surprised if there is a fall in training contracts in 2013, followed by a sudden spike in 2014. And beware of the SRA attempting to take credit for this rise.

Alex Aldridge is the editor of Legal Cheek and a regular contributor to the Guardian about legal affairs.

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Your Junior Lawyers Division is dedicated to meeting the needs of all LPC students, LPC graduates (including those working as paralegals), trainee solicitors, and solicitors with up to five years post qualification experience.

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