Crisis, what crisis? Number of solicitors soars to all-time high
The number of practising solicitors hit a record high last month, despite the parlous state of the economy, according to figures released by the Solicitors Regulation Authority.
By the end of November there were 125,473 PC-holders, a rise of 462 on the previous month and of over 4,500 on the same date in 2010. The total number on the roll now stands at 163,108. There is a caveat however - it is unclear at this stage whether the figure may have been artificially inflated by this year’s phased renewals process.
In previous years the SRA has carried out a PC bulk termination exercise, where it terminates PCs which have not been renewed. This led to falls in the total in December 2009 and January 2011.
The rise has come at a time when the number of solicitor firms has remained relatively stable, despite evidence of greater consolidation. The number of firms fell by just 20 year on year, to 10,925.
In the last 18 months, there has been just one month (September 2010) in which the number of firms closing outnumbered those opening. Since August, there have been 219 new firms formed. Sole practitioner firms still make up almost a third of solicitor practices, although their number has fallen by more than 250 in a year.
There are also around 300 fewer partnerships this year than at the same point in 2010, although they still make up almost 30% of solicitor firms.
Incorporated companies (24%) and limited liability partnerships (14%) make up the bulk of the remainder.
The influence of legal disciplinary practices, introduced in 2009 to allow non-lawyer ownership stakes, has grown markedly, rising from 323 in November 2010 to almost 500 by the end of last month.
Comments
More mouths = less cake
If there are now more lawyers chasing what can only be at best the same level, or perhaps a worse level, of work in the legal market this means less fees for all as a result. This is nothing to be happy about. Smaller, newer firms with young lawyers willing to work for almost nothing will put out of business more established firms with higher cost bases.
Conveyancing is flat, building work is flat, PI claims are going to be reduced because of Jackson, even employment tribunals are going to see a fee that will cut off some work, then there is the legal aid cuts and the general economic gloom. I challenge anyone to prove the High Street legal sector will see a significant increase in total revenues. (Add in inflation and most lawyers are going to see real declines in their incomes).
In such a market is it really a good idea to have more and more and more young lawyers who will work for virtually nothing in order to pay off their debts? Let's face it, we have 125,000 lawyers servicing a market that at best needs around 100,000 and probably lower than that.
More more and if cake not any bigger, means less cake for all.
Thanks for that comment Gary,
Thanks for that comment Gary, food for thought. Very interested in readers' views on this, as this would seem to be a remarkably counter-intuitive rise.
Paul Rogerson
Editor
It suits those at the top to
It suits those at the top to have more solicitors and drive down general wages - lots of underlings does not affect the wages of those at the top, as most large businesses show.
At some point - probably quite soon with the rises in Uni fees, it will not be worth qualifying as a solicitor for many, especially those from poorer backgrounds or wishing to head into high street work, as the wages will not offset the cost of qualification.
cost of qualifying
I work in the high street and trained in the late 90's.
I would love to see the Gazette do a proper feature on cost of qualifying vs the actual rewards of high street work. ignore the high-flying wages of the city and concentrate on realistic figures for high street work (not equity partners).
I suspect very strongly the cost of qualifying will not be recompensed by the income from working especially if you assign a cash value to limited benefits, no pension etc.
too many articles fixate on the city fees and city rates of pay which are not applicable to high street work -
time for a feature perhaps?
regards to all
What, real research and
What, real research and investigative journalism as opposed to printing press releases? You'll be lucky!
I agree with "fed up" - time
I agree with "fed up" - time for some honest articles about the hours and salaries on the High Street. Far too many people still seem to have an unrealistic expectation of what I and my colleagues are taking home each month.
As a profession, we really do owe it to the current crop of law students, and those who are thinking about a career in law, to be honest about the opportunities and the prospects. It is, especially now with the increase in University Fees, an awful lot of money to pay, to come out, as a NQ solicitor, with a salary which in many cases is no more than you would get working in lower or middle management in any corporate concern. And at least in a Corporate setting you might get access to a pension scheme.
4,500 NQs
One other point to consider is that of the 125,000 practising solicitors, around 40,000 of them are in the top 100 UK law firms, i.e. just under a third. There are also around 90 US law firms in London and a number of these are also hiring at trainee level too and thereby producing NQs too. These far larger firms will absorb a significant chunk of these 4,500 NQs. If we are generous and say, 1/3 of the NQs are in this large commercial firms group too, that helps explain away 1,500.
The remaining 3000 - it truly is hard to explain. One possibility is some smaller firms are increasing leverage at the bottom level by making use of NQs to reduce costs, while laying off more senior staff.
But are they Working?
Holding a PC is not the same as working.
Many, having qualified, will keep a PC at their own expense to make them more attractive to an employer. The jobs are not there.
There is always a time lag
There is always a time lag between A Level students getting career advice and those ending up with PC's some years later.
5 years ago we were pre-Credit Crunch, hyper inflated fee income and easy money.
Now we are Quality, Co-op, etc and little funding for law firms.
If the new PC owners were asked "Where will you be in 5 years" maybe they will answer "We're re-training to be Medics or even Bankers"!
Zero-sum game?
Is there really a fixed lump of legal work, which can only be spread more thinly if there are more practitioners to do it? I'd be interested to see some research.
The probable answer is that
The probable answer is that there not such a "fixed lump" of legal work. After all, more and more laws are enacted, and rules and regulations promulgated. So the lump is getting bigger, and all of this potentially rquires legal advice.
What probably is fixed, and possibly getting smaller, is the willingness of clients to pay for such advice, particularly with regard to laws/regulation which they regard as unnecessary. The client is worried about open ended costs (hourly rates are fine for large businesses, not for SMEs who want a fixed, and reasonable cost). The reaction of the profession has been to "nitpick" and make all legal matters as complicated as possible, to spin out the work. The fear of being sued for negligence has increased this propensity (ably abetted by the courts which regard the solicitor as having automatic liabilty).
Therefore the market is actually shrinking-but not the need. If proof were required, one need only look at the expansion of no win, no fee litigation-an example where there is a need but not constrained by the fear of the cost.
As ever, the demand is constrained by cost. This is why there is little need for more lawyers.
Fixed share
Good question,
The point is this, at least at the High Street level, there are a certain number of customers with a limited range of legal needs - these total a market. The value of the market can grow for three reasons:
- customers will pay higher rates for the same work.
- customers want more legal services, eg. buy and sell more houses
- or they need new legal services that were not offered before or not easily covered before, but the demand for a new service adds to the total legal work in the market, e.g. the rise in PI claims - was not produced by more accidents, but the means to litigate them profitably (plus a lot of marketing).
This market is served by X number of lawyers, mostly in small law firms - i.e. the mouths.
One key factor is how the lawyers are used and who profits.
Overall, all these factors will be in constant flux, but as a basic rule, if the market i.e. total demand for legal services at the High Street level, remain stable, and more law firms seek market share, then there will be a tendency for each firm to make less. Hence the need for consolidation in falling or flat markets, or markets where price competition has become acute.
Are the numbers correct?
An interesting article, but I fear that the figures upon which this report is based on are not entirely correct.
The number of sole practitioners has remained pretty steady over several years at about 4,500 (according to the records of SPG, the Sole Practitioners Group). This is about 41% of the total firms, based on the figure of 10,925 firms quoted.
As Sole Practitioners can set up as Companies and LLPs, I believe that the number of SPs is currently being given out inaccurately. Perhaps the figure given for SPs just took into account those defined as "own account" and overlooked those with an alternative status.
Number of Solicitors
In the 1990's the LS Council considered whether to restrict the number of Legal Practice Courses authorised for the College of Law and other institutions to try and deal with the crisis then. They were advised that this would fall foul of the competition.laws.
A Dental Lecturer friend recently told me that the dentists, the vets and possibly the doctors (he was not sure about the latter) were now doing just this without any objection so far. Is this a possibility for us ?
Unfortunately the LS Council
Unfortunately the LS Council appears to get junk advice frequently.
It was told that the OFT would insist that referral fees be allowed-later found to be utter nonsense.
We all have a glorious future with the LS Council
If you replaced the cache of New Labour luvvies who constitute the current LS Council with a set of Anglican Vicars and Rectors it would be slightly more worldly and marginally less credulous. Pollyanna and Dr Pangloss were more realistic than these people.
Their utter impotence is displayed by their complete abdication of effective power to the unelected SRA.
Even when they had power it made no difference. They still fell for every bit of rubbish dreamed up by the wildly ambitious New Labour apparatchiks who took control of the LS. The favourite bogeyman being the OFT. The OFT will fine us if we organise strikes against Legal Aid cuts. The OFT will insist on referral fees being allowed. The Clementi changes are a fait accompli was another leit motif. Tony Blair's flatmate, Lord Falconer, was treated like god when he ordered the LS Council to surrender all powers to the SRA.
I am reliably informed that the Bar told the wretched Falconer to get stuffed when he threatened them with the OFT if they struck en masse but then the Bar has real power, as those following the advocacy accreditation saga will now know.
As to the Legal Aid debate, the LS Council finds itself in the position of Soviets at Nuremburg. Demanding that the government relent, whilst, themselves, running a prosecuting system which has no legal aid for defendants, even for insolvent solicitors. Also, the LS resist all attempts to be made to pay costs for failed prosecutions of solicitors. The hypocrisy is staggering but utterly predictable. A large part of the LS Council clearly has no knowledge of the things the SRA does in their name. The disciplinary organs are and always were completely out of control. They are run by a very few J. Edgar Hoover like characters who have no real supervison. Indeed, both the LS Council and SRA Board have voluntarily abdicated all control over individual cases.
No wonder that nothing changes even though we face a "perfect storm". The only advantage from Clementi is that we can practise law but have a choice of regulators. The days of the Hoovers, the LS Council and the SRA may be numbered.Perhaps modernity will intervene. Perhaps we will get proper representatives with teeth. Perhaps the disciplinary organs will face independent supervision. Perhaps pigs will fly. Perhaps solicitors will become popular. Perhaps the streets will be paved with gold. Perhaps true justice will triumph and we will all live happily after. Perhaps ...........
Off topic here - but very
Off topic here - but very true. I had cause to complain about an in-house solicitor SERIOUSLY abusing his privilege (going behind my back to approach my client, whom he knew was represented by me - indeed he was ignoring my letters to him - getting the client to sign a consent order and lie to the court, to save his company a nice costs bill and land my client in the you-know-what).
I duly complained to the SRA. They told me that they had "outsourced" (nice word that) their complaints to an external firm of solicitors. I received three of four pointless standard letters from said firm (who I presume charge the SRA / Law Society - i.e. us - by the hour).
But the best part of this story is:- did they investigate the complaint? Nope, not unless I basically do all the work for them and supply them with a properly referenced file of documents evidencing all the breaches of the code with cross-references etc.
BUT, they wrote to me, to tell me that MY letterhead was non-compliant ("authorised and regulated") and that I need to confirm to them that I am shredding my entire stock of letterheaded paper and reprinting it, lest I face the wrath of the SRA!!!! (This despite the SRA confirming in the Gazette that they will allow firms to use their existing stocks!)
The firms to which the SRA
The firms to which the SRA "outsources" work are mirror images of the SRA-expensive, pompous, don't listen and useless, but of course they will enforce the petty rules whilst missing the main point.
Basic Supply and Demand Principal
More lawyers competing for less transactions. Basic supply and demand dictates downward pressure on fees. If you and all your staff cannot verbalise why prospects need your products and services at all, why from you rather than the competition and why now rather than wait, then challenging times may lay ahead. However if you are seen to be the expert in your field or geographic location, rich rewards may await.
Crisis, what crisis? Number of solicitors soars to all-time high
Unless there is going to massive contraction - which is unlikely - firms will have to think way outside their traditional, moribund box if they are going to leverage all that intellectual capital. Cross-selling is not the answer. Solicitors will have to think how they can offer a broader range of services - consultancy, training and products - and perhaps take a leaf of the accountancy sector which has looked further afield than simple audit work (which is just a commodity). If they fail to see the opportunities then the sums/numbers don't add up.
Julian
Less cake - more hungry
Gary you said "smaller, newer firms with young lawyers willing to work for almost nothing will put out of business more established firms with higher cost bases." Maybe it is not all about income and expenditure but also hunger and vitality. The threats that face nearly every law firm in 2012 are very real. The more dynamic, lateral thinking and pro-active firms will survive and big budgets are not always needed to do so.
It's a crisis if you think it's a crisis
I agree with Gary Barlow about the finite amount of work that the High Street has access to. And it's shrinking because of economics. But everyone assumes that all those who are swelling the ranks on the Roll are going to practice law, and in this country, and in private practice (25% on PC holders aren't in private practice) The profession the gets the representatives it deserves as it is a largely democratic body. The damage was done to its whole ethos and credibility by a few about 10/12 years ago, and later those who volunteered to agree and encourage the split between the representative and the regulatory body. Now one doesn't know what the other is doing and the unelected SRA is the result of that. It mainly consists of practising partners in City of London law firms with no interest or support for the smaller firms, that make up the bulk of practitioners. Firms do have to ofer a broader range of services but above all, they need to ask clients what it is that people value. Constantly adjusting and being sensitive to client needs; Look at the retail High Street and what challenges that face. What are the major retailers doing? Inventing angles and options for selling to the client - offering better value, in short, while never compromising on quality of service delivery.
Crisis, what crisis? Number of solicitors soars to all-time high
Why make something so simple, complicated ?
Putting aside active public interest in excluding such areas as criminal work from competition reforms, the profession as whole has used the public interest argument to limit numbers joining the profession and maintain an inflated level of fees for decades and done so quite openly and shamelessly. Whilst numbers joining the profession have increased in part due to increased access to higher education there has been little or no impact to increase access to justice by moderating fees for the normal citizen who NEEDS to investigate, defend or prosecute actions.
It has always been open to Government and the Professional Bodies including the Universities to free up the market by combining the practice element within degrees and allowing District Judges
to licence Legal Executives, Law Graduates, Bar or LPC Finalists in areas where they are already
qualified but for experience to present certain levels of cases. If nothingelse it is a form of Pupillage.
The vast majority will be competentl to prepare and present a wide range of cases at first instance. Such individuals could comfortably thrive on a third of the normally hourly rate and reduce costs to the opposing party; should costs ever be recoverable other than in specified circumstances. District Judges examine and licence Bailffs, why not part " qualified " lawyers ?
There is no reason to limit the amount that Solicitors or Barristers can earn or charge. If companies or people wish to pay City Blue Chip rates that is fine. That is a matter of choice. However, at the other end of the scale the ordinary citizen should not be bounced out of having their case assessed or heard, nor should the competent be limited in opportunity to deliver services that they are
competent to give on the basis that they have to join a firm that in turn is part of a concerted practice as to level of fees. New or " would be " entrants are simply " locked out " from meeting
the demand for legal services and that is directly attributable to a profession en masse that refuses to meet that demand so as to keep fees artificially high, notwithstanding it remains a demand which government refuses to fund and would be slow to require the profession to meet by imposing
realistic fee rates .
It is a form of racketeering and all members of the profession should be ashamed that they belong
or otherwise allow this parasitic practice to continue, in their name.