SRA approves sweeping changes to practising fee charging regime

Anonymous - 13:56.

This is a very important post and I want to comment on it in some detail.

You say:-

I mean when you think about it, a profession is a profession because it is run by people who are qualified or people who have experience gained through working for years under people who are qualified. The Clementi changes coming in allow any big player with a big cheque book and no experience to enter our profession - thus making it a profession only by name, not nature. You can't have a profession that's run by people who aren't professionals or indeed funded by people who aren’t professionals can you? It's an absolute nonsense and yet we’ve somehow let it all happen. If I had been 5 years qualified (like I am now) 5 years ago I really would have tried to do something.

My comment is:-

I totally agree with this but the government has legislated to make sure that the profession is run by non-lawyers. The LSB has and the SRA is to have a non-lawyer/non-solicitor majority. They have also allowed funding from outside the law and ASBs owned by non-lawyers.

There was a long “run up” to the Clementi reforms and the Legal Services Bill. There were countless consultations and yet there was very little understanding of the cataclysmic results of these changes. The profession remained silent.

In the absence of an outcry from the profession, as a whole, almost total reliance was placed on the reaction of The Law Society Council.

The then Chief Executive of The Law Society seemed to be wholly in favour of the reforms and was want to say such things as “Solicitors will enjoy working for Tesco. They will have better terms and conditions than in private practise.”. A Law Society team was set up to have input into the Legal Services Bill.

A series of office holders (Presidents, Vice -Presidents and Deputy-Vice - Presidents) supported the reforms.

Matters came to a head in early 2005, when a special meeting of the Law Society Council was called to agree total abdication of rule making powers to an appointed board and total abdication of complaints investigation powers.

A small group of Law Society Council members, led by two Law Society Council Members, rebelled. This rebellion was heavily rebuffed by the authorities in the Law Society.

Lord Falconer, the then Lord Chancellor, was then drafted into speak to the Law Society Council before the meeting. He heartily recommended the changes and the Law Society Council voted to abdicate their rule making powers to an appointed board and their complaints investigation powers to another appointed board. There were 105 members of the Law Society Council and I think it was 12 who voted against the abdication.

From the moment of that vote the profession effectively ceased to be self-governing and lost control of its future. I must say that for this to have happened we must have actually ceased to be a profession many years before.

You say:-

Where's our Arthur Scargill type character when you need him? He was passionate about his cause and spoke up for his people. We desperately need someone like this. We need someone who will stand up to the Government/SRA/Law Society etc and tell them where to go when we need to. Forget the “red tape”, forget the regulations which govern us, if we don’t like something we should all be able to say so and if they don’t listen we should say “no” and refuse to change. Everyone else does this in every other walk of life. Why don't we?

We all just seem to be too English for our own good; keeping quiet and bumbling along hoping for the best. That might be ok for the folk at the top at the moment who are bumbling along in their Chelsea tractors back to their stately homes grateful for what they got out of it when times were good (this is a general reference and not reference to my partners by the way!), but where does it leave the next generation; the newly qualifieds and junior solicitors who decided not to work for the big boys. These people (of which there are many out of choice Mr Magic Circle man) have worked very hard qualifying for one and paying for the "privilege" for two!! I pay-off my student loan next month (13 years after I took it out) and believe it or not, if salary statistics are to be believed, I'm reasonably well paid and not at all extravagant in my spending!

My comment :-

I think Arthur Scargill is a poor comparator. He was unsuccessful and stupid in his defence of the miners. He played into Mrs Thatcher’s hands at every turn. We needed a cleverer leader than him but one never ever emerged at the time it was really necessary, five years ago. Now it is too late because the Legal Services Act 2007 is on the statute book and the big corporations are looking forward to the blood bath and will howl if they do not get their feeding frenzy.

I have great respect for those two Council Members who led the rebellion over the abdication of powers but such a leader should have come up through the grass roots. Why did it not happen?

It never happened because we are a profession of individuals and a profession of the middle class. This meant that our tradition is silent dissent and not active disagreement. This is now a world where only those who shout loudest are heard. It is a world where only the activist can get anything done. The meek are ignored. It also means that we have a problem because we cannot get people to act in concert.

The only people who could possibly have stopped the rot were the City of London solicitors but the government had very cleverly inserted clauses in the Legal Services Act 2007 which would greatly enrich the partners or owners of firms who could float them on the stock market. In short, the large City of London firms. This was a cynical repetition of the way consultants were bought out when the NHS was founded but it ensured minimal dissent from the City of London. That is why the wealthy men and women in the Chelsea Tractors never responded.

You say :-

It seems we are creating a hole in our own ozone layer and the senior members who tend to speak out about these things (because they are senior) are not doing enough about it. Our Solicitor Grandparents are not planting any trees for their Solicitor Grandchildren are they people! Indeed, by the time we get the chance to sit in our partner's ivory towers it won't be worth sitting in them - the lift will be broken, the lights on the stairs won't work, and there'll be graffiti all over it!!

My comment:-

This is the last generation of solicitors as we know them. In future, there will be a few solicitors in the City of London and thousands of para-legals superintended by legal executives in huge factory firms owned by large corporations. There are still solicitors who remember doing articles in the 1960s and 1970s, when senior partners in high street firms were paid the same as senior executives in industry and therefore, could afford lifestyles quite beyond those of such senior partners today. People whose earnings allowed them to own strings of businesses. This has been destroyed over the last 30 years and now senior partners in the high street earn the same as plumbers and Police Inspectors. The ivory towers have been knocked down. How did this happen?

Back in the 1920s Sir Leslie Scott, Solicitor General in the Lloyd George coalition government, was tasked to get the Law of Property Act 1925 through parliament, despite virulent opposition from solicitors. He succeeded and from that time it was only a matter of time before conveyancing, the great money earner, became formulaic, for the act established registered land and the Land Registry. From that distant time the writing was on the wall for solicitors but they were still seen as important to the body politic and their privileges and monopolies were maintained until the 1980s when the property owning revolution meant that cheaper ways of doing things were needed. It was then open season on the high street and in thirty short years we have been reduced to penury.

This is an extraordinarily quick turnaround of events and demands some explanation over and above the reduction of monopolies .

The first explanation is that the real power behind the throne now is the media and the media detest solicitors. I believe that this is because we are associated with pain in peoples minds and the media only pander to those who give the public pleasure these days. We are not footballer or entertainers and so we are easy meat. The media are also profoundly lazy and cannot understand that most solicitors are now relatively impoverished. They still see us as amongst the very wealthy. Worse, they pump out so many falsehoods about this that students want to become solicitors to become rich. It would be laughable if it was not so tragic. They have also built the reputation of the Law Society as some sort of monstrous lobbying all powerful organisation. When, in fact, it is catastrophically weak, as is evidenced by one recent attempt to reverse government policy. During those awful years of Clementi and the Legal Services Bill there was one thing upon which the whole Council and their Chief Executive was united. That was that criminal solicitors could not be expected to carry on under the terms and conditions forced upon them. A ridiculous situation had developed where criminal defence solicitors were paid less then Police Constables, when all benefits were taken into account. Some partners in criminal defence firms were paid less than this. The Law Society campaigned long and hard over this but to absolutely no avail. So much for their great power.

The second explanation is the collapse of Legal Aid. Spending on this increased, as the government pumped out new laws and more and more solicitors joined in. It is not understood that they were not jumping on a gravy train but were refugees from even less profitable areas. Soon Legal Aid was overloaded and costing more and more. The government started by trying to limit suppliers through contracts and then, when that didn’t work, slashing fees.

The third explanation is new technology. This has allowed those who wish to take over our business greater flexibility in doing so.

The fourth explanation is almost complete complacency on the part of the judiciary. They really don’t seem to understand that the almost complete destruction of the high street part of the profession has the potential to destroy our justice system. This is because the majority of the senior judiciary have very little direct understanding of commerce. You only have to read their judgments in the cases of individual solicitors to understand this .

The fifth explanation is the almost complete complacency of solicitors in this country. I will give one example. The block listing system in the magistrates court. A solicitor appearing in the magistrates court has to attend court at 9.30 am and wait until his client’s case is called, sometimes as late as 4.30 p.m. Contrast the situation in some eastern bloc communist countries , where if the court was not ready to hear a case, when the lawyer appeared at the courthouse, then he went back to his office, telling the usher to telephone when the court was ready. So, we are less assertive then communist lawyers whose whole career could be ruined by falling out with the authorities. It says it all, doesn’t it.

You say:-

Above all else though all of this means the whole nature of what we do is downgraded and the quality of what we do diluted. Apart from lower charges how do the reforms actually help the end user; that end user the powers that be so desperately feel the need to protect (at whatever cost to its members)? Like anything in life you pay for what you get but the one-off clients this profession lives off (our staple diet in these economically difficult times) will opt for price over quality every time because they don't know what level of competence is required to do what they need us to do. They'll see the Supermarket’s economy branding and the brand will instantly conjure up an image of competency when in reality the person drafting that Will or selling that house could (note this is not a statement of fact) be nothing more than a monkey trained to hit return and press print on a computer keyboard! It will certainly not be a well-trained Solicitor working for £15k who understands the law behind the process, which is what, in my opinion, Clementi heads towards. The only clear and tangible indicator of competence is a person's qualifications or level of experience measured in years. Telling a client you were a Solicitor used to be enough to tell them that you knew what you were doing. Why did that have to change? To me, it is your qualification and experience that should drive a client to instruct; not a household brand or a flashy marketing campaign - at least not a flashy marketing campaign from a business which is predominantly operated by non-professionals.

Consequently, these reforms in whatever package they presently come in do two things - drive down our salaries to compensate for the inevitable squeeze on profit margins and actually drive down the quality of service the profession can offer as a whole. It will put good fee-earners out of business and will replace them with sub-standard non-professionals who are willing to work for less (peanuts if you wish to apply it to the above analogy!) That is what is fundamentally wrong with these reforms. Reform was needed but certainly not in this way. It was not thought through. It was obviously not challenged enough at the time.

For me, I really enjoy working in a competitive market place but not one where the competition wins outright because it can trick the consumer into thinking that bigger is always better. Indeed, what really makes your blood boil is that I think I read last week (although it surprises me and I still think it must be wrong!) that a staggering 83% of our "profession" is run by firms with 4 partners or less. If that is correct how do any of these reforms protect 83% of my profession? These firms (especially in this climate) do not stand a chance as they do not have the marketing budgets or computer systems in place to react to these changes. To put that into context that's a staggering 83,000 solicitors potentially all in the mire. "A Fair Future for All" really is a laughable tag line when you think what is happening here! Effective action is required.

My comments:-

It was always clear to me that the Clementi dream of solicitors working happily for large corporations churning out work and getting company pensions was complete rubbish.

It was always going to be para-legals on a pittance superintended by a few legal executives.

That means the high street and all those solicitors employed by it, will disappear and it will probably take the Law Society Council and the Law Society with it.

Virtually all current LPC students will face the destruction of all they have worked to become. A tiny tiny minority will go into the City of London and survive

It is going to be very very hard indeed.

Interestingly, the SRA seems to be making a bid to survive by asking to regulate ABSs and switching to firm based regulation. However, they may find that the former are a poisoned chalice. At the moment they get away with their draconian and archaic methods of investigation. No ABS run by a major company is going to accept that and the SRA will not be able to rely on their usual assistance from the courts, who regularly uphold procedures used against solicitors which would be anathema if used against suspected criminals. The major company will go straight to government and lobby for long overdue legislative change. The SRA will be radically changed by such legislation.

Why?

So, why are the majority of out profession facing extinction? The eternal question is conspiracy or cock up.

The cock up theory is supported by the fact that MPs and government ministers still think high street solicitors are wealthy. They think that competition will take the top off our cream and they don’t realise that the cream has long since gone. Therefore, they do not realise that their actions threaten the entire justice system.

The conspiracy theory is that high street solicitors were identified as easy targets for appropriation and destruction: We are hated by the press and have little public sympathy; our profit making work could be done by those large corporations who were so beloved of the Blair administration and the left wing of the Labour Party detest us for being middle class and wanted a middle class sacrifice, to make up for the destruction of the miners.

Last but not least, this country is palpably in decline from its great 19th century days and the North Sea Oil bonanza is running out. We are a nation running out of money. At the same time we have greatly expanded the professional sector. The professions used to be the law, medicine, the church and the commissioned officers of the armed services. Now it is the law, medicine, the armed services, the police, the media, the advertising industry, the accountants, banking, business and commerce of all sorts. In fact, there are more professions than non-professions. All staffed by graduates expecting professional salaries. The government’s response has been to restrict those professions that it pays for by grafting on non-qualified people to do the same work more cheaply. One example is the widespread use of Associate Prosecutors (or Designated Case Workers) in the courts. These are non-legally qualified prosecutors. The removal of the high street part of our profession will be the greatest addition to this move ever. At a stroke it will remove a lot of highly paid people and replace them with people paid less.

I am afraid that this trend will go on and on. It is an absolutely necessary trend if we are to take our place amongst the poor countries of this world, in a world dominated by South East Asia and the Indian subcontinent. I really really hope I am wrong about this.