Why the SRA scrapped the minimum salary for trainees
Since a minimum salary for trainees was introduced in 1982, there have been numerous debates around the appropriateness of both the SRA and the Law Society intervening in the market for trainee solicitors. Today the SRA is one of the few professional regulators that currently sets a minimum salary for trainees and it is the only one to set a minimum salary significantly above the statutory minimum wage. It was, therefore, entirely right for the SRA to question why this is, whether it fulfilled our regulatory objectives and, most crucially, whether it worked in the public interest.
At the board meeting on 16 May, following lengthy consideration, we decided unanimously that, from 1 August 2014, we will no longer set a minimum salary for trainees. Understandably, this has attracted significant media coverage, with much of the debate focusing on the impact this may have on diversity within the profession.
Why did we take this decision? The SRA only regulates where it is in the public interest to do so and where it enables us to meet our regulatory objectives. In reaching a decision, establishing whether there was clear evidence that setting a minimum salary for trainees fulfilled these criteria was a fundamental question for us. The board thoroughly considered the views of all stakeholders including 130 responses to the consultation, about 60 individuals who attended the focus groups, and over 1,300 individuals who responded to the online survey on this issue. We paid particular and detailed attention to the potential diversity issues.
The minimum trainee salary was introduced by the Law Society 17 years before the national minimum wage became law in 1999, to prevent exploitation and attract high-calibre entrants. However, there is little evidence that it meets these aims effectively and the board’s consideration instead needed to be on whether, notwithstanding these original objectives, setting a minimum salary effectively contributes to achieving the SRA’s regulatory objectives, in particular on equality, diversity and access to the profession.
The comprehensive Economic and Equality Impact Assessment (EEIA) we produced revealed a complex picture of the potential impacts of abolishing a minimum salary. We concluded that addressing diversity issues is a crucial part of our regulatory remit, but setting a minimum salary for trainees is not the best way to achieve this.
We were particularly influenced by evidence which suggested that professions with alternative pathways to qualification have a more diverse workforce and, in particular, include larger numbers of those from lower socio-economic backgrounds. Indeed, looking at the career choices of those from all types of background, starting salaries appear to be a less important factor than others, such as interest in the work of the profession, eventual earnings and length of time spent studying and accumulating debt. This, therefore, casts doubt on the value of the minimum salary in fostering diversity. Our research also suggests that removing the minimum salary may result in a greater number of training contracts. In the survey, conducted as part of the EEIA, 70% of the firms that did not currently offer any training stated that they would consider doing so if the minimum salary regulation was removed. This could well provide opportunities for those from less privileged backgrounds to enter the profession which may not have otherwise been available.
We hope that those firms who either do not offer training places or offer few relative to their size will review their requirements; their future success will be inextricably tied to the recruitment of new talent. We would in particular wish to see the Law Society launch an initiative to encourage the profession to increase the number of training places.
It is also worth highlighting the fact that setting a minimum salary for one type of individual regulated by the SRA has become increasingly anomalous in a modern regulatory environment where there will be a variety of routes to qualification, and the SRA is increasingly regulating different types of professionals and a broader legal workforce. If we continued to do this, solicitor trainees would be placed in a privileged position compared to those on other qualification pathways. We believe this is neither in the public interest nor the interest of the broader profession.
The SRA has been exploring alternative routes to qualification and we await with interest the findings and recommendations of the Legal Education and Training Review (LETR), which is considering this issue in detail. We have been criticised for not delaying the minimum salary decision until after the LETR was complete. This was a deliberate move on our part. We firmly believe that it was right to decide the issue now because this was a strategic decision better addressed ahead of any reform programme, and the two-year lead time means that individuals currently in training contracts will not be adversely affected. We also believe that, given the root-and-branch nature of the LETR review, it was essential this was debated separately from these wider discussions, to enable everyone involved to focus fully on the issues at hand.
The legal services market is far more complex than it was in 1982 and the SRA now regulates not only solicitors (and trainee solicitors) but a broader legal workforce. These are exciting developments, and they have the potential to have a significant and positive impact on access to and diversity in the profession. This complexity will certainly increase – for example, will-writers may soon join the SRA’s roll call of those we regulate. Our challenge now is to ensure we are able to provide effective regulation for the increasing range of individuals who are embarking on different routes to professional recognition.
The SRA’s response to the consultation on the minimum salary for trainee solicitors is available on the SRA website.
Charles Plant is chair of the board of the Solicitors Regulation Authority