In a rapidly changing legal services market, just how fit for purpose is the training contract in ensuring access to the profession is open and diverse and in preparing the next generation of lawyers? The profession-wide Legal Education and Training Review (LETR) is asking tough questions about how and when prospective solicitors should qualify and whether there should be multiple routes to qualification.

While this has huge implications for future would-be solicitors, the more immediate concern for current trainees is the Solicitors Regulation Authority’s review of the mandatory minimum salary for trainees. The consultation, which closes on 10 April, with a decision due on 16 May, has provoked strong reactions.

Fair pay

The Junior Lawyers Division believes abolition of the minimum salary would have a ‘devastating’ effect on diversity in the legal sector, while Mary Butler, senior partner of Sheffield high street practice Bell & Buxton, calls it an ‘abomination’. The compulsory minimum salary was set in 1982 to protect trainees from exploitation and to encourage high-calibre graduates into the profession. The question of whether the Law Society, and subsequently the SRA, should intervene in the market for trainee solicitors by setting a minimum salary has been the subject of several reviews over a 20-year period.

Rather than wait for the findings of the LETR, the SRA board has gone ahead with the consultation, arguing that, ‘on the face of it’, there is no evidence that setting the minimum salary promotes any of the regulatory objectives of the Legal Services Act 2007.

It is not saying there should not be a minimum salary - rather the question is whether it is right for the SRA to be the one setting it. Deregulation could encourage firms to offer more training contracts, it suggests, but the regulator has yet to complete an impact assessment, which will include an assessment of ‘any potential for exploitation’. The difference between the trainee minimum salary and the minimum wage amounts to several thousand pounds. The minimum salary levels are £18,590 in central London and £16,650 outside London. The national minimum wage, introduced in 1999, is currently £6.08 per hour for workers aged over 21, which equates to £12,464 for a 40-hour week.

The SRA received 38 applications for the minimum salary to be waived last year - 11 were granted, 15 were unsuccessful, 11 are still in progress and one was withdrawn. Firms have to provide evidence of the circumstances preventing them paying the minimum salary - financial circumstances alone are not sufficient grounds. While the average starting salary according to Law Society statistics is about £26,000, 30% of the current 9,000 trainees are at or below the minimum. A slightly higher proportion of women trainees - 32% - are at or below that level - compared with 27% of male trainees. The proportion is much higher for BME trainees - 42% compared with 27% of white trainees.

The JLD has launched a national campaign against abolition. Chair Hekim Hannan says: ‘The SRA should retain responsibility for setting the minimum salary because it will affect the future of the profession, which is clearly a matter of public interest. If firms just pay the national minimum wage, it will have a huge impact on trainees already struggling with debts while the amount the firm will save will not be enough to encourage them to take on more trainees.’

The Young Legal Aid Lawyers group argues it is an ‘essential safeguard. Given the ever-rising cost of legal education, dropping to the national minimum wage would be wholly inadequate and would effectively exclude all but the wealthiest from entering this vital area of law’.

Butler was one of the last generation of articled clerks and fought hard for trainees to be paid a proper wage. ‘I feel very strongly about this,’ she says. ‘The idea that trainees will be paid at an appropriate rate if there is no compulsory minimum is absolute rubbish. In the current employment market, no one will pay a penny more than they have to. We are a decent, sensible firm but if we could get away with paying less of course we would because you have to make savings where you can. The result will be trainees suffering hardship and being deterred from coming into the profession - and that is wrong.’

Richard Moorhead, professor of Law at Cardiff University, says most firms will continue to pay what they pay now. ‘But, from my past experience with the Trainee Solicitors Group, some firms will use abolition to exploit people’s desire to qualify to get very cheap labour,’ he says.

‘Having talked to trainees over the years, there is a strong correlation between low pay and very poor training, which I believe gives rise to a significant risk which is something the regulator should be concerned about.’ The debate comes at a time when arguably it is as tough as it has ever been to qualify, with far more LPC graduates than training contracts, despite a significant drop in numbers taking the course.

However, Sarah Hutchinson, business development board member at the College of Law, believes the market is starting to correct itself. ‘The fall in LPC graduates is significantly greater than the fall in available training contracts,’ she says. ‘This year, assuming similar levels of new registrations of training contracts, it appears there will be about the same number of successful LPC graduates as there are contracts available.’

However, the JLD is far less optimistic, pointing out those figures do not take account the huge backlog of graduates from previous years still seeking training contracts. Certainly firms are reporting hundreds of applications for every placement.

Manchester-based Pannone received 1,000 applications for its 2014 intake of eight trainees, while applications for the four to six contracts being offered by Morgan Cole, half in its South Wales and South West offices and half in its Thames Valley offices, ran into hundreds. Both firms have halved the number of contracts they are offering to ensure greater job opportunities at the end.

Guy Constant, training principal with Morgan Cole, says trainee recruitment has always been a challenge: ‘You are actually recruiting for four years ahead as you try to work out how many newly qualifieds you will want. But, in the middle of that, the world can change as happened four years ago. ‘In an ideal world we try and under-recruit so there are enough jobs for everyone when they qualify. Last year we had more newly qualified jobs than we had people qualifying. We have only once had to defer the start of some training contracts, but they are all with us now.’

There is some cheer for those who do land a contract. According to a survey of 2,200 trainees for the Chambers student guide, 80% were retained by their firms. Simon Johnson is trainee recruitment partner with Freshfields Bruckhaus Deringer.

The firm takes on about 100 trainees a year, with a 90% or higher retention rate. ‘We don’t pretend we recruit perfectly by any means,’ he says. ‘But, on the whole, there is a high level of demand for the trainees when they qualify. In part, this reflects the impact of the work permit cap which means you can no longer hire laterally from outside the EU.’

Time for change?

So, given the difficulties in obtaining a training contract, concerns that it is acting as a barrier to diversity, and the liberalisation of legal services, is it time for radical change? The Legal Services Board has been holding a national seminar series, Education and Training: Getting Fit for 2012, which will feed in to the LETR. Two papers published alongside it highlight unresolved tensions in the regulation of training.

The LSB paper says education and training should focus on the activities that the firm and individual are delivering rather than on making an individual fit to hold the professional title of solicitor or barrister. The College of Law’s Legal Services Institute argues the training contract is ‘almost certainly’ not fit for the purpose of preparing individuals for day-one competence and should be scrapped.

The body says the link between the professional title of solicitor and the entitlement to practise reserved legal activities should be broken. Students should qualify as a solicitor following the LPC. Firms would have to design an appropriate programme of development for the first years of practice, but this would be less constrained than the requirements of a training contract.

Those going on to do reserved activities would have to undergo additional qualifications or accreditation.

‘My gut reaction,’ says Constant, ‘would be someone coming out of the LPC is not qualified to advise members of the public. The two years spent on the training contract, and frankly the next few years after qualification, are much more important training than the LPC.’

However, professor Nigel Savage, chief executive of the College of Law, argues that giving students the opportunity to get a professional qualification without doing the training contract ticks the diversity box. ‘It would create a global transactional qualification,’ he says. ‘There would still need to be a period of training… And if you wanted to do one of the reserved activities you would have to go on and qualify in those areas.’

Professor Moorhead is sceptical. ‘That raises the question - what’s the point of a title which doesn’t entitle you to do anything you couldn’t do before? It digs a great big hole under the concept of solicitor.’ However, Stephen Denyer, global markets partner at Allen & Overy, argued at the LSB seminar that lawyers with the English and Welsh qualification were a declining proportion of their staff as the firm expanded internationally because it was ‘failing miserably’ against alternatives such as the New York Bar exam.

Nwabueze Nwokolo, chair of the Black Solicitors Network, also questioned the value of the training contract. ‘A lot of those I represent spend years being paralegals because they can’t get a training contract so they can’t get a professional title. That is encouraging people to choose the NYB route.’

Andrea Cohen, training partner with Pannone, counters: ‘My personal view is you aren’t ready to be called a solicitor at the end of the LPC. You need those two years to develop client skills, learn how to take instruction. You also need the time to decide what area you want to specialise in. A number come to us saying "I only want to be in corporate" and come out qualifying into clinical negligence.’

Nicky Bizzell, head of resourcing at Eversheds, says smaller firms may need a more flexible option. ‘For us, we value those two years. Trainees should have the opportunity to experience each of our areas - otherwise you would be churning out very one-dimensional lawyers.’

Skadden partner Allan Murray-Jones, a member of the City of London Law Society legal training committee, told the LSB seminar that qualifying after the LPC would ‘debase the brand of solicitor. Someone could do a two-year law degree and then a seven-month LPC. It is inconceivable to me that someone can do 31 months of education and no practical experience and be entitled to call themselves a solicitor.

‘It is part of the unique skill set of an English solicitor that, before you can call yourself one, you have had a valid period of work-based learning.’

Concerns that training contracts are a barrier to entry have already prompted trials of new models. The SRA has been running a work-based learning pilot with 98 students, which places emphasis on actual work experience and demonstrable competence.

Nottingham Law School has worked as the external assessment organisation with a group of paralegals and legal officers working in private practice, local government and in-house. One of their cohort, Stephanie Walsh, was admitted as a solicitor in October after taking part in the pilot while working in the HR department of North West Ambulance Service.

‘It is a very rigorous process,’ she says, ‘and more closely evidenced than an average training contract, probably because they are still feeling their way with it.’

After years working in the voluntary and public sectors, Walsh decided it was time for a life change and financed herself through the GDL and LPC. She then took a year travelling before taking up the opportunity offered by the pilot scheme to train without having to go back to a trainee salary.

‘That would have been galling,’ she says. ‘This is a good way to reach more people, particularly mature students who already have other transferable skills which they can bring to the workplace.’ The SRA has also waived two key regulatory requirements so Eversheds can trial a Combined Study Training Contract (CSTC). The firm takes on 60 trainees a year but has ring-fenced 12 places for students to test the new-style contract. They will study the core modules of the LPC full time at BPP Law School on the accelerated programme from August until December. They will then join the firm’s London, Birmingham or Leeds offices as trainees on a trainee salary - £36,000 in London and £23,500 in the regions - from January 2013, qualifying in January 2015. They will study their three LPC electives during those two years, matched where possible with the relevant seat.

Peter Crisp, chief executive of BPP Law School, says it will enable students to put into practice what they are being taught on the LPC, earn while they learn and qualify six months earlier. ‘If this approach is taken up more widely by other providers,’ he says, ‘it won’t mean having to restructure the LPC; it is just about finding a flexible approach to suit student and client needs.’

Bizzell says the primary driver is to give trainees a ‘fantastic learning experience’ in a way which may help students facing very high university fees. She acknowledges that there is a risk they will not meet the required standard at the end of the contract: ‘But there is that risk with any training contract.’

Another initiative is being devised by Accutrainee, which will recruit trainees directly and second them to firms. Founder Susan Cooper says the profession needs good quality trainees. But, alongside recessionary pressures to cut costs, increasing legal process outsourcing is taking away work traditionally done by trainees, while smaller firms face the headache of organising secondments if they cannot offer the whole spectrum of training.

Instead, Accutrainee will take those pressures off them. But Cooper stresses it is not a temp agency. It will only recruit when it knows where the trainee will be for the full two years. The idea has received a mixed reaction. Moorhead says there are ‘obvious problems with Accutrainees getting jobs at the end of their contract. But if the SRA makes training contracts a more genuine test of competence, I would expect more of these arrangements because firms may not have the resources to do that themselves’.

The profession is also starting to tap into the apprenticeship movement to attract ambitious students reluctant to take on huge student debt. Yorkshire-based Gordons recently launched an apprenticeship with the Chartered Institute of Legal Executives specifically to boost diversity.

Bob Labadie is principal solicitor with The Co-operative Legal Services (CLS). He says it plans to give all its staff the opportunity to access a legal career at the level appropriate for them. It is working on a legal apprenticeship scheme to fill the gap between paralegals and legal executives to go live next year which will open up opportunities post A-level and possibly post-degree to start building a legal career.

It currently has four trainees in place, with the first qualifying six months ago. ‘We have very ambitious plans for growth and will be offering significantly more training contracts because we believe the way to achieve that is by growing our own people at all levels,’ Labadie says.

He believes the training contract is still fit for purpose but stresses that a one-size-fits-all approach is wrong. ‘There should be other routes into the market so people can join at different stages of their education and still have the opportunity to progress. That is the challenge for business.’ He understands JLD fears that ABSs may mean fewer training contracts or newly qualified jobs. But he says: ‘I am as much a member of the Law Society now as I was when I was in private practice. We already have 65 solicitors working here out of a file-handling community of 200, and we are committed to both the legal profession and to training. I would be very disappointed if our trainees don’t stay with us, but if they leave me I want them to go out into the market and reflect well on my business.’

For trainee Sarah Bolt, a member of the JLD committee, a key concern is firms taking on LPC graduates as paralegals with the promise of a training contract which never materialises. ‘We are worried that, while some go on to obtain a training contract, others become demoralised and leave law completely,’ she says.

One LPC graduate, who took on a paralegal role when she could not get a training contract, says: ‘The firm didn’t entice me with the promise of one. However, it was very frustrating applying year after year but, despite being given more and more responsibility in my paralegal role, I wasn’t considered good enough to be given a training contract.’

After three years she left the profession and has retrained in the financial sector. ‘I am very disappointed as I financed myself through the LPC and didn’t want to give up when I still have huge debts to clear,’ she says. ‘I am not turning my back on a legal career - it may be I will be a stronger candidate with a couple of years of business experience, but I am angry that I wasn’t given a more realistic picture about the difficulties before I embarked on the expense of the LPC.’

The huge pressures on firms during the recession has seen some trainees being made redundant. David Taylor, chair of the Law Society Membership Board, says the board is seeking more information on the issue. Taylor, a partner at London firm Hanne & Co, says he is concerned about contracts being terminated as a cost-cutting exercise. ‘I understand why firms may feel they have to do that, but while there has been no authority specifically on solicitors’ training contracts, there is a potential claim for breach of contract.’

In a still-turbulent legal market, it remains vital to ensure a strong flow of good lawyers. But, with diversity high on the agenda in terms of employees and business structures, is the answer more diverse routes to qualification?

‘I would wholeheartedly endorse anything which opened up the profession,’ says Morgan Cole’s Constant. ‘The only barrier should be one of quality in insisting people are good at their job before they are let loose on the public.’

Grania Langdon-Down is a freelance journalist