When the College of Law sold out to private equity, £200m was generated for legal education. How is the money being spent?

A little over two years ago, the College of Law acquired university status and sold its goodwill and assets to Montagu Private Equity for £200m. Where has the money gone?

Sadly, there were no windfalls for those of us who studied at the college, which was set up in 1962 when the Law Society School of Law merged with the law tutors Gibson and Weldon (established in 1876). The money was paid to the old college, which acquired a new name but kept the same charitable purpose – ‘to promote the advancement of legal education and the study of law in all its branches’.

So now we have a profit-making teaching institution called the University of Law and a separate grant-making charity called The Legal Education Foundation (TLEF). I should perhaps disclose that I have received an honorary degree from one and a grant from the other.

You would think a body with £200m at its disposal might be rather better known; but it has not courted publicity. TLEF has a distinguished board of governors who must approve each grant. But the driving force is clearly its chief executive Matthew Smerdon, a softly spoken but dynamic former community worker who was recruited from the Baring Foundation, where he specialised in funding the legal advice sector.

Smerdon’s eyes light up when he recalls working with street children in South America as a student – and with legal rights workers at the community centre he then helped run in the East End of London: ‘It had a profound impact on me to see someone coming in, at their wits’ end, with the weight of the world on their shoulders, being bullied by a landlord, at the mercy of public decision-makers, up to their eyes in debt.

‘And then to see them sit opposite the advice worker and realise that there were laws that could help, that there were ways in which they could be helped to take more control of their lives; the relief and gratitude that would wash over them has always stayed with me. Since then, my work has been influenced by that power the law can potentially have.’

The £200m could pay for a lot of legal advice. But TLEF is here for the long run. Its investment managers have been instructed to preserve the value of the fund in real terms while producing an annual income of 3.5%. With staffing and administrative costs of up to £1.5m a year, it expects to spend around £5.5m a year on grants.

But it is not there yet. Although TLEF started investing in April 2013, it has distributed little more than £5m to nearly 70 projects in nearly two years. At a time of great need, couldn’t it do more?

It is still early days, Smerdon explains. The £200m was not fully invested until the end of 2013 and was never expected to produce as much as 3.5% at the outset. ‘We are not sitting on funds,’ Smerdon insists. ‘We are spending every pound that we can.’

TLEF’s first objective is to increase people’s understanding of the law and the public’s ability to use it. The foundation has made a number of relatively small grants to a wide range of providers. It is also supporting research into unmet needs and ways of making the legal system more accessible.

But perhaps the most far-reaching of its projects is one that TLEF is running itself. With the aim of increasing access to employment in the legal profession while advancing mobility and diversity, it launched a fellowship called Justice First.

Eight law graduates who want to work in social welfare law were recruited last year from a strong field of 161 applicants. TLEF is funding their two-year training contracts, mainly at law centres in England and Wales – although one is in Glasgow and another is at a solicitors’ firm. Trainee barristers may be included in the next round and TLEF is discussing potential placements with the Bar Pro Bono Unit.

‘We have committed substantial funding to this,’ Smerdon says. ‘We’d like it to become something that supports people for the next 20 years. If we can fund 10 fellows a year over 10 years, that’s 100 new people coming into this sector. That would be a terrific contribution.’

TLEF has received grants for its projects from general funders such as Comic Relief and the Esmée Fairbairn Foundation. In the US, a similar scheme called Equal Justice Works is supported by law firms, corporations and private foundations. Fellowships add prestige to donors as well as recipients.

Maybe this is not quite what Messrs Gibson and Weldon had in mind when they opened their students’ crammer. But it could turn out to be a great deal more useful.