The great divide

The great divide

The profession has expanded by 50% over the past decade and there is little sign of it slowing.

but will the gap between high street firms and the city continue to grow? neil rose reports

By the year 2055, barring the introduction of instant on-line justice and virtual lawyers, the profession is scheduled to celebrate having 1,000,000 solicitors on the roll.That is if it maintains the remarkable growth evidenced by the 2000 Law Society annual statistical report, which shows that the profession has grown by around 50% every ten years for the past three decades.As of 31 July 2000, there were 104,538 solicitors on the roll, of whom 82,769 have practising certificates.

In 1970 - when the explosion in the profession's size began - there were just 24,407 practising solicitors.

The sex warA chief cause of this rise has been the rapid influx of women, who now represent 36% of those with practising certificates (30,018).

In 1990, it was 23%.And, for the past eight years, women have accounted for more than a half of new entrants to the profession, their representation will only keep rising.Therefore, it is no surprise that the only age category in which women outnumber men is 30 and younger - and more than two-thirds of practising female solicitors are nine years qualified or less, compared with just more than a third of male solicitors.

The average age of men in private practice is 43, and for women it is 36.Tellingly, 42% of the solicitors on the roll without practising certificates are women, fuelling long-held fears that inflexible working practices mean that women are pushed out of the profession when they have children.Women are also more likely to work outside private practice - 26% do so, compared with 20% of men.In total, 80% of the profession is in private practice (see table 1).

Commerce and industry is the next most popular category of employment (6%), followed by local government (4%) and the Crown Prosecution Service (2%).Of the 66,445 solicitors in private practice, 43% of them are partners.

This is mainly a male achievement though.

More than half of male lawyers are partners, compared with less than a quarter of women.

Office movesThere are, in total, 15,519 organisations employing solicitors throughout the world.

Most are in England and Wales, and 9,770 of them are private practice partnerships, which between them have 13,713 offices.However, using the Solicitors Indemnity Fund definition of an active law firm (that is, one with a turnover of at least 15,000), only 8,319 of those private practice firms are engaging in defineable work.The statistical report shows that London is wildly over-run by solicitors when you consider its size.

While a seventh of England and Wales's population lives in London, it is home to 42% of solicitors and 25% of firms.

Over the past five years, there has been a slight increase in the proportion of solicitors plying their trade in the south-east of England.As a result, the geographical distribution of solicitors in all regions outside of London is less than that of the population as a whole in those areas.

This is perhaps most marked in the East Midlands, where 8% of the population lives, but only 4% of solicitors practise there.The past five years has seen a significant shift from smaller firms to larger ones.

The number of two-to-four partner firms has dropped 5% in that time to 3,454, while the fall in five-to-ten partner firms has been even sharper - 10% to 950.

By contrast, there has been an 18% increase in the number of 26-partner plus firms to 127.However, sole practitioners have been able to hold off this trend.

As of last year, there were 3,468 of them, just 1% down on five years before, although 5% down on 1999.

Men are twice as likely to be in sole practice as women, which is reflected in the fact that the average age of sole practitioners is 50.In total, solicitors' firms in private practice provide employment for almost 195,000 people, of whom 101,000 are administrative and support staff (the balance being made up of solicitors and other fee-earners, such as legal executives and paralegals).

This is a 16% rise on 1990, accounted for almost entirely by the increase in fee-earners - the number of support staff has remained virtually constant.The 23 firms with more than 81 partners (0.3% of all firms) employed 17% of all staff, including 12,014 solicitors (19% of the total).

However, in sheer numbers, more solicitors work in two-to-four partner firms (14,432) than in any other category.Unsurprisingly, it is the largest firms that have the best gearing - with more than two assistant solicitors and 1.5 other fee-earners to each principal (see table 2).

Turn and turn againThe headline figure of the profession's gross fee-income looks very impressive.

The figure of 9.5 billion for 1998-99 (the most recent year for which full financial figures are available) is a record 10% jump on the year before.

The 9.5 billion breaks down to an average 299,000 of gross fees per principal, 158,000 per solicitor and 108,000 perfee-earner.Around 15% of gross fees in1998-99 were derived from legal aid.

While net payments from legal aid have grown 15% in the past five years, criminal legal aid payments have jumped 34%.So turnover keeps spiralling - it is 43% higher than five years before, when the figure was 6.6 billion.

Or does it? The statistical report also takes into account both the retail price index and the huge growth in solicitors to paint a less than rosy financial picture.Allowing first for the increase in general prices means that real turnover in the years 1993-98 grew by 24%.

If the rise in solicitors and other fee-earners is then allowed for, 'we can see that the total real gross fee income of the profession has only just kept pace with the growth in the number of solicitors and other fee-earners employed in private practice', the report notes.Therefore overall, real gross fees per solicitors have increased by only 3.2% since 1993-94.

The report shows that in all categories of firm, with the sole exception of 11-25 partner practices, there has actually been a reduction in real income, most notably for sole practices, where the fall has been 4.4% over the five-year period.As Law Society President Michael Napier says: 'Figures like these prove what we have always said, which is that the idea of fat-cat lawyers is more myth than fact.' What such across-the-profession statistics do not show are the variations.

There can be no doubt that some of the huge commercial firms have seen massive increases in their fee-income which far outstrip the growth in their workforces.The Law Society database does not hold figures for firms' profitability, but the report reveals findings from the 1999 panel survey of solicitors' firms, involving responses from 299 firms, ranging from solo to 26-80 partner practices.

This highlights the disparity between the highest-earning City lawyers and the lowest-earning sole practitioners (see table 3).

The future's brightIf university figures are anything to go by, the high proportion of women entering the profession will not only continue but actually increase.

In 1999, 62% of the 9,664 law degree students accepted by universities were women (and universities accepted about 60% of applications in total).Altogether, 9,090 students left university with law degrees in 1999, a remarkable 40% rise on five years before.

And this total does not include those who took joint honours or modular degrees that year, which the Law Society's education department estimates could mean as many as 4,000 more students with qualifying law degrees - that is, degrees which allow them to proceed directly to the legal practice course (LPC).Of the 9,090, 338 (4%) received first-class degrees; 47% received upper seconds, 42% lower seconds and 7% thirds or passes.There is then a noticeable drop out of students going on to further legal education.

In the year up to 31 July 2000, 7,793 students enrolled with the Law Society, a requirement for those wanting to take the LPC, a 15% jump on 1999.There is then another drop: 6,830 enrolled on the LPC, of whom 6,490 actually sat the examinations.

Most (77%) passed, while 18% of students were referred.The figures show that the LPC is under-subscribed.

There are 7,376 full-time LPC places available this year, plus a further 1,500 part-time places.

This leads to competition between providers for students, which has the potential advantage of lowering the high cost of LPC, but also jeopardises those smaller providers in less populous areas.Also struggling, with perhaps more significant impact, are law firms looking for trainees.

After the major squeeze on training contracts in the early 1990s while firms weathered the recession, there has been a huge demand in the past five years.

In 1995-96, there were 4,063 training contracts registered with the Law Society; in the year to 31 July 2000, there were a record 5,285 training contracts registered, almost 10% more than the year before.

But only 5,007 students passed the LPC (of course, many of the 1,197 who were referred may pass too).This seems to be one stage where women begin to suffer.

While 60% of LPC students are women (compared to 54% five years before), 57% of training contracts go their way.

There are only two regions in the country where women, as a proportion, receive fewer training contracts than men, and of those only one shows a significant difference: the City of London.

While a third of male trainees get jobs in the City, only 27% of female trainees do so.Worse news for female trainees comes in an analysis of how much they get paid, which shows that on a national average, women are paid 6% less than men; it is worst in the north, where the differential is 15% (see table 4, over).

Presumably few firms make differentials within their practices, but the findings indicate that male trainees bag the better jobs with the bigger firms.

Rolling onThe fall in the number of women continues when the report reaches admission to the roll, with 53% of those admitted in 1999-2000 being women.

This figure has remained fairly stable over the seven years.Perhaps surprisingly, the age group that boasted the largest number of the 6,056 admissions was the 30-34 years-old range (20%).

In total, the average age of an admitted solicitor was 29.6, implying that many solicitors take time out at some stage.

However, there was one, presumably very bright, spark who qualified aged 23, while 19 of the admissions were aged 55 or over.

It is clearly never too late.Of the total, 76% came in via direct entry - 54% with a law degree and 22% with a non-law degree - a figure that has dropped a little over the last decade.

More marked however is the change in route.

A decade ago, 67% of new solicitors had law degrees.Of those who transferred into the profession, 15% came from other jurisdictions, 3% (197) were barristers, while 2% (108) were legal executives.

Of the overseas lawyers, a fifth came from Australia and New Zealand, followed by the US and Canada (9%).

Colour bindFinally, the annual statistical report paints a mixed picture for ethnic minority lawyers.

It says that ethnic minority solicitors make up 7.6% of all solicitors on the roll, and 6.1% of those with practising certificates, a rise from 5.5% in 1999.

People from ethnic minorities account for 5.7% of the economically active population of England and Wales, 'which implies a reasonable match overall', the report says.Lawyers of Asian origin make up the largest chunk of ethnic minority lawyers, followed by those of Chinese origin.

Most Chinese solicitors work overseas, presumably in Hong Kong, where transfer to the English profession was easy when it was still a colony; the large number of those on the roll but without practising certificates probably accounts for the difference cited earlier.Greater London (12% of all solicitors), the rest of the south east (6%) and the West Midlands (7%) have the highest proportions of ethnic minority solicitors.

East Anglia has the lowest (1.3%).Where there is plenty of work to do is in the status of ethnic minority lawyers in private practice.

While 44% of white Europeans are partners, only 24% of ethnic minority lawyers are.

'This is partly a reflection of the fact that solicitors from the ethnic minorities have only recently been entering the profession in numbers,' the report notes.

Interestingly, almost 10% of ethnic minority solicitors are sole practitioners, compared with 6% of white Europeans.It seems likely that the proportions of ethnic minorities in the profession will just keep growing, in much the same way as those of women, to judge by their participation in learning law.

Some 22% of students accepted on to law degrees in 1999 were from ethnic minorities, a figure mirrored in the Law Society enrollments for the LPC.

This compares with 17% five years before.

The rise is mostly attributed to a 60% rise in Asian students.However, only 16% of trainees were from ethnic minorities.

Nonetheless - and this is probably largely down to overseas transfers - 19% of those admitted to the profession in 1999-2000 were from ethnic minorities, compared with less than 16% five years before.

A slightly larger proportion of women make up ethnic minority admissions than across the intake.If these trends continue, that million-strong profession of 2055 will look radically different from today.

It will be dominated by women, with a larger representation of minorities than is reflected in the general population.

They will mainly work in large firms and still be trying to keep income up in line with inflation.But for all this speculation, one thing is likely - it may take that long to lose the fat-cat tag.

Tellingly, 42% of the solicitors on the roll without practising certificates are women

Solicitors' firms in private practice provide employment for almost 195,000 people

While a third of male trainees get jobs in the City, only 27% of female trainees do

Table 1 Practising certificate holders by category of employment as at 31 July 2000Category of employment All % of PC Men Women % of women holders as totalPrivate practice 66,445 80.3 43,782 22,663 34.1 Commerce/ industry 5,189 6.3 3,035 2,154 41.5Accountancy practice 95 0.1 45 50 52.6Nationalised industry 92 0.1 38 54 58.7Trade union 44 0.1 26 18 40.9Government department 74 0.1 37 37 50.0Local government 3,055 3.7 1,463 1,592 52.1Court 144 0.2 90 54 37.5Government funded services 132 0.2 83 49 37.1Crown Prosecution Service 1,529 1.8 794 735 48.1Advice service 295 0.4 120 175 59.3 Educational establishment 150 0.2 56 94 62.7Health service 32 10 22 68.8Others 938 1.1 567 371 39.6Not attached to an organisation' 4,555 5.5 2,605 1,950 42.8All non-private practice 16,324 19.7 8,969 7,355 45.1Total practising certificate holders 82,769 100.0 52,751 30,018 36.3Source: Law Society's REGIS Database

Table 2Average number of staff per principle in 2000

Size of firm Assistant Other Admin Total(no.

of principals) solicitors fee-earners staff B+C+D1 0.56 0.81 2.23 3.602-4 0.63 0.79 2.76 4.185-10 0.76 0.90 3.25 4.9111-25 0.90 0.94 3.19 5.0326-80 1.29 0.96 3.47 5.7381+ 2.17 1.44 4.09 7.70All firms 0.97 0.94 3.13 5.04Source: Solicitors Indemnity Fund

Table 3: Profits per equity partner 1998-99 Size of firm Sole 2-4 5-10 11-25 26-80 practice partners partners partners partners

Profit per equity partner 000'sLower quartile 26 33 49 72 96Median 46 56 62 98 167Upper quartile 64 93 89 140 260Source: Law Society panel survey

Table 4Trainees' starting salaries by region and genderNB Law Society recommended minimum salary is 13,600 for central London, 12,000 elsewhere Male Female All trainees Male average Average salary % trainees average average average salary over as % of paid at/below () () () female (%) minimum minimumCentral London 20,534 20,050 20,277 2.4 163.6 5.1Rest of London 14,841 14,074 14,384 5.5 133.9 19.7Rest of South East 13,116 12,427 12,697 5.5 114.7 35.7South West 12,914 12,808 12,851 0.8 118.3 23.5Wales 11,309 11,502 11,420 -1.7 105.6 54.1West Midlands 13,009 12,508 12,713 4.0 119.6 37.5North West 12,981 12,541 12,723 3.5 119.9 40.5North 13,335 11,577 12,372 15.2 107.1 55.1Yorkshire andHumberside 13,602 13,021 13,268 4.5 118.9 35.8East Midlands 12,821 12,078 12,375 6.1 115.0 37.6East Anglia 12,225 12,764 12,558 -4.2 111.1 51.7Total 16,131 15,194 15,597 6.2 n/a 23.4Source: Law Society REGIS database