Does the profession’s growth ‘defy gravity’?

I was struck by a story in the Gazette this week pointing out that:

The number of practising solicitors in England and Wales has risen sharply to more than 120,000, with their ranks growing at an accelerated rate despite the economic pressures faced by the profession, the latest figures have shown.

One leading industry commentator claimed that the rise ‘defies gravity’.

Figures from the Solicitors Regulation Authority revealed that there were 120,847 solicitors with practising certificates on 31 December, up 7% on the end of 2009. This represents a faster rate of expansion than in previous years, with the profession having grown by only 2% in 2009 and 2008, and 3% in 2007.

An SRA spokesman described last year’s 7% rise as ‘surprising’. The regulator does not collate the information required to enable the figures to be broken down into practice areas or type of firm.

One question is, should we be surprised?  Over the last twenty years or so the profession’s growth has outstripped economic growth generally.  Equally if the figure is right, David Dixon suggests it is not (see comments below), this is the biggest jump in figures reported in the last 22 years (the previous highest was about 6%)

Graph1

There are a number of ways that such data could be interpreted.   From the public policy level, growth in lawyer number is normally regarded with suspicion, particularly where such growth outstips economic growth (although a better measure than one presented here might be to track lawyer numbers against financial and other service industries – if anyone knows of good indicators I could use to do that, do let me know).

That is not to suggest that the profession’s growth is unrelated to the economic cycle.  You can see how year on year growth in the profession relates to year on year changes in GDP in the next graph (link below), but you can also see how when GDP dips the ‘hit’ the profession takes in terms of numbers is generally more modest.  Interestingly, the ‘mutedness’ of the effect appears particularly marked in relation to the recent recession.  It would be interesting to hear explanations as to why that was given the way firms downsizing (or, as some aparently prefer, ‘rightsizing’!) has been reported.

Year on Year GDP and Numbers

Sceptics would ask whether it is healthy for the legal community to be growing faster than the broader economy over such a long period.  Related to this is the question of whether lawyers are just a transaction cost generators or do lawyers add social or economic value?  Is growth down to over-zealous regulators, rather than lawyers?  Or do lawyers drive (rather respond to) complexity.  These are complex questions empirically and conceptually.  Proponents argue that lawyers assist in the allocation of risk; can facilitate the exchange of information (helping – at least in theory- increase the efficiency of deal-making); and provide an essential means of resolving dipsutes (albeit with the legitimacy and value of their approaches increasingly challenged by clients and others).  The pros- and cons- suggest that the notion of ‘gravity’ or, to put it another way – the demand which lawyer numbers respond to (or create) may be more complex than simple understandings of economic growth.

The story also suggests that this growth might be about to come to an abrupt halt.  I wonder about that.  They rely on Stephen Mayson’s sensible warning that the post-ABS world may lead to legal service providers delivering fewer services through solicitors (or barristers).   To the extent that new businesses emerge in the legal services market, they may be less inclined to employ solicitors or barristers, but that is not a given.  Solicitors firms can and do rely in increasingly on paralegals already (so ABSs may not, in fact, be so different).  It could be argued that solicitors can be recruited relatively cheaply given their skill levels (legal aid firms often pay low salaries) and have more and broader training than paralegals (although they also have different expectations).  They may provide ‘instant’ credibility to service providers (even if they are not practising as solicitors).  Nevertheless competition should drive down price and this may push price-conscious providers to systemise and cut costs, employing more paralegals.  Even here, though, there is the possibility that lower and more predictable cost will expand the size of consumer markets: solicitors might have a smaller proportion of a larger market and still find their numbers growing.  I’d not be confident in predicting such continued growth, but history suggests the profession has been extraordinarily resilient (so far), so I’d be cautious in predicting collapse too.

A less comforting possibility is that threats to the future size of the profession may lie not in the Legal Services Act but in a far more global context.  A new report by Jomati, trailed on legalfutures points both the the growth of global law and its further internationalisation.  The story is well worth reading but to paraphrase it: the Chinese may be coming and the Australians may (eventually) be going home.  As economic power shifts eastward, so will lawyer employment and (possibly) law firm ownership.  This may threaten something of a double whammy: solicitors may be ABSed out of high-street services and pacific-rimmed from commercial work.  It may not be gravity, but trade winds which should be concerning the professions (and – I should say – its educators).

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About Richard Moorhead

Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London with an interest in teaching and research on the legal ethics, the professions, legal aid, access to justice and the courts.
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2 Responses to Does the profession’s growth ‘defy gravity’?

  1. David Dixon says:

    Richard,,

    I’ve written a letter to the Gazette about this article and I set out its substance below.

    Although I agree that it seems odd that the profession is apparently continuing to grow during the recession it is not growing by as much as 7%, as your article suggests.

    The Law Society’s annual statistical report for 2009 states that on 31 July 2009 115,475 solicitors held practising certificates. Your article gives the figure of 120,847 on 31 December 2010, which is a rise of 4.65% over that 17 month period. Although I haven’t seen the SRA’s Summary of Performance Measures and Statistics for December 2010 from which I assume you obtained your figures, it is important to note that the September summary stated that there were 120,917 practising solicitors in September 2010, a rise of 2% over the previous year. Although the number of solicitors with practising solicitors may have been 7% higher on 31 December 2010 than a year before, there were fewer of them than there had been on 30 September 2010. Accordingly, I submit that the number of practising solicitors is already beginning to fall.

    Although your SRA spokesman thinks the rise in numbers in 2010 is surprising, I disagree. First, the profession has a robust record: the number of solicitors holding practising certificates has risen every year since 1972 save for 1983, when it fell by only 0.07%, despite the four economic recessions that occurred over this period. Second, it is probable that a record number of persons were admitted to the Roll in 2010, which is important because the rise in numbers is attributable to the surplus of the number of people who enter the profession over the number who leave it. In 2007/08 6,303 training contracts – a record number – were registered by the SRA, with a further 5,809 training contracts (the 3rd largest number on record) registered in 2008/09, so a bumper crop of people will have completed their training contracts and qualified in 2010. Moreover, it is probable that the number of QLTT entrants will have risen too as foreign lawyers rushed to take the QLTT before it was replaced by the more rigorous (and expensive) QLTS on 1 September 2010. I suspect that with fewer training contracts having been offered over the past 18 months and with fewer people choosing QLTS because of the increased rigour and expense, the number of admissions will soon be falling and there will be a knock-on effect on the numbers on the Roll and those holding practising certificates.

    It is also important not to confuse the number of solicitors with practising certificates with the number of practising solicitors. Not all solicitors with practising certificates are practising: some of those who are not working retain their practising certificates so they can start to practise as soon as they find a job. This is cheaper than it was due to the introduction of the new individual PC fee in 2010, so I suspect that more unemployed solicitors than before are retaining their PCs..

    To conclude, the growth in the size of the profession is not defying gravity but is now falling. Despite what Professor Mayson says, where the expanding numbers are coming from is not surprising. What is mystifying is what they are doing and what they are going to do.

    David Dixon

  2. Perhaps what this tells us is that there is a body of trained, open minded Generation Yers out there willing to work in new, streamlined business structures rather than stay unemployed. Whatever the actual figure, we have approximately 120k solicitors ready and able to practice at a time when General Counsel are looking for a reduction in legal costs. A happy coincidence?

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