Minimum Salary: In real trouble this time

Every time there is a recession, the solicitors’ profession likes to reconsider minimum salaries for its trainees. For a while this was a kind of annual sport. Chairs of the Trainee Solicitors’ Group and the Young Solicitors’ Group Lawyers (I did both jobs back in the days when the Law Society Council was busy tearing itself apart) would be invited into the Law Society equivalent of smoke-filled rooms (biscuits and too strong, rather rank coffee) to be told that they were standing between hundreds of new training contract places and they should allow the abolition of minimum salaries. At some point (usually at the then well-lubricated Council dinners) they would be approached by the Law Society Council member they were most friendly with to be told, don’t ask for an increase and everything will be alright. They duly, usually, did that and everyone claimed common sense had prevailed. We know what both Len McCluskey and Ed Milliband would say.

The SRA are consulting again (see here and here). The SRAs distance from the Law Society may mean that this time the threat is more potent. I hope and expect that there are no more smoke filled rooms. Given the current number of LPC graduates without training contracts, the SRA can expect a degree of support (usually consultations suggest support for this in the profession who cannot help but interpret the question through the lens of: would you like to see your overheads lower?).

Here’s my instinctive reaction to the question should they abolish, based in part on my experience of speaking directly to distraught trainees who’s firms simply refused to pay minimum salary and also from seeing minimum salary waiver applications (firms could apply for a lowering of minimum salaries). It’s a rather anecdotal response, and (of course) it is a long way from the last word on the subject.

Firstly, the firms that did not pay minimum salaries were almost always forms that were small and looking to employ someone who could afford to work unpaid/low paid for two years. The current minimum salary levels are £18,590 in Central London and £16,650 outside of London. There were clear diversity issues. Interestingly, these trainees were often, in my experience, women with husbands who supported them. Sometimes these firms refused to pay minimum salary and the trainee felt obliged to keep quiet. If they did not, they risked not having their training contract signed off by their supervising partner. They evaded the monitoring of training contracts in place at the time. One can only wonder at the quality of training and the ethical practices at these firms.

Secondly, there is a broader argument around whether a firm that cannot pay a, rather modest, trainee a minimum salary can provide adequate (let alone quality) training. The firms that tended to do so were also in my experience at the time also firms which tended to work their trainees as fully fledged fee earners. It was almost always my experience that when helpline calls were received from trainees about lack of supervision and being thrown in too deeply into the deep end that it was firms paying the minimum possible that were involved.

Thirdly, I think I am right in saying that various studies – tending to the rather flakey, would you be willing to offer a training contract if you did not have to pay someone to earn you fees – kind – were conducted. Even these, as I recall, did not tend to indicate a very significant increase in the number of training contracts that would result. They would of course result in lower pay, the bargaining power of firms in this situation is enormous. It also encourages a market where firms bid not for the best graduates but the ones who will tolerate the lowest salaries and can meet the immediate needs for low level fee earning. Len McCluskey would be gnashing his teeth, Ed M would be saying, well maybe that’s a price worth paying.

For me, there are serious questions about the impact of such an idea on diversity, but they also increase the risk of unethical firms training LPC graduates poorly, if at all. This stores up trouble for the profession and certainly does nothing to increase standards. The SRA do not accept these arguments (the consultation paper rehearses…):

“There was a view put forward in the 2007 consultation by a significant number of respondents that removal of the minimum salary could result in a lowering of standards (on the basis that low pay might encourage low calibre graduates into the profession). There was also a view that standards would be maintained only if those who could afford to pay “a proper salary” were able to take on trainees.

“The SRA Board does not accept these arguments, however, as it is through the standards set at the academic and vocational stages of training that quality is maintained. Furthermore, it would run contrary to the SRA’s objectives to justify retention of the requirement on the grounds that it might limit access to the profession and make it more difficult for potential entrants who might otherwise meet the standards to enter the profession.

“In considering its role in the setting of a minimum salary for trainee solicitors, the Board has taken into account the fact that the SRA does not attempt to control the legal employment market in any other way. We do not, for example, set minimum salaries for anyone else providing legal services in a firm we might regulate or minimum salaries for the provision of particular legal services.”

The last paragraph rather ignores the fact that that firms de facto control qualification and that this is the bargaining chip that gives them enormous power over trainees and enables salaries to be bargained down. They seem to be saying it is okay if the abolition damaged properly diverse access to the profession. I am puzzled and concerned by that. They have to do an impact assessment.

They also claim that the academic and vocation stages of education guarantee standards and so the quality risks fall away. That’s interesting news in given the genesis and uncertain outcome of the Legal Education and Training Review. The robustness of the process of monitoring training contracts and how far qualification certification will be removed from firms hosting training contracts is a key question in this context. It’s a plausible argument though and it fits, I suspect, with the deregulatory instincts of the LSB (although the brushing aside of diversity concerns does not). They are saying, we have no business regulating salaries, it makes no difference to quality, regulatory risk and a concern about access to the profession does not fit with their objectives. The minimum salary is in real trouble this time. It is not enough to say, surely a trainee solicitor should be paid at least $16,650 because the SRA are saying, “So what? That’s up to firms and students.”

2 thoughts on “Minimum Salary: In real trouble this time

  1. Simple solution to this problem would of course be to abolish the training contract entirely, and cut graduates loose from the necessity of riding shotgun for unscrupulous and exploitative firms, especially those particularly nasty ones that hire for a training contract and then cut the trainee loose before completion. It would not take much to modify the post grad vocational stage to incorporate a more comprehensive training schedule to allow trainees to emerge from the LPC as fully qualified lawyers, perhaps requiring a two year course. While this may cost a little more (I would of course suggest capping the course fee, perhaps somewhere around the £15k mark max) but at least those who graduate would know that they could now either look for work or strike out on their own free from having to spend another two years of their lives in complete uncertainty as to their potential.

  2. The Law Society (and the solicitors profession generally) has a shabby history of setting salaries for its trainees. In 1979 or 1980 the Law Society’s policy was that the minimum salary payable to trainee solicitors should be the “grossed-up” student grant (ie the maximum weekly student maintenance grant payable over 52 weeks rather than the 30ish weeks payable through the grant). However, the Law Society did not implemented this policy, preferring instead to recommend a lower minimum salary, which it reviewed anually. In 1982 the concept of a “registrable” minimum appeared – if a trainee was to be paid less than the registrable minimum, the Law Society would not register his/her articles. Even this was unsatisfactory, for when, in 1983, the registrable minimum increased, it did not apply to those whose articles had already been registered, the result being that a number of 2nd year trainees were paid less by their firm than the 1st year trainees. I know this as I was vice chairman of the TSG at the time and campaigned for this anomaly to be removed (which it was, in 1983).
    The registrable minimum salary was necessary to protect trainees from unscrupulous and mean employers who used whatever devices they could to pay as little as possible. In this connection, it is interesting to note that while the SRA’s consultation is prepared to state the percentage of trainees who are paid the minimum salary or lower, it does not refer to the SRA’s power to waive
    the requirement of the minimum salary or state how many waivers are sought each year and how
    many are granted.
    Times have changed since 1982, so perhaps the SRA should review the minimum salary, but human nature doesn’t change and potential trainees are even more vulnerable to exploitation than those of a generation ago with the vast overdrafts they accumulate as students and the even more severe economic climate. The SRA, as a regulator, should not be protecting trainee solicitors not exposing them to exploitation in this way.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s