Will cutting minimum salaries increase training contracts?

One of the questions being debated in the aftermath of the SRA’s decision to abolish (two years hence) the minimum salary is its likely impact on the number of training contracts.  One place to look is the situation at the Bar.  In particular, it has been suggested that the bringing in of minimum salaries for pupillages had a dramatic impact on the number of those pupillages.  I’ve seen one figure of a 60% drop asserted.

It follows from such arguments that a cut in minimum salary would be likely to increase the number of training contracts significantly if the impact on pupillages is as described.  The question then is, of course, is that what really happened in relation to pupillages?

There’s a nice graph in a Bar Standards presentation which tracks the number of pupillages over time (Slide 15).  The red line shows when a compulsory minimum was brought in.  There was a big drop in pupillages around that time.  There was, though, a similarly large (though not quite as large) drop after 1995/96.  That drop cannot have been caused by the introduction of  a compulsory minimum because it had not yet occurred.  It is also worth noting that there was a large increase in the number of pupillages in the year prior to the introduction of the minimum.  One plausible explanation would be that the introduction of a compulsory minimum caused some chambers to bring forward some recruitment causing a lift and then a bigger drop post introduction; that would mean the drop in pupillages was exaggerated by chambers altering their behaviour either side of the introduction of the mininum but that the effect was not long lived (similar arguments were  made about the impact of introducing student fees and again when student fees were recently dramatically increased).

Another way of thinking about this is to look at the data across the whole period of the graph.  Then we can see that there is a general and consistent trend downwards from 1995 onwards.  Under this interpretation there has been a general contraction in pupillage numbers which was not much affected by the introduction of a minimum pupillage salary.  My own reading of the graph, and here I should stress a level of subjectivity, is that this is probably the best interpretation of the data, subject to the caveat that the introduction of a minimum salary looks like it may have reduced the number of pupillages by about 50 per year thereafter.  On this analysis the minimum salary would have had a modest impact on the number of pupillages not a dramatic one.  The question then is whether the advantages of a minimum salary outweigh the detriment.

I tried one further analysis to look at the training contracts situation against the number of pupillages and see if broader economic trends explained the larger drops in pupillages.  It didn’t really help because whilst the pupillage numbers have largely contracted over that period, the number of training contracts have largely grown .

Taking this analysis and projecting it simplistically into training contracts should be avoided.  Firms can (sometimes) make money from trainees; chambers economic interest in having pupillages is less strong. This will impact on willingness to take on trainees and thus the impact of salary requirements.  Still, it suggests we may see a modest (perhaps very modest) increase in training contracts post-abolition.  The question will remain at what price in terms of the quality of those contracts and the diversity of those able to afford being paid at a rate less than one of my students has said they earn in Greggs.

One thought on “Will cutting minimum salaries increase training contracts?

  1. In one sense this helps – it means possibly more training contracts and more students who have invested huge time and money getting qualified as solicitors actually have the qualification. On the other hand, there are already simply too many solicitors, so it may make that problem worse and lead to further disappointment down the line.

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