Scrapping minimum salary will stimulate more, if lower-paid, training contracts, says SRA

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By Legal Futures

3 May 2012


Minimum salary: half of trainees and student say they could not pursue the career without it

Scrapping the minimum salary for trainee solicitors is likely to stimulate more training contracts – but the majority will pay below the current minimum level, a Solicitors Regulation Authority (SRA) report has concluded.

It also found that around half of trainees and students said they would be unable to train as a solicitor without the minimum.

However, the SRA’s draft economic and equality impact assessment – released for a very short consultation period – suggested that the negative impact on diversity is not be as clear-cut as critics think, at least so long as ending the minimum is counterbalanced by an increase in contracts.

The assessment – which used data analysis, online surveys and focus groups – found that 70% of firms which currently do not offer training contracts would consider doing so if the minimum was abolished, but of those, 69% would pay below the current £16,650 set for outside of central London (where it is £18,590).

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A third of those firms which already have trainees would consider providing more contracts, but 82% of them said it would be below the current minimum – there would also be a proportion of firms (around 10%) which reduce the salaries they pay trainees but not increase the number they take on.

Concern over the impact of scrapping the minimum focuses on those smaller firms which pay at or near it at the moment – where women, those from a black or minority ethnic (BME) group, people working outside of central London and those who attended state schools are more likely to work.

The report said that such firms generally “take into account many more factors than just the minimum salary when deciding how many trainees to take on and what to pay them” – key considerations include the profitability of the firm, relevant experience of candidates and salaries paid by competitors.

Nearly half (47%) of current trainees felt they would not be able to train as a solicitor if the SRA did not impose a minimum and, as a result, salaries fell. “Many of these respondents indicate that if they wages were to reduce, they would not be earning a liveable salary,” the report said, with loan repayments for legal practice courses a key contributory factor.

However, there was no evidence that those from groups seen as likely to be disadvantaged by the end of the minimum were more likely to say this.

Exactly half of students, paralegals and others considering training as a solicitor said ending the minimum would affect their ability to train, with women and those from state schools more likely to state this, but not BME students.

The report noted that it was not known whether those who chose not to train as a solicitor would be able to command better salaries than whatever level trainee pay moves to, meaning “the actual impact on career choices if deregulation takes place might be different to that stated”.

It added: “Even though we found widespread concern that BME groups, women and those from lower socio-economic groups would be put off from entering the profession, thus impacting on its diversity, BME respondents were no more likely than white respondents to say they would not be able to train if we removed the minimum salary requirement… [All the findings] suggest there may be a more complex impact on diversity in the profession than supposed.”

Nonetheless, the report conceded that any reduction in salaries would have “a disproportionate impact” on trainees from those affected groups.

The impact assessment is open for comment until 11 May, and the results – along with responses to the recent consultation – will be fed into the meeting of the SRA board on 16 May at which the minimum salary will be discussed.

 

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9 Responses to “Scrapping minimum salary will stimulate more, if lower-paid, training contracts, says SRA”

  1. Asking people how they will behave in the future if X happens has very limited evidential value as a research technique. This is particularly true of surveys where respondents have an interest in the policy to be influenced by the outcome of the survey.

  2. Richard Moorhead on May 3rd, 2012 at 8:44 am
  3. Surely this part of the EIA says it all

    “Potential impact on access by people from less affluent backgrounds”

    Respondents to the surveys were asked for their views on the potential impact of removing the training salary on diversity within the profession. In terms of discouraging individuals from less affluent backgrounds from pursuing a career as a
    solicitor:

     77% of trainees felt that it would have a negative impact compared to 12% who did not
     35% of firms felt that it would have a negative impact compared to 52% who did not
     80% of students, paralegals and others considering becoming a solicitor firms felt it would have a negative impact compared to 9%
    who did not.

  4. MW on May 3rd, 2012 at 10:45 am
  5. The EIA clearly cannot confirm that there will be more training contracts. It says:
    “The impact on TCs offered by firms in the ‘lower tier’ of the market for training is harder to judge…
    Assessing the impact on the ‘lower tier’ of the market for training is complex and cannot be carried out with a high degree of accuracy. Most firms in this segment of the market take into account many more factors than just the minimum salary when deciding how many trainees to take on and what to pay them. Key considerations
    include:
     The profitability of the firm
     Relevant experience of candidates
     Salaries paid by competitors.

    It is unlikely that changing this element of the regulatory regime in isolation would encourage a significant change in firm’s decisions about whether to start taking on trainees or take on more trainees.

  6. lawstudent on May 3rd, 2012 at 10:47 am
  7. There is no evidence that any firm WILL increase training contracts, simply evidence that they will think about it. Any increase in training contracts will benefit those who can afford to be paid £2.60 for the first year and minimum wage for the second year. They are unlikely to be the same people who have paid for university, paid for the GDL and paid for the LPC themselves through loans and are burdened by debt. These people cannot afford to be paid less than the minimum salary. We need alternative routes to qualification if the SRA are even going to consider scrapping the minimum salary. Why can the SRA not wait for the outcome of the LETR.

  8. mw on May 3rd, 2012 at 10:58 am
  9. I do not see what benefit there is to offering more training contracts while there are so many NQs finding it hard to find a job. It will just saturate the market with NQs. There is nothing wrong with competition for obtaining a training contract (providing firms use fair methods of recruiting trainees etc, but that is another matter!).

    The SRA should concentrate on the amount of people who pay to do the LPC and do not get a TC. It is a waste of money and is not transferrable to any other career. Should an LPC graduate decide to give up the hunt for a TC and pursue another career the fact that they studied the LPC at all makes them look like a failed lawyer!

    Why are the SRA looking at the minimum wage issue now while there is a review of the legal training and education underway? I think solicitors training should be treated more like that of accountants – on the job – it would be more relevant and less of a waste of time. If we’re honest, the LPC was quite easy and did not require a full years study…a year we will never get back!!

    NB, I am a qualified solicitor and I could not have afforded to be paid the minimum trainee wage while I was a trainee because I had rent and loan repayments to come out of my account. Low paid TCs would only deter others like me from pursuing a career in law.

  10. Grace Cowling on May 3rd, 2012 at 11:11 am
  11. It seems fairly clear that the SRA has already decided to scrap the minimum salary for trainees and the consultation and report process looks more and like they are going through the motions.

    If around half of trainees and students said they would be unable to train as a solicitor without the minimum, this is presumably because they could not afford to.

    How can the SRA assert that “the negative impact on diversity is not be as clear-cut as critics think”? Those who are going to be in the category of people who could not afford to train on less than the minimum salary will be those from poorer backgrounds and a high proportion of these will be black or ethnic minorities, disabled etc.

    What is the point of carrying out a consultation if the results are not analysed with sufficient vigour?

  12. Mark Pentecost on May 3rd, 2012 at 11:41 am
  13. The minimum salary was introduced to prevent exploitation of trainees… how has the need to prevent exploitation suddenly vanished? Trainees are just as likely to be exploited now as they ever were, with record numbers of graduates coming out of Law School searching for a small number of Training Contracts. These proposals will allow firms to hire and fire trainees every 2 years as a source of cheap labour, paying them the national minimum wage.

    With course fees rising to £9,000 a year for the LLB, and adding the LPC costs on top, it is already extremely expensive to become a solicitor. It is only having a minimum salary that enables graduates to repay the extortionate loans they take out to pursue this career path.

    Where is the incentive for talented people to enter the legal profession, at huge expense, when they are going to be paid the same as if they took an un-qualified job that doesn’t require 4+ years of study and huge amounts of stress and debt?

    KEEP the minimum salary and allow those who are not from a priviliged background to bring their skills into the legal profession.

  14. Bryan Scant on May 3rd, 2012 at 12:35 pm
  15. Another wonderful decision (the consultation is phoney) from the nonsense factory!

    At what point, will the profession acknowledge that the SRA has become the biggest hurdle to the success of the profession? Regulation piled on top of regulation without regard for cost or consequence – for example we have to send a 9-page client engagement letter to clients who don’t want it and don’t need it – and who definitely don’t want to pay to receive it (which of course they are paying for, because regulatory costs increase overheads). We have had to stop doing work for poorer clients because the regulatory/PII farce means we can’t now deliver our services cheaply enough. God I hate the SRA and the bureaucrats who run it with only a glancing interface with reality

  16. Tim O'Conner on May 4th, 2012 at 1:59 pm
  17. Making it even more difficult for the disadvantaged! Common sense out the window! Really devastated. From working hard on minimum wage to put myself through university to obtain a law degree to be given the opportunity to gain little monetary reward in near future. What a waste. I just feel like crying!

  18. Janine on May 17th, 2012 at 11:31 am

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