ABSs making their mark in £22bn legal market, report finds

Female solicitors: statistical equality but not at partnership level

Alternative business structures (ABSs) account for just 5% of all law firms but nearly 12% of total turnover in a market worth £22.3bn, the annual snapshot of the solicitors’ profession has shown.

It also revealed that women will become the majority of practising solicitors this year.

The Law Society’s annual statistical report, which described the demographics of the solicitors’ profession as at 31 July 2016, said there were 475 ABSs at that time, out of a total of 9,430 private practice law firms.

More than two-thirds (68%) were set up as limited companies, around twice the proportion among law firms as a whole.

ABSs contributed 11.7% of total turnover, some £2.2bn according to the available 2014/15 turnover information. So their market share is actually likely to have been even bigger last July.

The 2014/15 financial data was collected through the 2015/16 PC renewal process, and it reported the total revenue across all firms as £22.3bn.

Only 62 firms had 81 or more partners, but they accounted for 42.6% of the profession’s turnover; some 86% of all law firms have no more than four partners and collectively they delivered 20.5% of turnover.

The overall turnover figure was made up of £13.2bn in business-to-business work, £4.6bn in high street services – with residential conveyancing the biggest single area of practice, followed by family law, criminal and private client – and £4bn from areas associated with both business and retail clients, mainly personal injury, followed by employment law.

There were 136,176 solicitors with practising certificates (PC holders), of whom 50.5% were men. With women dominating the ranks of law students – meaning they made up 62% of new solicitors in 2015-16 – the report predicted that women would become the majority this year.

However, although women are already in majority at the younger end of the profession – women under the age of 35 make up almost one-fifth of all PC holders – there was a gender gap at more senior levels –more than 40% of male solicitors become partners, compared to 18.8% of women. This was in part explained by the fact that the older members of the profession tend to be male.

It was a similar story with black, Asian and minority ethnic (BAME) solicitors. They now make up 14.1% of PC holders, up from 9.1% in 2001 and numerically the number of BAME solicitors has more than doubled in that time. The proportion of female PC holders in BAME groups (57%) was greater than the share amongst those of White European origin (48%).

However, 23% of BAME solicitors were partners, while they were twice as likely to be sole practitioners compared to 3.9% of White Europeans. A third of solicitors of African origin worked on their own account.

The overall growth of the profession does seem to be finally slowing down – though the total number of PC holders rose by almost one-third in the 10 years to 2016, this was significantly less than in the preceding two decades.

Other findings of note included:

  • The rise in PC holders working in-house was marked in 2015-16, reaching 22% of the total of all practising solicitors. In 2001, it was 16%. Some 26% of female solicitors worked in-house, compared to 18% of men;
  • Two-fifths of all practising solicitors worked in London;
  • The 9,430 private practice law firms represented a steadying of the number of firms, which has fallen by 1,000 since 2010;
  • Some 31% of all solicitors in private practice were partners, compared to 36% in 2006; there were 3.234 admitted staff per partner last year, up from 2.797 in 2016.
  • Of those starting law degrees last year, 68% were women and 36% from BAME groups;
  • Some 15,950 students graduated with degrees in law from universities in England and Wales in 2016, up 3% on the previous year, of whom 64% were women;
  • Women were more likely than men to get first and upper seconds, and overall only three in 10 graduates failed to get one of those grades;
  • Training contracts peaked at 6,300 in 2007-08 and then dipped as low as 4,874 in 2009-10 and since then slowly risen, reaching 5,728 last year.
  • London was home just over half of all new trainees starting in 2015-16; the share of traineeships registered in the City fell for the third year running, but were 36% higher than in 2009-10; and
  • After two years of decline, the number of new admissions increased by 4%, to 6,346. Roll admissions grew strongly throughout the early 2000s, peaking at 8,491 in 2008-09, but fell back and stabilised thereafter.

Law Society president Robert Bourns said: “Increasing diversity in the solicitor profession is a powerful force for good and a cause for real celebration.

“Not only do solicitors themselves come from an ever widening pool – reflecting the diverse society of which we are part and which we serve – but new business models are flourishing, allowing us to provide an ever more tailored service to our clients.”

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