Legal profession still recovering from financial crisis

by Jun 13, 2011 No Comments

Lorna Jack, chief executive of the Law Society of ScotlandIt is regularly said that no industry will emerge unscathed from the tough economic climate and for Scotland’s legal profession this is becoming increasingly clear.

Hundreds of positions have been lost in the last two years and this has been compounded by a significant drop in the number of traineeship places on offer for law graduates.

It is difficult to put an exact figure on the number of jobs lost as not all firms have disclosed details, but it has been claimed as many as 500 positions could have gone in the last two years.

Lorna Jack, chief executive of the Law Society of Scotland, said although there have been some encouraging signs in the last financial year, the market remains fragile.

She said: “In the financial year 2010-2011, there has been a slight improvement in conditions compared to the previous year.

“But in 2009 we probably had a worst economic situation than people in the industry can remember.

“Before 2009 there had been enormous highs in the legal profession and in terms of the number of people in the industry and the turnover there had been growth, but this fell off significantly in 2009.

“We do a thing called the ‘cost of time survey’ which looks at legal firms and is probably the single largest survey of its kind in Europe. That has shown for smaller firms – like sole practitioners or one- or two-partner firms – life is just tougher.

“In other areas there have been some signs of improvement, but there is further difficulties looking ahead – cuts to public sector funding will impact on the legal profession so there is still concern.”

The Scotsman carried out a survey of firms last month and respondents indicated that turnover fell more than £20m between 2009 and 2010. Profit per equity partner decreased from more than £100,000 in 2008 to £72,000 in 2009 and £64,000 the year later.

The fragility of the market is also highlighted by a reduction in the number of traineeships available – reports have suggested the number of positions has dropped by more than a quarter since the recession. It comes at a time when record numbers of young lawyers are coming out of law schools looking for their first job.

Jack added: “The chokepoint is at the stage where people are coming out of university – graduates looking for traineeships. In 2009 there was twice the number of people chasing traineeships than there were positions.

“They then look again the following year so you get more and more people chasing fewer traineeships.

“We are obviously not permitted to manage the numbers going to university, so the best thing we can do is constantly talk to universities and students about the percentage chance they end up with a traineeship.

“If you look at the number of people setting off to study LLB to the number actually getting a traineeship, it is probably one in four so that highlights how competitive it is.

“I would not discourage people from thinking about law as a career, but it is important to understand the risks and that we are not out of this bad period yet.

“There are ten law schools in Scotland, the universities tell us that they are being fair to students and advising them of the world they face upon graduation. We also run road shows throughout the year as well as it is important people know the world they will be facing when pursuing a career in law.”

It has been a difficult year so far for the society and made worse by a number of disputes. More than 100 members called for the body to be abolished in its present form, citing their ‘complete lack of confidence’ in its ability to represent the interests of the profession.
The dispute followed a fall out over the way society negotiators handled funding talks with the Scottish Legal Aid Board (Slab). Three prominent Glasgow solicitors resigned from the society’s ruling council, and its access to justice committee walked out. The legal aid budget in Scotland was cut by 8 per cent at the end of last year.

“There have been some very contentious issues,” Jack added.

“In terms of the legal aid topic, there were some people that thought we should fight 8 per cent as a line in the sand while others said they knew it was going to be 8 per cent so let’s concentrate on trying to influence which areas they cut back from.
“The latter is the position we took – some colleagues in Glasgow didn’t agree with our stance, didn’t agree with the way forward but we are a democratic organisation and if all the other areas in Scotland felt that was the way forward then we had to go with the majority, notwithstanding the cut being painful for everybody.

“Of course we would want a unanimous, united front on all things. When you are dealing with 10,500 members spread all over the country doing all sorts of different work it is difficult. We worked really hard to see if we could find a place to unite everybody, but at the end of the day we just could not get this.

“But we have I think come out of it stronger, we have new members from Glasgow on the legal aid negotiating team and things are moving forward.”

There has been concern that the cut to legal aid could restrict the public’s right to representation.

Jack added: “As we practically work our way through this we find there are public interest issues.

“For example, if a legal firm decide they don’t want to carry out certain work because it no longer makes commercial sense, you might find pockets around Scotland where there is no provision anymore. We haven’t seen that yet, but who’s to say that couldn’t happen?

“Therefore, we have to keep an eye on that and we have a duty, as do the Legal Aid Board, to ensure there is no geographical area of law where there are gaps.

“This is one of several changes to the legal profession in Scotland. I would say this is a hugely important time for everyone involved – whether it’s the Carloway Review that is ongoing, the issue with the Supreme Court in London or economic uncertainty, it is essential the society and its members remain active in the debates and [we] have our voices heard.”

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