The SRA has opened a consultation on whether it is still appropriate to set a minimum salary for training contracts. The consultation and survey is open until April 10th 2012. In this feature, a local member of the JLD looks at the issues.
The minimum salary for trainees is a vestige of a bygone time when those completing their articles were unpaid, unappreciated and either of independent means, or juggled two or more jobs to make ends meet.
Those days are gone and, according to some, so should the minimum salary. Its critics argue that it is a bar to access as it artificially inflates the cost of employing a trainee. They allege that this has the effect of limiting the number of training contracts available and making trainees a less cost effective proposition when compared to partially qualified or unqualified paralegals or assistants, who can be paid the national minimum wage (NMW).
The alternative view is that the minimum salary offers some protection from exploitation and compensates trainees for the substantial costs they have incurred in training (which are set to grow exponentially).
Which view you take depends on several factors including your proximity to completion or the start of your training contract (or indeed your articles), your position within the profession or even your take on social mobility.
The world has changed since 1982 when the minimum salary was implemented to protect trainees from being exploited and to encourage high calibre graduates into the profession. There was no NMW back then. Nevertheless, like now the country was also in a recession. Is the minimum salary appropriate given the depth of the current recession or is it outweighed by economic considerations? This article aims to briefly address these issues from a future trainee’s point of view by answering the SRA’s own consultation questions, underlined below.
On the basis of the regulatory principles set down in the Legal Services Act, do you think there is a regulatory role for the SRA in setting a minimum salary for trainees?
Most feel that as the SRA set standards for trainees, so they should protect them from exploitation. Coupled with this should be recognition (as mentioned above) that trainees often have incurred extensive costs just getting to the start of a training contract.
I sympathise with the position that it is up to market forces to set pay levels not rather than the regulator. This would mean that the SRA have no place to set remuneration and benefits packages. After all, every other employee has these set by the market.
If, however, you consider that one of the regulatory objectives under the Act is encouraging an independent, strong, diverse and effective legal profession, then the scrapping of the minimum salary may run contrary to this. The minimum salary provides compensation for the long hours, compulsory attendance at networking functions outside office hours, and police station representation at all hours of the day and night that would not be possible if the trainee was paid the NMW.
There is therefore a role here for the SRA to maintain the minimum salary level.
Do you have any comments on the compatibility of the SRA’s strategy of outcomes-focused regulation with the setting of a minimum salary?
As mentioned I have spoken to trainees and NQs. Sadly I had no replies from students.
No-one who replied saw an incompatibility between the SRA’s outcomes-focused regulation and the setting of a minimum salary.
There are also the SRA Principles demanding we act with integrity and not to allow our independence to be compromised. Trainees are there not just to learn. They are required to show their worth to a firm in anticipation of qualification. They need to show their commitment, willingness to work and ability to undertake the sometimes long hours required in the profession. This is in addition to demonstrating academic ability and the myriad of other skills required of a solicitor. If trainees have to take a second or third job to be able to afford their training contract, this could conflict with key SRA Principles.
To what extent do you think the removal of the minimum salary requirement will result in employers reducing the salary paid to trainee solicitors?
This is a question which can only be answered by firms themselves. In a tough economic environment and a hard market place, I know if I were a partner or managing partner I would see this as an opportunity to potentially cut overheads.
Let’s be honest, there is no shortage of prospective trainees who, if the minimum salary was removed and salaries dropped, would simply have to make it work if they want to qualify, whatever the cost. There is always also the prospect of some having to work for nothing as “interns” as discussed below.
In some firms it is already the case that trainees receive not just the lowest salary of any fee earner but also the lowest salary within a firm. In firms where wage cuts have been imposed to avoid job losses, there is anecdotal evidence to suggest the only reason why some trainees’ salaries did not drop below the level where they could afford to pay their university debts was due to the minimum salary.
One comment I received could not have put it better:
“Given the opposition to the minimum salary requirement from employers since it was first imposed, it is inevitable that trainee salaries will reduce at the lower end if it is removed.”
It is not a matter of will they, more a matter of by how much.
To what extent do you think the removal of the minimum salary requirement will discourage individuals from less wealthy backgrounds from pursuing a career as a solicitor?
Speaking personally, I simply would not have been able to undertake my training contract unless I knew I would be getting a substantial wage. I am sure I am not alone. Many of those I spoke to about this felt they would have to think twice about the LPC now and would probably have to consider career options other than law.
If you consider that the LPC is a minimum spend of £7,500 (£9,300 in London) then how else, unless you have wealthy parents, will you afford it other than a loan or by several years of saving, by which time life will probably have overtaken you and changing careers may no longer be an option.
Loans are already harder to come by and, with lower wages for two years, may become harder still to obtain. There is always the reality that you have to pay them back and the term for repayment will normally start after your LPC (if not before) and therefore during your training contract.
The LPC fees will also be on top of fees of up to £9,000 a year for a law degree. Graduates with a non law degree are looking at a further £7,370 or £9,355 to study for your GDL. There are providers offering the latter for £5,300 but that is still £5,300 which has to be found somewhere. There are also living expenses on top.
Many will say that some firms pay for the GDL, LPC and even offer maintenance grants but those firms pay their trainees more than the minimum salary requirement anyway. However, in many firms, particularly those dealing mainly with criminal law, trainees will be expected to have not only the LPC but also Station Accreditation as well. A further £600 plus.
The minimum salary does not cover all of this but it goes someway to my point above that the NMW of around £11,000 just doesn’t reflect the amount of outlay a current day trainee has to go through to get to a point of starting a training contract.
Firms may even seek to recoup fees for the PSC from trainees. After all, why stop at removing their right to a proper salary?
The trainee is in the weakest position in all of this in terms of defending their rights to a decent wage, i.e. one which reflects the outlay they have had to make. This inevitably means they will have to afford it or simply go elsewhere. This change would have a direct effect in peoples’ ability to look at the training contract as a route into the profession.
To what extent do you think the removal of the minimum salary requirement will encourage some employers to take on trainees or to take on more trainees?
Again this can only be answered by individual firms.
What I would ask though is why would they take on more when they have enough presumably to do the work they have available, (no firm I know has spare cash to pay people to do nothing)?
Therefore any savings made by scrapping the minimum trainee salary are likely to be absorbed as efficiency savings and not necessarily used to recruit more. Furthermore, the amounts firms will save by removing the minimum salary level are not likely to be enough to pay the salary of even one additional trainee so the argument that removing the minimum salary level will increase the number of training contracts is spurious.
The other factor to consider is the current over-subscription to the LPC compared to the number of training contracts available. Why are we even discussing the possibility of increasing the number of trainees when there are already too many candidates for places? Perhaps, instead of looking at the minimum salary, the SRA and the Law Society should be considering the over provision of the LPC and look at a better, more efficient system of entering the profession.
Are there any potential equality issues we should consider in deciding on our future role in regulating minimum salaries for trainees?
In addressing this question there are so many groups to consider who are under-represented in the profession.
The figures show that a larger proportion of trainees paid at or just above the minimum salary level are from ethnic minorities. By definition, they will be more severely affected by a removal of the minimum salary. There are also massive hurdles to be faced by groups such as single parents, older candidates and those who simply come from a background of a lower income family.
To take as an example, (and one which I know well being one myself), those who are older and starting a second career are unlikely to be able to live on the NMW and so the minimum salary level makes a crucial difference. That said, £16,650 outside of London or £18,950 within is not brilliant compared to some wages being offered to trainees in bigger firms but it is much better than a NMW of £11,000 or taking an internship for no pay. Similarly, if you consider those who have to pay for childcare or who need to travel long distances to get to an office or offices during their training any lowering of the remuneration package will immediately prevent them from entering the profession.
It will not be a matter of choice – it will simply be a barrier to entry.
Those who have money behind them and have no such issues will immediately be in a better position to apply for contracts. Others will simply be unable to afford to. This will be regardless of the latter being potentially better candidates. Although not quite turning back the clock 30 years, it will not be far off.
Will there also be bars on firms asking trainees to work for free on internship programmes or will the SRA insist on their being paid for their work? Will firms continue to expect trainees to work a reasonable amount of overtime if they are paid far less than they are now? I suspect that trainees would feel they have to put in the hours to show commitment and the ability to record time which will make them attractive as a prospective NQ on qualification as I have alluded to above. Again, is this something a person on the NMW would be asked, told or expected to do? There is no escaping the fact that even with the minimum salary requirement, trainees are a bargain!
Simply put, from a trainee or potential trainee’s position and, indeed, for those of us fortunate to have already qualified, removal of the minimum salary level looks remarkably like an attempt to give firms a green light to cut overheads.
It will affect those who are the least likely or able to kick up a fuss because, let’s face facts, a training contract is hard enough to come by and no trainee or prospective trainee is going to turn one down if they can help it. Trainees are often, though not always, amongst the lowest paid members of a firm. Trainees are largely unrepresented by the Law Society despite being paid up members. As a result, the trainee salary is an easy target. At the junior end of the profession you will be hard pressed to find anyone in favour of this change.
The problems that the minimum salary level was designed to address back in 1982 are just as relevant today, perhaps even more so given the severity of economic conditions. Removing it will result in a resurgence of exploitation and a limitation on access to the profession.
The author is a General Committee member of the Bristol JLD and solicitor in the West Country. He has a young family and entered the profession as a second career.