Law Soc profits from students
30 June 1998
6 March 2014
18 February 2014
27 November 2013
15 September 2014
9 June 2014
The Law Society, which has recently raised LPC fees, is making a profit out of legal students - the ones who are least able to afford it, argues Nick Armstrong. Dr Nick Armstrong is a trainee at Irwin Mitchell, Sheffield, and the Chair of the TSG.
The Trainee Solicitors Group's (TSG) discovery that the Law Society is making a profit out of Legal Practice Course (LPC) students goes beyond the immediate scandal, deserved though that is. It should provoke a fundamental review of the way in which legal education is funded in this country.
Back in March, the TSG highlighted the fact that a lot of money was going into the Law Society from students and trainee solicitors, but it was far from clear how much of it was actually being spent on them.
The Law Society could not immediately answer the question. On the one hand it pointed to areas of Law Society activity which might be said to benefit students and trainees, but which did not fall within the Legal Education and Training (LET) budget. On the other, it said that there was a legitimate concern and that it would look into it.
To its credit, the Law Society did go to some lengths trying to find out where the money was going. The result was a meeting in which the society ran through the management accounts for LET and explained them in detail.
The accounts reveal that while LET as a whole runs at a slight loss, there is considerable variation between its three budget areas: the Legal Practice Course; pre-admission (in other words the training contract); and professional development. The professional development budget just about breaks even. Pre-admission makes a loss.
The Legal Practice Course budget, on the other hand, has a surplus this year in the region of £200,000 and has had a surplus each year since the LPC was introduced in 1993.
The Trainee Solicitors Group has two big problems with this. First, of all the areas from which the Law Society could make a profit, it is unfortunate, to say the least, that it has chosen to make it from the Legal Practice Course. This means that students are subsidising other LET activities.
Second, the Law Society has just raised the LPC fees and introduced a new fee of £50, payable when trainee solicitors make applications to have the minimum salary requirement waived, to seek dispensation from the Professional Skills Course, and for time to count towards the training contract. These applications fall within the pre-admission budget, but they are analogous to the LPC budget in that they are often paid by trainees, not by firms. The upshot is that the Law Society is raising more money from those entering the profession when it has already profited from them.
This is unacceptable. Debt is the biggest obstacle to those entering the profession and the Law Society is supposed to be resolving that problem, not contributing to it. The TSG has asked the Law Society to reform its LET funding arrangements, and withdraw the new fees.
The TSG is, in effect, asking for special treatment for students and trainees because there are examples of cross-subsidy all over the Law Society accounts. We are asking for ring-fencing because we believe the dire financial straits of most students and trainees justify special treatment.
The TSG believes the profession should subsidise those trying to enter it. In the short term, this may mean fees paid by firms rise because they have to fill the gap currently covered by the students. In the longer term, it might lead to a more formalised system of grants and bursaries.
The profession - generally the larger firms - already subsidises students it intends to take on. Perhaps the surplus generated by the LPC profits should be re-distributed in order to top that up.
The Law Society and firms, however, are not the only big players in the legal educational market. The law schools are estimated to be worth £50m. The LPC fee paid to the Law Society is tiny in comparison with what students pay law schools.
This is the first time the fees paid by students and trainees to the Law Society and the law schools have been subject to a proper policy debate.
Such a debate is long overdue. Fortuitously, a new Director of Legal Education takes up his post next month. Funding is the first thing the TSG will be asking him about.