Why I disagree with BPP's strategy of premium pricing
24 March 2008
29 May 2013
17 June 2013
18 March 2013
18 October 2013
30 September 2013
The recent fee increases announced by providers of the LPC have far wider implications than triggering a newsworthy spat - they go straight to the heart of the future of education and training for solicitors.
It has been widely reported that, from this September, BPP Law School will hike its fees by some 10 per cent - a figure that is well above the rate of inflation. At £11,550 BPP will be by far the most expensive provider of the course in the country.
In contrast, the College of Law, which has the same overheads in London, and indeed around the country, as BPP, has increased its fees by only 5 per cent.
BPP is a private company with primary responsibility to its shareholders and is perfectly entitled to take business decisions as it sees fit. In this case it seems to have embarked on a policy of premium pricing. In my view that is a massive mistake, not just for BPP, but for the entire legal education and training community in the UK.
Premium pricing is a legitimate business strategy, but it works only if the provider is offering a premium product. I have no doubt that BPP is competent and offers a good legal practice course. But is it really claiming to be that much better than the competition?We are all obliged by the Solicitors Regulation Authority to maintain very high standards, requiring investment in teaching and resources that is similar across the board. If BPP's overheads are very similar to those at the College of Law, there can be only one reason for such a stark difference in the fees - BPP is looking to increase its profit margin to provide a better return for its investors.
But, again, that is a business decision for BPP's senior management. What concerns me are the wider professional, and indeed social, implications of above-inflation fee increases in legal education. What will be the practical effect? For my money it will mean law firms potentially reducing their commitment to investing in domestic trainees. For the most part law firms pay for or subsidise students on the LPC. While a few pounds here and there might seem like small change to the mega-budgets at the magic circle, for other Square Mile firms, and indeed the large regional corporate practices, the figures soon mount up when you have large numbers of trainees on the books.
As the prospect of economic recession looms, many firms - even the glamorous wealthy global practices - will be tightening their belts. And it might not take much to push firms towards scaling down on their numbers of domestic lawyers and recruiting a higher proportion of young lawyers from overseas.
Apart from the impact this would have on the future of law firms (some of us can still remember how the recruitment crunch in the early 1990s caused real problems once the economy picked up again), it will have an immediate impact on social issues that have recently come to the fore. Not least being the impact that fewer training contracts could have on diversity in the profession.
In an environment where firms have fewer training contracts to dish out, they are more likely to offer those that they do have to students from traditional backgrounds. So those students coming out of Oxbridge and the red bricks might not be too concerned, but the future might not be that bright for others.