The Law Society Gazette recently (July 2020) ran an article regarding the concern at Magic Circle and city firms that newly qualified solicitors will
be seeing pay cuts and it may be a rocky year ahead for newly qualified
and trainee solicitors.
Struggling NQ City Solicitors?
Examples are given by the Gazette of Allen and Overy paying £90,000 to newly qualified solicitors rather than £100,000 and
Clifford Chance cutting newly qualified pay to £94,500. Hogan Lovells trainees will receive £85,000 as opposed to £90,000 when they qualify.
The Law Society Gazette talks about newly qualified pay
bouncing back the following year and it being a worry for newly
qualified solicitors that they are going to get these low levels of salary.
Vodafone Chief - a Dislike for Law Firms
On the next page of the Gazette there is actually an article
from the Head of Legal at Vodafone who has said she is troubled by rapid moves
to lay off junior lawyers and to further support staff in private practice
law firms. It looks as if the head of legal at Vodafone, Rosemary Martin, did
not enjoy her time when she was in private practice as she says that she felt very
uncomfortable that huge attention was paid to the partners and hardly anything
was paid to all the other people in the law firms.
Surely Some Mistake?
We think both the Gazette and the Head of
Legal at Vodafone are mistaken. Although salaries may be slightly dented to levels only high street solicitors can dream of, the likelihood is that, rather than junior
lawyers being overly affected by the pandemic, it is much more likely that this is
going to be the middle level of lawyers in private practice and in house.
Anecdotal Evidence
Our anecdotal experience so far is that the solicitors most
likely to have been laid off or furloughed at the start of the pandemic are solicitors in their 50's, working full time, but not at equity partner level.
There are obviously good business reasons for this. It makes sense for a struggling law firm with high overheads to seize the opportunity to get rid of their highest expense. A 50-year-old senior solicitor costs
money whereas a 25-year-old newly qualified solicitor on a fairly low level of
salary does not cost as much.
When the work picks up obviously equity partners
and senior staff will be undertaking as much of the work as they possibly can
to maintain their fee levels and using the assistance of the more junior staff.
Partners Retain Work
It is similarly
possible that the equity partners and senior staff will retain as much of the
work for themselves as possible in order to justify their existence and by
doing so deprive the next level down in terms of staffing from any fee earning
opportunities. It is these members of staff who we think are more likely to
face layoff and redundancy rather than the junior staff.
Dreamworld Salaries
The figures given in
the Law Society Gazette for the central London city firms are salaries that most
of the 120,000 solicitors in England & Wales can only dream of throughout their career even when they are 30 to
40 years qualified.. It is these figures of course that get picked up in the press and
grossly distort the earning potential for most legal practitioners in the UK
who can only dream of receiving salary of this kind of scale.
Gap in the Market
The senior staff who have been laid off already or face redundancy over the coming months are those
most likely to be lost to the profession forever. Our experience back in 2008
was that the same thing happened. Firms actively recruited younger and more
junior members of staff and overlooked senior members of staff and those above
45 years old.
High Locum Numbers
It is partly why there is currently a glut of locum solicitors
desperately seeking work in certain areas of law because they turned to locuming when the last recession hit and have not been back into permanent work sense.
Moving from locum to permanent is a very difficult thing to do at the best of
times and it has been an issue for many years that firms actively discriminate
against anyone who has tasted the freedom of locum work when looking to recruit
into permanent roles.
To give another anecdotal example of why older
solicitors are more likely to lose their jobs and then struggle to get back
into the market is a telephone call I had recently with a senior partner of the
firm looking to sell his practice and retire. He wanted to take on a partner
to join his practice and eventually purchase his equity and I duly sourced
him a good candidate with their own following and an active interest in taking
equity in the medium term. His immediate response was virtually to rule this
person out because they appeared to be of a certain
age.
More at Risk than the Office Cleaner
So if you are a fairly senior solicitor and do not have an equity-linked position I suspect you are more at risk of losing your job
than the office cleaner.
The high risk category back in 2008 was quite clearly anyone aged over 45, working in a full
time role on a salary at the higher end for the firm they work for.
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