When Halliwells went bust last summer, trainees were the last to be thrown a lifeline. The powers-that-be must wake up to the dire situation facing young lawyers today, writes Kevin Poulter

There must be very few readers who are unaware of the difficulties the legal profession has endured over the past couple of years.

The worldwide recession has taken its toll on law firms internationally. Decreased commerce obviously means less commercial work – and for some reason fewer divorces. Add to that the deep cuts which have been made to the legal aid budget, preparations for new ways of working under alternative business structures (ABSs) and increasing competition between firms, and it is clear times are hard. No matter which practice area you work in or aspire to, there is little doubt that revenues are down on what they once were and savings are being made.

One of the few national casualties of the economic downturn has been Halliwells LLP. The 144-partner, top 40 firm with a turnover last year of £83m had offices in Manchester, Liverpool, London and Sheffield.

The past months have shown that the final days of a law firm are mired in confusion, speculation, opportunism and worry. But coming out of the mess has been a reassuring rally by firms across the country to step in and take on the unfortunate trainees and future trainees who would otherwise have come close, but not close enough, to realising their professional dreams.

The Solicitors Regulation Authority (SRA) is often the first port of call for solicitors who are unsure of where they stand and how their career will be affected. However, the SRA was quick to respond to the immediate concerns of frantic trainees with an official statement confirming that “we don’t set the employment conditions of trainees in the first place, so how can we step in? We don’t get involved in commercial issues.” Equally as reassuring was the SRA’s optimism that “one would hope that other firms might look sympathetically on their situation and try to help”. With such confidence from the profession’s regulator it was in hindsight perhaps foolish for us to be concerned.

Coming to the rescue

Fortunately, however, initiative was taken by Bristol firm Burges Salmon which took up the gauntlet and rallied firms both locally and nationally and threw out a lifeline. A website was set up to try and locate contracts for those who found themselves stranded. Firms including HBJ Gately Wareing, Clifford Chance, Hill Dickinson and Barlow Lyde & Gilbert have subsequently taken on not only existing trainees part way through their contracts, but also those about to start in September. How those poor souls felt when they heard that their careers were potentially over (or at the very least delayed) with the demise of Halliwells, we will never know, but maybe some good has come from it.

A special mention should go to Manchester Metropolitan University which quickly responded by offering four-week work placements to unemployed graduates. The incentive was the offer of £1,000 to any firm taking part in the scheme, and “the perfect chance to run the rule over a potential trainee at no extra cost”. Following on from a previous Junior Lawyers Division (JLD) campaign, those undertaking work experience under the scheme will also be paid minimum wage.

So, where was the Law Society while this was going on? It’s all well and good passing judgment on the SRA, but if it’s not its job to look out for unemployed trainees, whose is it? The JLD – the Law Society’s representative arm for LPC students, trainees and solicitors of up to five years PQE – sent out a letter to all those affected by the collapse of Halliwells and posted the same on its website. Although there was little support that could be provided immediately, other than sympathetic reassurance, plans were put into place to co-ordinate activities to assist all graduates including practical application advice and a networking event – in Manchester initially – to provide support and guidance for all aspiring trainees without contracts. This has been followed up with a fourth Student Forum and series of online webinars all with the ambition of informing students of the difficulties in pursuing a legal career alongside sensible and real careers advice free of charge.

Trouble ahead

But let’s go back one step and look at the wider picture. The scheme set up by Burges Salmon in reaction to the Halliwells dilemma has worked wonderfully and they deserve full credit. Surely senior partner Stephen McNulty’s “litmus test for the profession” has been a great success? Already, 30 firms are signed up and working together to ensure that no one misses out on an opportunity. But his passing comment that “ironically it looks like they [the Halliwells trainees] might have a bit of choice” will not sit comfortably with the 10,000 students potentially qualifying from the LPC this year, the majority of whom will be suffocating under a sea of rejection letters.

Until a scheme is put into place to regulate the law schools and ensure that the number of LPC places is kept in line with the number of training contracts (this year estimated to be 5,000) there will forever be a surplus to demand. This in turn increases year on year as the surplus re-apply again and again. The SRA has previously informed us that the number of LPC places is self-regulating by market forces, but it remains within the SRA’s discretion to refuse an increase in places request from an LPC provider. So why do the number of places continue to rise? Pre-LPC tests (what’s a degree?), application interviews and other forms of assessment will potentially reduce the number of successful applicants, but this will only lead to an increased course fee(!) to preserve the profits of the law schools. Note that it is also within the SRA’s power to regulate the costs of such courses by stripping back the gold-plating – the most expensive this year being £12,500 at BPP London.

Until these issues are addressed, there will be widespread disappointment year after year and a rising number of applicants for training contract places (rumoured to be up 70 per cent on last year). Sorry for being the bearer of bad tidings, but until this professional black hole is stitched up, take heed and anticipate the worst.

This article was first published in Young Lawyer magazine on 26 September 2010