Post-qualification Practice of Solicitors

A. Workplace Regulation of Solicitors before the

Legal Services Act 2007

Some regulation of employing organisations is longstanding. In 1999, for example, the Guide provided that a firm had to have at least one principal admitted for three years and that solicitors could only enter partnership with other solicitors.⁸⁹ There was also regulation of those persons solicitors could and could not employ.

The regulation of everyday employment by professions was relatively light. The Guide required attendance of suitably qualified lawyers for the kind of work con­ducted in the office.⁹¹ Solicitors, not just partners, were responsible for ‘exercising proper supervision of staff’, including independent contractors employed by the firm.⁹² There had to be arrangements for the supervising solicitor to see incoming mail.⁹³ Principals were ‘responsible’ for all work carried out by staff⁹⁴ and could face disciplinary action where they knew or should have known about any breaches of accounts rules by the firm.⁹⁵

B.

Legal Services Act 2007

Regulation of employment by and of solicitors has grown and has become more com­plex under the LSA 2007. There are three main areas, relating to type of regulated organisation, personnel and the kinds of obligation imposed.

i. Organisations

The LSA 2007 extended the potential range of organisations handling legal work to Alternative Business Structures. This potentially changed management responsibility for lawyers and the scope of employment relationships. The possibility of non-lawyer ownership and management of ABS meant that responsibility could no longer be laid solely at the door of solicitors and partners.

ii. Personnel

a. Employees

Another anticipated feature of ABS was that they would involve multi-disciplinary practice, mixing people with different professional backgrounds. There was a pos­sibility that different people in the same workplace could be subject to different regulatory regimes. Such people could include members of all the law professions, now approved regulators, and Registered European Lawyers (RELs) and Registered Foreign Lawyers (RFLs).^[2563] The mixture of professional backgrounds within law firms was already a feature of many practices before the LSA 2007, so was not revolution­ary. The SRA regime did, however, make specific provision by subjecting all those working within entities to the SRA Code.

A wide range of people are now subject to the SRA Code of Conduct, includ­ing non-lawyer owners of ABS or managers or employees of firms.^[2564] Managers and employees of an authorised firm, which the SRA does not regulate, are subject to the Code when doing work SRA-authorised work for their firm.^[2565] All of those subject to the SRA Code of Conduct must receive training on its requirements appropriate to their role and level of responsibility. For example, all staff must understand con­fidentiality but only fee earners need to manage conflicts of interest.

b. Managers

Responsibility for businesses under the SRA Code of Conduct lies with managers. These are defined to include a member of an LLP, a director of a company, a partner in a partnership or a member of the governing body of any other body.^[2567] The LSA 2007 imposes a duty on a non-authorised person, whether employees or managers of licensed bodies (ABS firms). The duty is not to do anything which causes or substan­tially contributes to a breach by the licensed body, or an authorised person in relation to a reserved legal activity, of the duties imposed on them by section 176.

c. Compliance Officers

The Act also prescribes that licensed bodies shall have a Head of Legal Practice and a Head of Finance and Administration. The Head of Legal Practice must ensure compliance with the terms of the licence, ensure that authorised persons conducting reserved legal activities comply with duties imposed by the approved regulator^[2568] and report to the licensing authority any failure to comply with the terms of the licence.^[2569] Licensed bodies must, in accordance with the LSA 2007, also report non-material breaches. The Head of Finance and Administration must ensure compliance with the SRA Accounts Rules, recording breaches and reporting any material failure to the SRA as soon as reasonably practical.

As part of its regime for managing ABS, the SRA extended these requirements to all the entities it regulates, renaming the Head of Legal Practice a Compliance Officer for Legal Practice (COLP) and the Head of Finance and Administration, Compliance Officer Finance and Administration (COFAs). Firms can decide how the COLP and COFA operate within their business structure depending on the nature of the business and business risks. Managers are responsible for ensuring that COLPs and COFAs are effective, including by providing support and, in large firms, clear reporting lines.

Unsurprisingly, the imposition of an infrastructure designed to control complex ABS on all solicitors, caused concern. Apart from the obligation to report colleagues, there was the difficulty of deciding when a breach becomes material. In making this decision the COLP or COFA must take account of a number of factors. They include the detriment, or risk of detriment, to clients, the extent of any risk of loss of con­fidence in the firm or in the provision of legal services, the scale of the issue and the overall impact on the firm, its clients and third parties.^[2570] Firms therefore had the scope, and the incentive, to define breaches as non-material and therefore not report­able by a non-ABS entity.^[2571]

iii. Employer Obligations

COLPs and COFAs must ensure compliance in their areas of responsibility. Under the SRA Handbook, managers have overall responsibility for meeting the outcomes and for compliance generally.^[2572] The outcomes include a requirement to have a clear and effective governance structure and reporting lines.^[2573] There must be effective systems and controls in place to achieve compliance with the SRA principles.^[2574] Training must be provided to enable individuals to maintain a level of competence appropriate to their work and level of responsibility.^[2575] Employers must also ensure statutory require­ments for the direction and supervision of reserved legal activities are met, for example, by ensuring that they are not outsourced to persons not qualified to conduct them.^[2576]

iv. Transition into Qualified Practice

Different firms tend to have different policies on retention of trainees at the end of the training period. In commercial firms, retention rates tend to be around 70-80 per cent.^[2577] This relatively high level is partly because of the high investment made in each trainee.

The fifth phase of the cohort study found that the majority of trainees did not have much choice when accepting a training contract. Around 14 per cent were unhappy with the type of firm they were in.^[2581] Movement between types of firm was rare, however. Newly qualified solicitors were usually limited to the type of firm they trained in and the type of work they did.^[2582] This may explain why 6 per cent thought they would not be working as a solicitor or barrister in five years and a further 18 per cent were not sure.

v. Terms and Conditions

Menkel-Meadow argues that the quality of life of employees is an ethical issue for law firms.^[2583] The terms and conditions of lawyers’ employment are different although probably more variable in high street firms. There are potentially six aspirations of those entering professional work. These are desires for adequate financial reward, for job security, for interesting work, for rewarding work, for personal autonomy in work and for career progression. Some of these areas have overlapping features. The fifth cohort study survey found high levels of job satisfaction among solicitors, but many problematic areas.

a. Salaries

Lawyers’ earnings are widely diverse. The large commercial solicitors’ firms gener­ally pay the highest salaries to newly qualified staff, often higher than those of the partners in some legal aid firms. The fifth solicitors’ cohort study found significant differences in newly qualified salaries, between £20,000 in high street and £50,000 in City firms.^[2584]

Different firms have different systems for rewarding staff. The lockstep system, where salary is based on seniority, is traditional in law firms.

The use of merit-based systems raises issues within law firms. There is, for example, an issue of fairness where decisions on pay depend on the views of senior partners. Attempts to make processes more objective can involve using crude measures, such as income generated and clients attracted.^[2585] However pay is decided, merit systems encourage rivalry, hogging of the most profitable work and wrangles over the credit for bills.^[2586]

Partners share the profits of the firm after deducting the overheads, including staff salaries. Those who achieve partnership in large firms tend to be rewarded through the traditional lockstep method of dividing partnership profits rather than by merit or bonus schemes.^[2587] Under a lockstep system, partners move towards taking a full profit share incrementally. As with their employees, this may reduce their incentive to work. Managed lockstep systems, where progression is not automatic and where there is even the possibility of demotion, has therefore gained ground. Some British firms over recent years have also moved to more merit-based systems,^[2588] particularly follow­ing mergers with US firms. Most of the larger, commercial firms have adopted bonus schemes by ‘top slicing’ the profits and allocating them to high performing staff. Such systems can also be used to lure ‘stars’ from other firms.

Partnership carries the risk of receiving less from the business than employees on fixed salaries when times are hard. In smaller firms, particularly those relying on legal aid, partners allegedly struggle to earn more than £30,000 per annum. In contrast, some partners in large firms earn in excess of £1million per annum.

b. Security

Security of employment is one of the traditional benefits and expectations of profes­sional life. In general, turnover rates for assistant solicitors are relatively low. In 2005, for example, the average assistant solicitor turnover rate in the top 50 firms was 14 per cent.^[2589] Law firms do, however, reflect changes in the employment market generally, which has become more insecure since the 1980s. The trade press contains many sto­ries of firms ‘clearing out’ groups of lawyers. Sometimes, leading lawyers themselves instigate moves, taking whole departments with them. The explanation for the fre­quency of these acts of disloyalty is that marketisation of legal services has loosened the bonds of the employment relationship, introducing instability and uncertainty.

c. Interest

Graduates may be more likely to find law work boring for a number of reasons.^[2590] First, it often fails to meet expectations raised by the media. Film and television series portray law work as unrealistically glamorous. Secondly, it may be because they are not working in a preferred area. Thirdly, it could be because of an acquired interest in substantive law and a relative lack of intrinsic interest in legal procedure.

Law students enjoy EU law, human rights and civil rights, but also criminal law, family law, benefits law and personal injury law.^[2591] There is a disproportionately high level of interest in careers in human rights and EU law compared with available jobs. 50 per cent of prospective solicitors were interested in legal aid work but only 8 per cent were likely to pursue this given the career prospects.^[2592] Commercial areas, includ­ing commercial property and business and commercial affairs, had low levels of inter­est compared with the numbers that are expected to work in them.

d. Reward

Many people distinguish between the intellectual and emotional rewards of profes­sional work. Emotional rewards are intangible and susceptible to being dispropor­tionately diminished by negative experiences. For example, some entrants cite the opportunity to help people as a primary motivation. Personal plight work is one of the areas offering the highest potential rewards. Commercial firms do not offer areas such as crime and family law, which involve people in crisis. Over 42 per cent of women leaving the profession were disappointed that their expectations regarding the value of the work to the community were not met.^[2593]

Emotional rewards may derive from a sense of achievement. Across a range of occupations intrinsic work motivation is associated with challenging tasks. Emotional exhaustion is caused by high workload and lack of social support,^[2594] low status, poor work life balance, stress,^[2595] emotional exhaustion and unmet career expectations.^[2596] A competitive environment exacerbates old demands, like turning over work, and adds new ones, like attracting and keeping clients. There may be workplace pressure to indulge in unethical practices, such as ‘padding’, inflating the hours billed.^[2597] These pressures potentially diminish the satisfaction found in work.

Across different kinds of legal organisation, but particularly in large firms, a culture of long hours has emerged. The cohort study found that just over a quarter in high street firms, 40 per cent in large provincial and 56 per cent in City firms worked over 50 hours a week.^[2598] This may be a reason why, in the 1990s, lawyers suffered from more workplace stress than other professions, including doctors.^[2599]

A director of the legal healthcare charity SolCare observed that, between 1997 and 1999 the subject of the majority of calls received had switched from alcohol to stress. He suggested that parts of the legal profession had adopted the attitude that ‘if you aren’t stressed you’re not working properly’ and that lawyers had been sacked for complaining about workloads. Menkel-Meadow argues that the ‘long hours culture’ needs to be defined as an ethical issue.^[2600]

Also in the 1990s, Sommerlad found relatively low levels of job satisfaction in high street firms. This was caused by declining conveyancing income and increasing commer- cialisation.^[2601] Legal aid practitioners and women were particularly affected. Funding con­straints and franchise auditing mechanisms symbolised a propensity for ‘denigration and distrust’ in the political establishment that undermined the morale of public sector profes­sionals. In contrast, interviews conducted for the final stages of the cohort study found that young lawyers in well-established high street practices were content, even pleased, with their experience of practice.^[2602] They were offered interesting professional work, the opportunity to specialise, together with good terms and conditions. Their firms tended to be traditionally organised, providing a high level of autonomy in a collegial setting.

e. Autonomy

In the European context, autonomy refers to the freedom of individual professionals to exercise discretion in their work. It is supported by the collegial form of profes­sional organisations. In a relationship of equal professionals, each has control of their own sphere of influence. Some areas offer more autonomy than others. Clients in crisis tend to be ‘one-shotters’, unfamiliar with what is involved in legal work. This provides scope for a high degree of individual professional autonomy.

Since the 1990s there has probably been a decrease in the professional autonomy of lawyers, in England and Wales, compared with legal professions elsewhere. Lawyers of all kinds have been affected by the shift towards a consumer society. Clients are more likely to resent professional authority and to demand to be treated liked cus­tomers. This changes the emotional balance in the professional relationship. It raises expectations of client satisfaction and undermines the ‘professional detachment’ that is a feature of professional autonomy.

Hochschild found that workers in certain service jobs perform ‘emotional labour’, involving emotional display.^[2603] A number of studies have found a similar phenom­enon among professionals.^[2604] The need to perform emotional labour impinges on the autonomy of young lawyers. It also potentially increases the pressure on the individual and the likelihood of emotional exhaustion. Workers in service industries with demanding and abusive customers were able to cope better by sharing problems with co-workers.^[2605] Declining collegiality and a more individualistic culture may exacerbate the ability of legal workplaces to provide this support. Legal specialisation has a negative impact on relationships by reducing the common work experience of employees and the ability of colleagues to provide necessary support.

f. CareerProgression

Gallanter and Pallay coined the phrase ‘tournament of lawyers’ to describe the inter­nal race to partnership in large US law firms.^[2606] The tournament is a process whereby firms recruit too many young lawyers and select potential partners from within the group. Those that are selected emerge from long and gruelling competition, working long hours, generating high income and attracting and retaining elite clients. Some large firms apparently expected associates to bill 2,420 hours per annum which, assuming four weeks’ holiday, represents 10 hours of chargeable time for every work­ing day.

A variation of the tournament model has operated in some English large law firms,^[2607] although the recession, combined with the high cost of training, may have reduced its prevalence. The fate of those solicitors who do not become partners is a potential ethical issue. Lee suggests that many English large firms have adopted the ‘up or out’ policy, which is a feature of the tournament model. Solicitors who do not achieve partnership are asked to leave, or, feeling their position untenable, choose to go.^[2608] A variation, also identified in the US, is ‘two-tier partnerships’, in which some lawyers remain associates and never become partners.^[2609]

Never making partnership may be a preferable option to ‘up or out’, but it chal­lenges the collegial assumptions of the traditional law firm model.^[2610] Solicitors who never make partner may have their sense of agency undermined. They may be de­motivated and unable to fully participate in the joint enterprise.^[2611] Unless the situation is clear to them, they are unable to make good career decisions. This, Lee suggests, undermines the ethical principles of individual autonomy and fairness. It offends the Kantian injunction that people are to be treated as ends rather than means.^[2612]

In the early-1990s a quarter of solicitors holding practising certificates were women, but many were working part-time or unemployed.^[2613] Women who took a career break to raise families were unlikely to make partnership.^[2614] When firms laid off solicitors, those affected were disproportionately women. Since 1994, more women than men have been admitted annually as solicitors. In fact, across all ethnic groups, the gender gap has increasingly widened. At present, women make up 60 per cent of new admissions.^[2615]

The fifth cohort study found that women’s pay began to slip quite quickly compared with men.^[2616] This, and later research by the Law Society,^[2617] found that female solici­tors earned less than men, were more dissatisfied about long hours and work/life bal­ance^[2618] and were significantly more likely to have considered leaving the profession. Among the issues troubling many women solicitors was progression to partnership.

In 1998, women made up half of newly qualified lawyers but only 15 per cent of partners.^[2619] In 2011/12 there werejust over 30,000 partners in solicitors’ firms. Of these, around 22,000 were men and 8,000 women. There were around 3,000 male sole practitioners and under half that number of women in sole practice.^[2620]

It might be expected that the progress of women would be different in the large firms because of their open and meritocratic cultures. This was not so. In 2009, firms with more than 81 partners appointed 1,064 women trainees compared with 831 male trainees. This represented 32 per cent of all women traineeships and 40 per cent of all males appointed to traineeships.^[2621] This willingness to recruit significant numbers of women trainees was not, however, however reflected in appointment of women to senior positions in City firms.

It was 1998 before the first woman achieved senior partner in a top 100 law firm.^[2622] The difficulty for women in achieving partnership was national news in 20 0 5.^[2623]6 In fact, in 2006, there were more women partners and women associate solicitors in the large national firms than in City firms. The top firm in a 2006 Diversity League Table of the top 100 firms was Shoosmiths, with 40 per cent female partners and 59 per cent female associates. Clifford Chance was the first City firm with 19 per cent female partners, but it also had the lowest percentage of female associates at 51 per cent.^[2624]

The record of large firms in enabling women to achieve career progression is slowly improving. A recent diversity league table showed that two firms in the top 100 firms comprised over a third of women partners. All the top 10 firms had more female than male associates. Many had introduced measures to address disadvantage, such as mentoring support for women to encourage more to aim for partnership.^[2625]

There are different theories explaining these common features of women’s legal careers. The fact that women partners in US law firms typically come from higher social groups than their male counterparts has been taken to indicate gender barriers to female progression.^[2626] This could be because there is blatant discrimination against women. It could also be due to the structure and culture of solicitors’ firms and more subtle exclusionary mechanisms and gender stereotyping.^[2627] A recent study for the LSB found that stereotyping and perceived bias causes women and BME lawyers to abandon their careers in disproportionately high numbers.^[2628]

A theory of how law firm environments disadvantage women is based on Gilligan’s theory of male and female moral orientations. This speculated that men’s judge­ments are based on an ethic of rights whereas women’s are based on a so-called ethic of care.^[2629] According to this theory, male-led organisations would have rational and legalistic cultures^[2630] whereas those led by women would make allowances for individuals.^[2631] The emphasis on working long hours and on generating business,^[2632] and a lack of willingness to accommodate motherhood, suggest prioritisation of male work preferences. This potentially leads to the subordination of women.^[2633]

An alternative set of theories suggests that male and female career paths reflect gender preferences. Men enter the high status business areas of practice for long-term salary prospects. Women prioritise intrinsic interest and the value of work to the community^[2634] or areas of work with demands consistent with motherhood. They are more likely to work on family and relationship problems or conveyancing and wills. These choices affect career progression. In large firms, women often decide to work in ‘knowledge areas’ like employment litigation, rather than in the corporate and com­mercial departments from which partners tended to be drawn.^[2635]

These are obvious generalisations and reality probably lies somewhere between these theories. Many law firms have seen working long hours as an indication of commitment and as a prerequisite of progression. This is unlikely to change.^[2636] There may be gradual ‘feminisation’ of the workplace as numbers of women increase, but organisational norms that are important to survival are likely to persist.^[2637] Women often have to mimic stereotypical ‘male’ behaviour, for example, by generating a client base, to compete for partnership on equal terms with men.

Ethnic minorities are present in smaller numbers in elite sectors and so it is more difficult to generalise about their advancement in law firms. Given the supposed difficulty for ethnic minorities in gaining training contracts in City firms, the firms perform relatively well on ethnic minority data. In the 10 most ethnically diverse firms in the top 100 solicitors’ firms, ethnic minority partners usually constitute less than 5 per cent of partners and 10 per cent of associates. There are variations. Clifford Chance, for example, had 5.5 per cent ethnic minority partners and 17 per cent ethnic minority associates.^[2638]

Ethnic minority candidates may not have attended elite educational institutions. This may be an impediment to progression in large firms,^[2639] not least because they will not have had early access to social networks in key financial and business institu- tions.^[2640] If this is important to firms, they may have to help facilitate the development of such networks. Unfortunately, there is a suspicion that ethnic minorities may not follow the usual progression routes to partnership within firms. A Department of Constitutional Affairs junior minister, David Lammy, has suggested that, like women, ethnic minority recruits are often channelled into the ‘knowledge areas’ that are less likely to lead to partnership.¹⁷⁴

IV.