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Archive for October 17th, 2008

Unusually… I’m going to write about something sensible. I’m going to write and explain why I think law schools in England & Wales could run into some quite serious and severe problems over the next two to three years and why there should be some ‘rationalisation’.

There are, essentially, four things for law schools to consider: (1) The current financial situation and almost inevitable recession, (2) The outsourcing of legal work abroad,  (3) pressure from regulators and (4) the fact that there are just too many law schools – some of indifferent quality.

(1) The current financial situation and almost inevitable recession

It is unlikely that the economy will turn rapidly and the UK, if not already in recession, is likely to experience recessionary pressures for between 12-24 months if current expert thinking (and past experience) is correct.  This will lead to a reduction in demand for a range of legal services and while City firms enjoy a ‘banking and insolvency dividend’, this high end work is unlikely to filter through to more than 50 or so of the top law firms in this country sufficient to stave off significant reduction in firm revenue.  Other corporate-commercial work requires a degree of growth in the economy, the availability of credit and, rather important,  risk averse business thinking.  The property market, both commercial and residential, is experiencing a downturn, prices are falling and are likely to continue to fall over the next six to twelve months. I need not labour this point – there is, in any event, a wealth of expert opinion out there in the press and on the net. It is inevitable that there will be further contraction of law firms, redundancies and, of course, recruitment of trainee lawyers.

(2) The outsourcing of legal work abroad

We have already seen major law firms contracting work out to to India. It is likely that other legal, quasi-legal and paralegal work will  go the same way as law firms find ways to cut costs. Soft budgets like training and education will, I suspect, form part of this outsourcing.  The big firms will continue to employ training professionals, but what merit is there in a smaller firm retaining the cost burden of a sophisticated training and education team when high quality provision is available at an increasingly competitive price in the open market?

(3) Pressure from regulators

We have already seen that the Bar Standards Board plans to make it more difficult for young people to qualify at the bar.  There are, in anyone’s logic, far too many trainee barristers chasing far too few pupillages, let alone tenancies.  The figures quoted seem to be 3200 chasing 450 pupillages (and, presumably fewer tenancies) in each year. The high cost of reading for the Bar must weigh heavily now on the mind of a student contemplating a career at the Bar.

There is no indication of this at present, but it is quite possible that the Solicitors Regulatory Authority will begin to look at over supply of student lawyers in the market.  This apparent over supply may correct naturally with the coming recession.  Loans from Banks to students may be more difficult to come by and, again, students will need to consider most carefully whether they are suited to a career in law where only the best survive, or should survive, irrespective of background, creed or race.

(4) There are too many law schools – some of indifferent quality

This, of course, is the most contentious and difficult part of this post.  The best way to deal with the issue is to break it into sections:  (a) There are too many law schools to sustain a declining student market (b) There are too many BVC providers for a predictable decline in student numbers and (c) There are just too many law schools.

(a) There are too many law schools to sustain a declining student market

With over 80 law schools in England & Wales providing law degrees (and some providing the LPC and BVC) it is inevitable, with the decline in student numbers predicted, they will experience financial difficulties if not serious financial loss in terms of revenue – against an inflationary background of rising cost and a likely government reluctance to increase education budgets to universities.

(b) There are too many BVC providers for a predictable decline in student numbers

There are eight providers of the BVC (College of Law and BPP have two centres each) with ten law school choices available for approximately 1700 students at present.  Given the Wood ‘root and branch’ review, the new test, the general uncertain economic climate, it is possible that we will see a fairly significant reduction in numbers.

University based law schools may argue that they provide a ‘full service’ and they are less concerned with ‘profits’.  This is a specious argument in some respects, given the fees charged for the LPC and BVC – far higher than degree courses, because they are permitted to charge higher fees. Presumably universities have to run to recognised budgetary rules and not run heavily loss making courses?

I would suspect, but have no direct knowledge, that BPP and The College of Law tend to be the BVC providers of choice for many if not most students. If this premise is correct, and there is a downturn in numbers, it is likely that those students intending to read for the bar, are likely to continue to choose BPP and The College with an inevitable reduction in demand for places at other providers – perhaps even despite geographical benefits?

The location of a branch of The College of Law in Birmingham and a branch of BPP in Leeds could, in any event, negate geographical advantage for providers outside London.

We could, of course, see fee competition.  Fees for the BVC are high, arguably higher than they need be. We shall see. University providers of the BVC are going to have to take a long hard look at the books and the trends if they are to avoid difficulty going forward if demand does drop for the reasons given above.

(c) There are just too many law schools

Given the logic and reasoning above, if correct, it is clear that we have (a) an over supply of law students and (b) we probably have too many law schools.  Why the need for every university or technical college to run a law degree programme?  The reality is that employers, in the main, tend to prefer the older traditional universities over the newer universities and, without going into recondite detail here, I think it is reasonably well established that there is a qualitative difference between the education delivered by a top university and some in the bottom ten per cent of the league table.

Vice Chancellors have long regarded law degree programmes as a favoured ‘cash cow’.  They are comparatively inexpensive compared to medicine, the sciences and even some of the arts based subjects – requiring only teaching / research staff, accommodation, classrooms and a relatively inexpensive law library.  Demand for law has been high for the last ten to fifteen years and it cannot have escaped anyone’s attention that class sizes have risen dramatically as the old tutorial of 3-5 people has given way to ‘seminars’ with larger group numbers, some as high as 25 per seminar.  Universities like the money that regular or even growing demand brings in.

Legal academe guards jealously the right to award degrees, the right to provide courses – but is there really a need to replicate what is essentially a ‘core knowledge course’, dictated in part by the needs of the profession, in quite so many universities?  Might it not be a good idea to cut the number of universities offering law courses and invest the money in the better universities?

We may not need to.  The market may do that for us if numbers decline in the short to medium term.

Caveat

I have spent 25+ years in legal education, often in the van,  and I have for the last 6 months been quietly researching into the economics of law provision, supply and demand.  The above is but a simple distillation of the information I have had access to.  Economic models, as with any forecasting tool, can be wrong.  I feel, however, having survived two recessions, having seen what happened in the past,  that the situation could be as bad, if not worse, this time – simply because there has to be added this time – a significant over supply of students to the needs the market.  That seems to have been the case for some time and is recognised by the Bar Standards Board at least and may be a factor to be considered for the future by the SRA.  Again, we shall see.

I welcome debate, comment, information etc etc…. and remember, I am only the mesenger and my view is entirely personal as I have no agenda other than to write as I see the situation at present.

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17th October: Daily Legal News

Daily Legal News and blog coverage up on Insitelaw – podcast to follow by 10.30 with morning news.

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