Not all of Britain’s lawyers are “raking it in”

Published: 6th Jan 2017

In brief

Claim

Lawyers are complaining about legal aid reductions despite making more money.

Conclusion

Turnover in the legal sector overall has been rising, but legal aid is a relatively small and falling proportion of that.

“Lawyers raked in £32.2bn in just ONE year… The money that lawyers make has shot up by nearly a quarter in just five years, it was revealed yesterday. Despite strikes by barristers over their pay levels and protests from senior lawyers who demand greater taxpayer subsidies, the legal profession has been booming, according to official figures.”

Daily Mail, 2 January 2017

These figures are broadly correct, but lawyers have grounds for complaint about the way they’re used in the story.

The figure of £32 billion comes from a report released in July 2016 by the Legal Services Board, a regulator. This is the turnoverrevenue before costs and taxgenerated by Britain’s legal sector in 2015, according to figures from the Office for National Statistics. It’s not the take-home pay of lawyers.

These figures do show a rise of almost a quarter since 2011. But alternative ONS figures show a smaller rise, of less than a fifth over the five-year period. No matter which figures are used, taking inflation into account and looking at growth from year to year rather than over several years would show a much smaller increase.

More problematic is the contrast made between this picture of robust growth and the protests of lawyers over reductions in government legal aid spending.

Government funding for lawyers is falling, even as the legal sector overall expands

As barrister Barbara Rich puts it, the gist of the Mail’s story is that lawyers have “wrongly complained about financial pressures at a time when lawyers’ incomes were in fact rising”.

But the legal sector is diverse. It’s perfectly possible for lawyers representing people granted government legal aid to be feeling the pinch, while those doing commercial work on the high street or for big corporate clients are growing their business.

This is borne out by the figures. Turnover from legal aid work has been falling. Partly because of this and partly because of the rise in overall turnover, the proportion of the sector’s gross revenue accounted for by legal aid was down to 7% in 2014/15. It was 9% in 2006/07, according to the Legal Services Board.

The Mail’s article notes that “former Justice Secretary Michael Gove abandoned the attempt to save £100 million from the £1.6 billion legal aid total at the beginning of this year”. That cut may have been dropped, but others weren’t: before this, the budget for legal aid was over £2 billion throughout the last decade, even before adjusting for inflation.

The changes that made this reduction possible led to protests by criminal legal aid lawyers in particular. Their counterparts working in the likes of corporate, tax or intellectual property law weren’t directly affected, as their business comes from private clients rather than government legal aid.

Legal sector turnover isn’t the same as salaries, but they’re also up

Solicitors working in legal aid earn around a third less than their counterparts who don’t take publicly-funded work, according to a 2015 survey by the Law Society.

That’s not to say that such lawyers are poor: legal aid solicitors who own a stake in their firm earned an average of £70,000 that year: well over twice the national average. Again, that’s considerably less than equity partners who don’t take legal aid clients. As the Law Society told us, though, partners’ income is more like the profits from their company than a salary.

Salaried solicitors have seen their incomes rise slowly but surely: the £44,000 average pay of an assistant or associate solicitor has risen 12% since 2000, adjusted for inflation.  Again, there’s considerable variation within that: the Law Society survey suggests that a quarter of those lawyers earned £35,000 or less, while another quarterlikely to be concentrated in large commercial firms—earned £64,000 or more.

This distinction between privately-funded legal work and the publicly-funded part of the legal profession is the main reason that lawyers accuse the Mail of not comparing like with like.


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