Workforce projections and implications
3.128 It is important to understand the combined impact of the current economic environment and the longer term market changes discussed above on the size and composition of the legal services workforce in the future. Predicting employment trends is seldom straightforward, but the current combination of recession, market liberalisation and reform to legal aid and litigation funding undoubtedly add to the complexity. Consequently, this is a topic on which there are no straightforward answers, but some plausible directions of travel.
3.129 The historic strength of the sector has been reflected in significant and long-term employment growth. The solicitors’ profession overall has grown by over 206% between 1981 and 2011 to a total of 121,933 solicitors with practising certificates (Fletcher, 2012). The picture at the Bar has been more complex, but the results have been, essentially, as dramatic. The Bar grew rapidly in the 1970s fuelled largely by access to publicly-funded legal work. That growth rate more than halved in the 1980s, as pass rates on the old Bar Finals and the prospects for tenancy both declined (Abel, 1988:70), before picking up again following the reform of vocational training in the early 90s. As a consequence, the Bar had nearly trebled in size in the years between 1960 and 1990, and then virtually doubled again between 1990 and 2004 (Department of Constitutional Affairs, 2005). By the beginning of 2012, there were 15,581 barristers holding practising certificates (Bar Council/BSB, 2012), over 12,000 of those in independent practice. For the future, the Law Society forecasts that after the dip of 2012 legal services will return to ‘modest’ economic growth in 2013, with longer-term growth predicted to be over 4.2% from 2015 (Law Society, 2012a).
3.130 The relative success of the legal services sector, with a range of performance in the last four years (see 3.5 and 3.6 above) has made for an interesting recruitment environment. The credit crunch led both to a reduction in trainee numbers in law firms, and, initially, a significant fall in retention rates. For example, in firms surveyed by Chambers and Partners (2012), retention fell from around 82% in 2008 to below 75% in 2009. Signs are that recruitment and retention rates are slowly recovering, but that the market is still volatile. In 2010 roughly 75% of trainees stayed on at the firm that trained them, with the figure rising to 80% of qualifiers in selected firms in 2011 (Chambers and Partners, 2012). This is, however, in the context of a significantly reduced intake of trainees (a total of 2,251 trainees qualified at surveyed firms in 2011, over 400 fewer than in 2010). This pattern is reflected also in the global number of admissions to the Roll, which have recorded a fall in numbers for the last two years for which data are available (Fletcher, 2012). Data at the Bar also show, overall, a continuing decline in the number of new pupillages offered between 2005-06 and 2010-11, from 515 to 446 per annum (Bar Council/BSB 2012:42). Negative growth of 3.1% was recorded in tenancies and new starter positions at the employed Bar over the period 2005-6 to 2009-10 (Sauboorah, 2011).
3.131 Signs of recovery started to emerge in 2011, but the outlook remains fragile. The decline in tenancies and new positions at the employed Bar was reversed in 2010/11 by an almost 16% increase (Bar Council/BSB 2012:26), and was accompanied by relatively ‘upbeat’ recruitment by City law firms (High Fliers Research, 2013:11). However, the recent removal of legal aid in respect of a substantial proportion of the work of the family Bar and the reduction in remuneration for advocates in the criminal courts suggest that the numbers of the independent Bar may reduce, rather than increase, over the next few years at least. Furthermore, leading employers across a range of sectors, including law, subsequently downgraded graduate recruitment targets in the course of 2012 (High Fliers Research, 2013:10-11). Forty-five out of the Times top 100 employers ultimately reduced their graduate intake in 2012 from 2011. The law firms surveyed have reported plans to increase graduate recruitment again in 2013, but only by 1.3% (High Fliers Research, 2013:13).
3.132 These trends are not necessarily reflected in all parts of the sector: indications are that the overall number of legal executives (Chartered, or equivalent, and trainee) has been relatively static over the last seven to eight years, at around 22,000. By contrast, the number of notaries appears to have declined over the last decade, from about 1,300 in 2000 (Shaw, 2000) to around 900 in 2012.
3.133 A set of sector-wide employment projections was developed for the LETR research phase by Warwick Institute of Employment Research (IER) (see Wilson, 2012). This focuses on the general trends in the UK economy and their likely impact on the demand for employment in the legal services sector in England and Wales, providing quantitative projections of numbers employed, looking forward to 2020. These data are reported here in the context of other available sector-specific sources, in order to provide, so far as possible, a rounded picture of trends.
3.134 In official data, employment by sector is defined using the Standard Industrial Classification (SIC). Official data sets suggest that in 2010 employment in the legal services sector as a whole was just under three-quarters of a million people. Compared with 2000, numbers in the sector as a whole had grown by over 120,000, a 20% per cent increase. Within the legal services sector, about 400,000 people worked in the more narrowly defined legal activities category in 2010. It is this legal activities group that is the primary focus for the LETR.
3.135 Within the sector the jobs people do are classified according to the Standard Occupational Classification (SOC). In 2010, based on the official statistics there were around 20,000 barristers and judges and 100,000 solicitors. This compares quite closely with the figures produced by the professions from their own membership data (above).
3.136 Looking at emerging trends, the IER analysis projects an overall expansion (of approximately 14%) in total workforce numbers in the legal activities sector between 2010 and 2020, requiring an additional 58,000 workers. Added to this is a further and larger figure representing replacement needs over the given period. Replacement demand reflects permanent loss from employment due to retirement and similar factors. For most occupations annual replacement demand is about 2.5% of the existing labour force. Over a longer (eg, 10 year) period, however, replacement needs are cumulative and thus an extremely significant change factor. Thus, in respect of legal activities between 2010 and 2020 there is a projected need to replace nearly 39% of the workforce, or 157,000 jobs, thus giving a total projection of 215,000 job openings between 2010 and 2020.
3.137 Female full-time employees are the largest single group in the legal services labour market (36% of the whole in 2010) and, despite a small loss of share of available jobs, they will continue to be the dominant group in 2020. Part-time female employee numbers are also significant (20% of the workforce in 2010) and women are expected to marginally increase their share of available jobs by 2020. Meaningful projections based on ethnicity cannot be produced as the numbers for most ethnic groups are too small to be statistically robust for this purpose.
Trends by occupation
3.138 Trends can be examined reliably for barristers, solicitors and on the basis of an amalgam of other occupational groups. The small numbers involved in the smaller professions mean that comparable data for individual trends for each of these are not available.
3.139 Law Society data show that the rate of annual employment growth for solicitors between 2008 and 2011 fell significantly below the historic average of around 4% (Fletcher, 2012). Looking forward, IER projections indicate a relatively slow recovery: 2008 levels of employment are unlikely to be regained much before 2018, and the average annual growth rate in the solicitors’ profession 2010/20 is predicted at around 2.6%, ie, some two-thirds the average rate of the last ten years. Nonetheless, this equates to approximately an additional 18,000 jobs between 2010 and 2020.
3.140 The projections developed by IER assume common growth prospects for men and women. However, based on historic data, that assumption could prove to be incorrect. Between 2000 and 2010 the proportion of women on the (solicitors’) Roll increased by over 8% and those with practising certificates by almost 10%. The proportion of women at the Bar increased by 5% over 2000 to 2009. If these kinds of historic trends continued, the gap would, of course, continue to narrow, and women might be expected to constitute the majority in the solicitors’ profession by 2020.
3.141 Published statistics for the Bar between 2007 and 2011 indicate annual growth of 0.9% (Bar Council/BSB, 2012:9). The IER projections for 2010 to 20 indicate cumulative growth of 7.5 per cent, ie, continuing at slightly below the current average level. If correct, this would see another 2,000 barristers in the marketplace in 2020.
3.142 The SOC classification does not clearly differentiate between other occupational groups within the legal activities sector and so data cannot be disaggregated at these levels. The classification does distinguish two categories, ‘associate legal professionals’ and the residual ‘legal professionals not elsewhere classified’. The former group, comprising around 34,000 workers in 2010, expressly includes legal executives and law costs draftsmen with a range of paralegal roles, while the latter includes a broad cross-section of other specialist legal functions. The IER projection suggests growth in the ‘associate legal professionals’ category of 19.6% between 2010 and 2020, which is below the predicted growth of the solicitors’ profession. This nonetheless translates to an extra 7,000 jobs between 2010 and 2020. By contrast only 4.6% growth is predicted for ‘legal professionals n.e.c’ over that period, resulting in around 2,000 new jobs.
3.143 These data have three important implications.
3.144 First, they suggest that, as one might expect, growth will continue to be slow until at least 2015, but, other things being equal, underlying demand for employment is reasonably robust, with replacement demand in particular generating significant employment opportunities across the sector over the period to 2020.
3.145 Secondly, the projections indicate that pick-up in recruitment is likely to be slow, even on a best case scenario, within the context of a fairly unpredictable job market. Consequently, with continuing high levels of recruitment and graduation by university law schools, unless students begin to self-select options other than professional training at levels above the historic norm, the traditional professions are likely to experience continuing bottlenecks at the point of entry into workplace training.
3.146 Thirdly, the projections offer little indication of a substantial substitution effect from traditional fee-earner to paralegal roles. In this respect the data are somewhat counter-intuitive, since there is a widespread view, reflected in the trade press, and to an extent in the LETR qualitative data, that such a process is underway. It is possible that there is such a trend, but it is still too recent to be clearly reflected in government employment statistics, or may be masked by a lack of granularity in SOC categories. Whilst a substitution effect might not significantly impact the global projection for numbers across the sector, it would make a difference to the distribution of the workforce between solicitors, CILEx members – including those who are part-qualified – and (other) paralegals.
3.147 A recent small scale survey of 50 employers by Welsh and Aitchison (2012) offers some evidence to support the idea of faster growth in the paralegal sector. This predicts an 18% growth in paralegal employment over the next five years, ie, an annualised figure of 3.6% growth. This is markedly above the IER projections for solicitors, and for the sector as a whole. While this appears to fit the paralegal expansion thesis, the figures do need to be treated with some caution; sampling for this survey was non-random and respondents tended to be employers who already had a history of employing paralegals. If such an effect could be more reliably established, it might suggest a need to re-assess the demand/need for paralegal training and regulation, but the position is not clear and therefore more monitoring is necessary.
3.148 This leads to a further observation. It follows that, whilst these projections offer a best estimate of trends, based on sophisticated microeconomic models, they cannot account for the impact of (micro or macro) structural events that may re-shape the market in ways that are still unpredictable. For example the extent of the impact of the new legal aid reforms and changes to remuneration of criminal advocates, cannot be anticipated in these projections, nor can the fallout from large scale political changes, such as a weakening of the European Union in the wake of the Eurozone crisis. To that extent, these projections may be better regarded as falling nearer the upper end of a range of likely outcomes.
 Annualised growth of 8.2% between 1969 and 1978 (see Abel, 1988:69).
 As discussed, there is a lack of longer-term, accurate, statistics in respect of other authorised providers.
 Based on figures published in Department of Constitutional Affairs (2005) and reported by CILEx to the research team.
 Data derived from the register of practising notaries held online by the Faculty Office at http://www.facultyoffice.org.uk/Notaries1.html
 The Institute for Employment Research (IER) at the University of Warwick has been a major provider of comprehensive whole-economy and sector-based workforce forecasts for many years. The latest set of national projections was produced for the UK Commission for Employment and Skills towards the end of 2011. These projections are based on the latest Cambridge Econometrics macroeconomic projections, and upon changing employment patterns within and between sectors. These forecasts are therefore not simple time series extrapolations based on past trends but take into account the changing demand for legal services from business, consumers and the state. The main official data source used is the Labour Force Survey (LFS). This is a quarterly survey of households covering the UK, reporting on both those in employment and self-employed. The other key source is the Business Register and Employment Survey (BRES), formally the Annual Business Inquiry (ABI). This is a survey of employers and workplaces. It tends to provide a lower workforce estimate, partly because it does not collect data relating to self-employment.
 ’Legal activities’ is the category used in the SIC (2003 and 2007) system that includes the majority of activities within the sector delivered by legal and paralegal occupations. It excludes the activities of court staff, public security, law and order activities and some support staff activities.
 These rates are based on IER analysis of Labour Force Survey (LFS) data. For barristers and solicitors some additional data on the age structure of the current workforce were available from the data provided by the Bar Council and Law Society. These enabled a basic check on the loss rates assumed.
 This is consistent with, but not wholly explained by, a predicted decline in the number of legal secretaries over the period.
 Ethnicity data are published by the Law Society and Bar Council; the data for both from 2005/2006 to 2010/11 are usefully summarised in the Legal Services Board’s Baseline Report (2012b:31-33). Law Society data thus show that, relative to the BME population, BME solicitors have been slightly over-represented since 2007/08. Data from the Bar indicate a small reverse trend, whereby the BME proportion of the Bar has remained essentially static against a growing BME population. Unpublished data from CILEx show a snapshot in 2011/12 of 12% of Fellows and 29% of students from BME backgrounds.
 Bar Council response to Discussion Paper 02/2012.
 Including notaries, parliamentary draftsmen, justices’ clerks, legal advisers and consultants, and in-house lawyers not classified as solicitors, etc.
 The graduate market is still primarily focused on the traditional professions. Hardee (2012) notes that about 79% of entering law students and over 60% of final-year students still see a career as a solicitor or barrister as their preferred choice. Very few positively select alternative careers as a positive choice at this stage. The growing popularity of the CILEx graduate fast-track should be noted, though it is likely, in the face of Hardee’s data that this is more a response to market conditions than the result of an expressed preference for the CILEx career path. The impact of the rising cost of university particularly for students living in England, and the development of non-graduate pathways such as apprenticeships remains to be seen.
 For example, the references to firms developing extended training pathways in Chapter 2, building on internships and/or periods of paralegal employment. One ABS respondent also specifically referred to the likelihood that the market will require firms ‘to have greater gearing going forward’ [‘gearing’ refers to the ratio of fee-earners who are not profit-sharing partners to profit-sharing partners; higher gearing should indicate higher profitability].