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Abolishing minimum salary 'may trigger legal challenge'

Law Society says SRA 'misguided' in launching proposals in advance of LETR

16 April 2012

The Law Society has warned the SRA that abolishing the minimum salary for trainee solicitors could “exacerbate the existing equality problems” faced by the profession.

The society strongly criticised plans which could result in trainees being the paid the national minimum wage of £6.08 per hour or even, in their first year, the £2.60 per hour paid to apprentices (see solicitorsjournal.com, 27 March 2012).

Russell Wallman, director of government relations at the Law Society, said it was “not impossible” that the SRA would face a legal challenge if it went ahead with the proposals.

“I’m hopeful that the SRA will appreciate that they are misguided in this, especially in going ahead in advance of the LETR. There is a risk that they will be subject to a challenge if they do not.”

Wallman said the Legal Services Board would have to give its approval to scrapping the minimum salary. He said the society delegated the task of fixing the salary to the SRA when the regulator was set up and setting it was a regulatory requirement.

“We simply do not have the power,” Wallman said. “The only people who can make direct rules concerning the profession are the SRA.

“There is no stakeholder pressure for this, either from students, law firms or consumer groups. Why the SRA is pressing ahead is a mystery to us.”

Wallman added that he was not saying there was not a single firm which favoured the move but the society’s ruling council, on which the owners of small firms were well represented, “strongly supported” retaining the status quo.

In its formal response to the consultation, published last week, the Law Society said that although the minimum salary had not solved the issue of pay inequality for BME and female trainees, there was “scope for the disparity to be increased” by its removal.

“Socio-economically, the potential impact could result in far fewer entrants into the profession from less wealthy backgrounds,” the response said.

“BME trainees are over-represented at the less wealthy end of the socio-economic scale and would therefore be disproportionately affected.”

The society criticised the regulator for failing to carry out an equality impact assessment (EIA) before it launched its consultation on the plans in January this year and reminded it of its general duty under the Equality Act to ‘remove or minimise disadvantage’.

Chancery Lane said it had carried out its own EIA, which suggested that the abolition of the minimum salary would lead to “the potential for further barriers to entry into the profession, namely, that the increased likelihood that salaries at the lower end of the scale will reduce, discouraging people from joining the profession”.

A spokesman for the SRA said a full equality assessment would be carried out before the board made its final decision.

He said the issue would be considered at the board’s next meeting on 16 May.

Launching the plans, the regulator said a slightly higher proportion of the total population of female trainees (32 per cent) are paid at the level of the minimum salary than males (27 per cent) and a far higher proportion of the total population of BME trainees (42 per cent) are paid at the minimum salary level compared to the proportion of white trainees (27 per cent).

“Although there is a potential for salaries at the lower end of the scale to fall, as discussed above, this is by no means certain,” the SRA said in the consultation paper.

“We will be looking at this further as the diversity monitoring data suggests that any reduction in salary at the lower end of the market may affect women and BME trainees who are over-represented in this group.”

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