How the SQE & QWE might impact the Economy of Solicitors Firms

There’s a quiet revolution happening which I think has the potential to bring about quite some change in how many solicitors firms operate and affect their economic model.

Many firms seek to drive down the cost of production and drive up profit by employing paralegals to do less complex and lower value work. I know. When I was in practice we did that. They were usually law graduates who had passed their LPC. Often people were enticed with the potential to be considered for a Training Contract after they had worked in the firm for a while. We all knew that the Aspiring Solicitors had to obtain a Training Contract in order to proceed with their career to become a solicitor. That gave the solicitors firms power and control and pick of the bunch. They held all the cards. Many firms operate now with several or indeed large numbers of paralegals. That’s their business model.

I think this will change. The SRA has changed the way that people qualify as solicitors. The LPC method is being phased out. In its place the SRA has introduced the SQE. An Aspiring Solicitor still needs a law degree. However, instead of following in a linear fashion to take their LPC and then obtain and complete a training contract, each stage dependent on completing the former, now they have 2 exams to take: SQE1 & if they pass it SQE2. Instead of the Training Contract, they have to acquire and have signed off 2 years Full Time Equivalent (FTE) Qualifying Work Experience (QWE). The idea is that this is done BEFORE they sit the SQE2, as it prepares them for this exam (which tests them for 16 hours on real life scenarios, applying law, practice, ethics & conduct). Importantly, they can reach back in time for QWE already done. QWE does not need to be done in a formal training contract. It can be acquired working as a paralegal. Indeed, it the work does not even need to have been done in a law firm, in England & Wales or even working on English & Welsh law. The QWE is all about acquiring the competencies & skills the SRA believes one needs to acquire to be a good solicitor.

This is game changing. You may employ paralegals who are paid less, but no longer may a firm hold them there dangling the possible prospect of a Training Contract. Whilst working they are gaining their QWE. They can qualify. Ah, you might say – they need me to confirm their QWE. I could refuse to do that and so there’s no change. I control their career progression. This question was raised at a webinar I attended when the SRA were speaking. The person from the SRA paused and then said “in that scenario we might be interested in speaking with the solicitor about THEIR conduct”. That is seismic. The message I took from this is that it is not acting in accordance with good conduct as a solicitor for you to hold back the progression of an Aspiring Solicitor to qualification.

This is one point. A second is that the SRA has specifically allowed Aspiring Solicitors to go to a solicitor outside their organisation to have their QWE confirmed. [I have helped several Aspiring Solicitors by acting as External Confirming Solicitor so that their QWE has been accepted by the SRA.] Thirdly, there is nothing stopping the Aspiring Solicitor going to another firm more willing to support them.

The dynamic and power balance is changing. Does that mean that paralegal will disappear? I don’t think so. All is not gloom and doom. Aspiring Solicitors will still need to get their QWE. However, they will perhaps be more discerning. They may be more willing to vote with their feet. They may well be moving on or qualifying after about 2.5 years whether you want them to or not. (I write 2.5 years because most will be studying for their SQE exams at the same time as working. If they take 1 day out a week to study that equates to about 2.5 years to get their 2 years FTE QWE.) That might be something to build into your financial planning.

Churn hurts the profitability of your firm. A colleague & I once worked out that it cost the firm in lost turnover at least £60,000 each time a fee earner left and had to be replaced. That was without the recruitment costs. So, how to reduce churn as much as possible. The SRA has been very careful to design the SQE top fit with the government’s Apprenticeship Scheme. You could put your paralegals through this as Graduate Apprentices. That would mean that 95% of their study costs and their exam costs would be paid for by the government. The other 5% you, the firm, would have to pay (by my calculation roughly £2,000). It’s 100% if your firm is large enough to pay the apprenticeship levy (few solicitors firms are).

Feel free to contact our lead consultant, Ingemar Hunnings, for more info about the SQE & QWE. There is a Contact Form below. If you search 'QWE' or 'SQE' in the blog search you will find several articles giving information about this.

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