‘Get on with it — uncertainty costs’, SQE co-creator tells regulators at LegalEdCon North
Crispin Passmore warns against super-exam delay
Consultant and former executive director for policy at the Solicitors Regulation Authority (SRA) Crispin Passmore delivered the keynote address at a packed-out LegalEdCon North, held at The Lowry, Media City, Manchester, last Thursday.
There he offered his thoughts and views on the North’s legal scene, new entrants to the market and, of course, the Solicitors Qualifying Examination (SQE). You can read his speech in full below:
Regulation, education, training, journalism and consultancy get sucked into a view shaped by London. But as you all know, there is life beyond London. It is a diverse legal market in almost every sense.
We have heard a range of impressive and exciting insights today. It is clear SQE will continue to split opinion for some time to come, but it is also clear there are many serious people considering how best to evolve their business in the light of it. I don’t think many people can fail to be impressed with the ideas from universities, law firms and others. We are in for a period of creativity.
I will not claim to be an expert on the provision of education, but it strikes me that for all those involved in legal education, SQE is just one driver pushing us to be thinking again about strategy. Online delivery and reform of tuition fees are perhaps the most obvious, but you will know of many more. I may touch on some of them as we go forward, but I want to focus on the changing legal market and what this means for all of us interested in how solicitors are educated, trained and qualify.
In short, SQE provides a plain canvas for educators, employers and students to paint their own picture. It is one more step in giving legal businesses the opportunity to create compelling offers to students, lawyers and clients. Those that respond by doing the same as now — be they students, educators or law firms — are likely to be missing opportunities. That is their choice as much as others will choose to innovate. That choice is at the heart of the evolving legal market.
The legal market has been diverse and plural for some time. Some might say that it is not a single profession — it is perhaps two-tiered they say. I do not know what the tiers are or what they really mean. But let us think about what they might be.
It is easy to split solicitors and indeed firms into ‘City’ and ‘other’. And the suggestion, at least in the City, might be that the City is the top tier. As a regulator I don’t know how many times I heard that regulators problems are not with big City firms but with small firms without good compliance systems. You can draw your own conclusion on that from the pages of Legal Cheek or Legal Futures but there are other ways of splitting the profession that are at least as credible as ‘City’ and ‘other’.
We could talk about in-house and private practice. We could talk about domestic and international lawyers. Or we could talk about retail and corporate. Or bespoke and industrialised production. Perhaps crime and civil law? We might talk about legal administration versus ‘real lawyering’ in the courts.
My point is that the legal market has always been dynamic and offered many ways to practice. Attempts to put it into two tiers or simple boxes are often connected to putting oneself on a higher platform than the alternative group — it seems ‘othering’ is alive and well in the professions. Recognising the plurality of solicitor practice is an important element of considering the diverse education and training that they need before and after they qualify.
The plurality of the legal market is not reducing either. We see new models like Elevate, United Lex or Axiom bringing alternatives to the very idea of a law firm and the practice of law. Or we see F-LEX and LOD offering flexible lawyer platforms that allow law firms and in-house teams to operate lean. And firms like Keynote Law or GunnerCooke that have redefined what a law firm looks like with their consultant-based model. We have Legal Zoom and Rocket Lawyer bringing technology and fixed price delivery to retail and small business consumers. And firms like Hybrid Legal and Aria Grace offering flexible models for lawyer and client alike outside of regulated models. Halebury, Obelisk, Legal Director are great examples of innovation too. There are so many to choose from we could spend a whole conference crowdsourcing, debating and then voting on our favourite new model law.
And then there are the Big Four. They are all now serious players in the UK legal market. And globally too. KPMG recently opened in their 79th jurisdiction. And one of the others was recently opening in a new jurisdiction, on average, at the rate of one a month over more than four years. You may not be excited by the big four entry into legal services, but it is evidence of further change.
If you think multi-disciplinary practice is just for the big four, take a look around the City. Look at Vario by Pinsent Masons for example. ‘Professional Services with law at the core’, is the slogan; multi-disciplinary practice is the fact. Or look at Ince in its new guise with Gordan Dadds at the helm. They have recruited an ex-senior Deloitte partner to head up their move into global consultancy.
You can also consider firms like Bryan Cave Leighton Paisner — a track record of innovation that goes back at least to the origins of LOD now offers Cubed. And Hogan Lovells has recently partnered with Elevate to offer a document review service based in Phoenix, Arizona.
Hopefully, you get from this that I do not think that these new entrants, leads to the death of traditional the law firm. They are great businesses — high margin and high trust with clients. But the market has been changing and the dynamism, the plurality, the diversity across the legal market is evidence that growth will come from multiple sources over the next few years. Law firms are innovating and responding to change. The new legal market is breaking down boundaries. The future is already here: it is varied, fragmented and joined up, local and global, personalised and mass produced. It is, in fact, just like every other market.
Often it is said that the traditional law firms are not really threatened by these upstarts because of the work that they do. Big law might even say it is relaxed about handing over routine, administrative, legal process work so that they can focus on high end, high value, specialist legal work. That is what their bright lawyers find interesting and what the firm finds so profitable. We even see law firms partnering with enterprise legal businesses — though that often seems to be driven by corporate clients rather than being a marriage of choice.
But even if that were true, what might it mean for training new lawyers? If they no longer do the same volume of entry level work what are lawyers going to cut their teeth on? What happens to the large drop off rate from starting a training contract to five years qualified — that work is the playing field for the tournament that identifies future rainmakers and managing partners? Is the need for trainees in the City going to be the same in five years’ time? How does that reshape traditional Qualifying Law Degree (QLD) and Legal Practice Course (LPC) approaches?
Add to that the fact that many City firms have created onshore centres that we have heard about today. Do we really think that the boundary between the onshore centre and the City part of the firm will remain watertight? I know of at least one firm where the damn has already burst. Paralegals with a great track record in the onshore centre are applying for a training contract in the City office of the same firm. How long before a City firm realises that this might be a model that pays — if it offers better engagement from paralegals alongside a more effective way to test and shape values, behaviours, real office skills before investing in helping them qualify as a City solicitor why would it not be the core recruitment model?
Boundaries are being broken down — there are not two tiers. Can you remember the story of Japan and motorbikes? Post war, European and American motorcycle manufacturers were the best — great brands and fast bikes, backed by tradition and racing heritage. The Japanese started making small bikes — city bikes, run arounds. And no one bothered — the ground was ceded. And surprise surprise Honda, Kawasaki, Yamaha all moved up the value chain. Having learned about engineering and manufacturing they bought their customer insight to bear on the racing and luxury end of the market. Honda and Yamaha have now won more world titles than any other constructor. Japan has won more than the next two (Italy and Germany) combined. Japan had only won one big bike title before 1974 and has only lost one since.
Who’s betting that the legal market won’t go the same way. The legal market is different to fast bikes; but let us not pretend that there are not some parallels or lessons to draw. And if they impact on the legal market then legal education providers must choose between being behind or ahead of that curve. Look in the US at Elevate Next — it looks like a law firm, it is a law firm but its Elevate — an enterprise legal business. Elevate owns Halebury here in the UK. They are moving up the value chain.
What lessons might those interested in SQE draw from the changing legal market? It will be different for regulators, firms, educators and students.
For the SRA it seems clear to me (and it would, wouldn’t it) that they need to get on with this. Given the plurality of the legal market, the diversity of the labour market and the inevitable varying needs of different employers, a regulator should not require more than is the bare minimum necessary for a solicitor to be a safe beginner in any form of diverse practice. It should not impose requirements that are not essential in regulatory terms for every solicitor. That allows the labour market, educators and employers, to drive what else is needed for specific market segments and firms. There may be competencies that are sector specific that can lead to dedicated pathways. Or they are generic competencies that are needed in most employers but how they are acquired, packaged or combined with other elements varies. Employers are best placed to decide what they want and if they want it to be taught in-house as part of on the job learning or through more formal education.
Of course, we also need to be honest about the fact that not all solicitors are doing the same level or type of work. Some will be operating as legal administrators or case workers. This is important work and it is better that those colleagues are well trained whether they are paralegals or solicitors. Others might go on to do rarer legal work or become leaders, managers and senior lawyers. They obviously need to acquire up to date skills as they progress — but it is absurd to think that they should get them all at the start, or that the regulator should insist all have those discretionary elements before they enter the labour market as a solicitor. That is just adding cost, which in the end consumers pay, or, even worse, leads to the exclusion from the market of consumers who cannot afford the higher prices that means.
These discretionary competencies include a wide range of skills, knowledge and experience. Some are obviously legal knowledge and related tactical experience that facilitate specialisation. Leadership, project management, technology, coding, customer services, cross-selling, collaboration are examples that we have heard about today. The key is that the list is endless; that employers are best placed to say what they want for their workforce; that individuals need to take responsibility for developing their own skills, knowledge and experience; and, that educators are well placed to look across the piece and offer what the market might want — driving it as well as responding to it.
Across all of this is the values and behaviours that underpin everything we do at work. The SRA is right to demand a better focus on ethics within SQE. There is clearly a minimum requirement regardless of how or where a solicitor works, and my view is that there has not been a strong enough focus on that in recent decades. But beyond that minimum ethical obligation, firms clearly set (by accident or design) their own values and they drive behaviours.
One of the real benefits of SQE is that gives an opportunity for employers to recruit more widely and identify those with the values and behaviours that match the firm in order to invest in them as future lawyers and leaders in their business. It’s easier to observe these ethics and behaviours in the workplace. Trying to identify it through recruitment is notoriously difficult.
So, in this diverse legal market, the SRA must focus on what it takes to be a ‘safe beginner’. What do we then expect of the Legal Services Board? Well it has already approved the SQE framework through its rule approval process. And it has issued statutory guidance to regulators such as the SRA setting out what it expects in their education and training approach. The LSB will need to take that into account when it gets its next application covering the SQE detail, and of course the law requires the LSB to approve the changes unless certain criteria are met. Front-line regulators must be given a margin of appreciation on how they design their systems. Not least because the LSB guidance does not remove that flexibility and does not prescribe an alternative. The LSB has spoken and I cannot see how it rationally backtracks from that.
Why do I pause to divert to the subject of rule approval still needed for SQE? Well because the noise and uncertainty is a well-trodden path in reforming legal regulation. The Law Society has opposed almost every reform I have been involved in over the last 15 years. There is no prospect of consensus on reform and it is of itself an absurd objective. The SRA has consulted widely and deeply. It has revised its proposals in the light of that and continues to do so. Uncertainty now affects investment — from educators and law firms. The people that pay the price of that are consumers who could benefit from increased supply and innovation. So, to regulators I say: ‘get on with it, uncertainty costs.’
What do employers need to think about in this changing market? Well we have heard lots today about what they are doing — and I have heard so many fabulous ideas. Clearly employers need a workforce strategy that goes beyond how to recruit, train, qualify, solicitors? It should derive from the strategy of the business — what skills, knowledge and experience do I need in the whole workforce to deliver the products and services that I am offering? That might involve lawyers and paralegals, but it might also include all sorts of other professions. To put lawyers as a special category is absurd. How do employers expect to recruit, retain and incentivise the whole workforce when its language of ‘lawyers and non-lawyers’ speaks volumes about priorities and value?
On that point alone I am aware of firms that are growing the range of professional and technical backgrounds of their senior people and their wider workforce. They are starting to look at the cultural implications of this. Can you sustain a lawyer only partnership when a significant number of your senior people are from other professions and backgrounds?
The co-creator of the Solicitors Qualifying Exam (SQE), @CrispinPassmore, delivering the closing keynote at #LegalEdCon North. He wants to drive down the cost of legal services by increasing the number of lawyers in England & Wales. This idea underpins the SQE pic.twitter.com/pc6DALLmHB
— Legal Cheek (@legalcheek) January 30, 2020
Given all these changes within the legal market I expect employers to demand more from educators — just as employers do in other sectors of our economy. What sort of people are they feeding into legal labour force? Are they offering a ‘whole of workforce’ approach? Are law schools providing the right people? Well, we can already answer that at least in part because we see some City firms recruiting half their graduates from outside of the law school. What does that tell us about the value they really put on the QLD?
All the more surprising that so many City firms are sticking with an updated (and still just as expensive) QLD/LPC/training contract. Their competitors are taking different approaches — seeing opportunities to recruit, retain and develop talent in more imaginative ways.
Given this varied legal market, legal workforce and diverse demands from employers what should educators do?
A good starting point is to be clear about the market you are operating in. If legal educators’ horizons are too narrow, they are reducing themselves to providing standardised training for training contracts and private law firms — big or small. The nature of the changing legal market that I have been seeking to highlight is one of opportunity. But those diverse businesses need something more than the QLD and LPC.
In the current environment we see that many of what I call enterprise legal services have built their workforce strategy on the recruitment of experienced lawyers. Is this because that will always be their best approach, or is it because the current system constrains them? It is instructive to see just how many of these firms are taking advantage of SQE to think about new ways to recruit and train future lawyers and the rest of the legal workforce.
I expect that as SQE comes online we will see more and more of these firms looking to develop their own workforce from scratch. Many of them tell me that it is hard to find lawyers from private practice that will fit into new model firms. Some turn down over 90% of applicant lawyers. Inevitably it makes sense to train them from the start rather than have to put them through a re-education programme. Which educators are well placed to respond to that? And rather than wait for it to happen, which educators are designing content that meets the needs of this growing part of the legal market?
I could say the same about the in-house legal workforce. Again, most come from private practice and it is assumed by many that this is the only or best way to develop that workforce. But more and more in-house teams now train their own lawyers. SQE further increases flexibility and lowers the cost, also providing a better value alternative to the legal executive route to becoming a solicitor.
Understanding the market means being able to distil and define what the labour market needs. What is the menu of skills, knowledge and behaviours that is needed beyond SQE? Where is the value beyond preparation for SQE? Or what is the offer instead of preparation for SQE for parts of the legal workforce that do not need to be qualified at this stage? Are educators going to say that is not our business and give up that territory to new entrants who then move up the value chain as if it were a motorbike?
I also wonder what educators can offer beyond a steady stream of people ready to take next steps towards solicitor qualification. Can they work with employers to develop an appropriate workforce strategy? Can they do that alone or in conjunction with their business department, or an outside consultancy? Can they do it in conjunction with individual firms, local law societies, or others?
That whole of workforce approach may open-up more opportunities. Perhaps it opens up opportunities to educate and train people other than qualifying solicitors? Or lawyers post-qualification? The more time that educators spend looking at, engaging with the legal market locally, nationally and globally in all its diverse forms the more chance they have of designing courses that appeal widely. If the employer of your product, your graduates, is thinking across a whole workforce, what benefits are there to mirroring that? For example, if your client is operating globally and moving solicitors abroad, what can you do to help them train students in other countries as English and Welsh solicitors?
How might educators tackle the curriculum? It has to be more than adding and subtracting a few things to what they do now. That will not cut it when others are rethinking the teaching of law and its delivery. In most markets the skill is to have a core that is mass produced but to tailor it or personalise it wherever possible at low cost. Others are better placed than me to say how to do that in education, but I know that many new entrants such as the College of Legal Practice and BARBRI are doing just that. They are engaging with the full breadth of the market — not trying to find a single answer but seeking to distil the range of skills needed, the core and add-ons, and to provide a menu that goes from pre SQE through to post-qualification development. But there is room for many approaches.
Some universities might be able to ignore SQE altogether. The most successful lawyers in the most successful firms are still likely to be from reasonably traditional routes — SQE doesn’t change the economics of that, yet. That is likely to be a smaller market for universities than many expect — especially if City firms need less trainees when they work alongside enterprise legal businesses. But that does not mean failure for others — there are alternatives. Free from the restrictions of the QLD they can deliver law and business as Exeter does at its Cornwall Campus. Or law and legal design — learning from Stanford in California. They can set themselves apart from online provision with a strong focus on teaching through clinics — real world legal practice throughout the law degree. It seems unlikely that they can just carry on with what they have for 30 years.
Some will offer SQE1 after the law degree — perhaps a summer course discounted from standard prices as part of their student offer. Perhaps some universities will include SQE1 within their law degree — either totally combined within a still high tuition fee, or perhaps as a third-year optional pathway, or with an additional fee at the end of the undergraduate course.
There will be many more great ideas beyond those we have heard today. But the key is that sticking to the old QLD and LPC is a route to nowhere in a market that is diversifying, fragmenting and breaking down barriers.
While educators are thinking about all of this (and some are still trying to stop SQE) many firms are already making changes. Here are some models I am seeing being developed already:
a. Three-year in-house training post law degree
b. Four or five year post A-level in house training
c. Formal apprenticeships — each level through to degree apprenticeships
d. Recruit post law degree/SQE1 and offer paralegal experience with supervision to support portfolio and fixed SQE2 after 18 months
e. Recruit post law degree with reward package designed to support online training costs, study leave, and SQE fees over flexible two to five year period
f. Seven year training programme with qualification as a solicitor as just part of the journey – so includes post qualifying development
g. And many still offering something that looks like a traditional LPC/training contract
What does this all mean for students? More than ever it means that your success depends upon you. There are so many opportunities in the legal labour market — in terms of routes to qualify, places to practice, clients to serve and ways to develop. I predict a significant surge in the next five years in the number of solicitors qualifying — there is pent up demand from those stuck in roles as paralegals for example.
These students are, because of SQE, getting a route to qualify as a solicitor without the need for an employer sponsorship. That shifts power from employers to students. Employers will have access to a better trained workforce — having your paralegals qualify as a solicitor does not mean you need to change the work that you give them, or indeed their pay. But it gives you assurance on their competence and them access to the wider legal labour market. You can embrace or resist that as an employer but the truth will out on Glassdoor and other forums for rating employers.
I do not know the right path for educators or firms. I do not know what the varied legal market will look like in ten years’ time. But I am happy to predict that we will have more qualified lawyers, working in more legal businesses, delivering services in ever more imaginative ways.
Regardless of SQE, the genie is out of the bottle and the nature of the changing legal market puts consumers at its powerful heart, impacting educators, students and employers. Long may that continue if we are to grow this market to the size it can be for the benefit of our society and the rule of law.
Crispin Passmore is founder of Passmore Consulting and former executive director for policy at the SRA. He will also be speaking at LegalEdCon London on 14 May 2020.