Why bother with university and SQE when non-degree jobs pay the same as a lawyer in a small firm?
A looming rise in the UK’s minimum wage could deter students from applying for law, with small firms increasingly offering McDonald’s starting salaries – even as they require new hires to fund expensive SQE courses themselves.
The expected rise in annual wages for a full-time minimum wage worker – from £25,376 to £26,416 under Chancellor Rachel Reeves’s forthcoming Budget – will be welcome news to millions. But city bosses warn that the gap between the minimum wage and starting salaries for graduates in professional services roles, including legal affairs, is closing fast, particularly at small firms where long hours are common.
They argue that raising the minimum wage could discourage young people from pursuing degrees if pay for non-degree roles such as working in McDonalds or supermarkets remains roughly the same. This is predicted to have the worst impact on students from the lowest socio-economic backgrounds, “because only those people who can afford to pay for university are immediately encouraged to do so.” As one CEO said Financial Times:
“Why would young people take on £45,000 in student debt when they can earn the same shelves?”
By FT According to the study, some smaller law firms currently pay first-year interns slightly more than the current minimum wage. Law Society vice-president Brett Dixon warned:
“When a newly qualified lawyer in a small firm earns barely more than the minimum wage, graduates from entry-level jobs are likely to lose interest in pursuing a career in the legal field. Especially given the long hours required in this field, a career in law may no longer seem attractive.”
However, those with a law degree do on average better than their peers in finance and other expert positions. Data from the Institute of Student Employers (ISE) shows that the average starting salary for graduate roles is £32,000, compared to an average of almost £50,000 for entry-level legal roles.
This difference is largely due to the bumper salaries offered by the city’s elite law firms. Three companies at the top Legal Cheek The firms on the Most List – Davis Polk & Wardwell, Milbank and Sullivan & Cromwell – pay their first-year trainees £65,000.
Fortunately for budding lawyers, the ISE also found that the legal sector offers the biggest pay rise of any graduate sector, with average pay rising by 86 per cent over three years to £90,000.
Still, the gap between high-paying US firms and smaller regional practices appears to be widening. And with businesses facing higher costs from rising graduate wages, higher national insurance premiums and the planned introduction of “day one” work rights, one FTSE 100 executive warned that hiring young workers has become a “high-risk business”. Recruiters told FT this may ultimately mean “fewer opportunities overall” as well as fewer graduates choosing to enter the legal profession.