REDUNDANCIES used to unheard of in the Scottish legal sector. Even in the last recession, the idea of firms paying off paralegals or ditching trainees – let alone laying off lawyers – was unthinkable.
In recent months, however, there has been talk
of little else among Scottish solicitors. The credit crunch and the resulting downturn in the residential property market has seen house sales plummet.
Any lingering hope that the Scottish market was immune to the problems south of the Border was crushed when the ESPC revealed last week that Edinburgh house prices had fallen for the first time since 1971.
That firms substantially, or wholly, dependent on estate agency and conveyancing work are facing a challenge is clear, but the true impact on jobs is more difficult to gauge.
With established names such as Blackadders laying off staff – the firm confirmed 44 redundancies last week – and anecdotal reports suggesting hundreds of job losses among paralegals, some warn that redundancies in the legal services market could be akin to the collapse of the steel industry.
The Scotsman can reveal that the only official figures, from the Law Society, make less gloomy reading. Between May and August, 40 solicitors, not of retirement age, lost their jobs, and 36 new lawyers have either lost traineeships or had them postponed.
But the society acknowledges this doesn’t include solicitors who have lost jobs and found others, or left law altogether, and solicitors who specialise in conveyancing remain deeply concerned about the future.
Graeme McCormick of Conveyancing Direct in Glasgow says firms may not wish to shout about problems, but the reality is that jobs are vanishing– his own firm has let 15 staff go this summer.
“I think solicitors were not keen to make known any challenges they were having to their business, he says. “That attitude is fast disappearing. We have made half our staff redundant and it was the worst decision I ever had to make. I have been doing this job for well over 30 years and it’s the worst position I’ve ever found myself in.
“I don’t know of any firms that haven’t had to make hard choices like that. Even areas we thought were insulated, like Grampian, are having to make redundancies.” He adds: “I would easily estimate that there are thousands of people in legal and estate agency who will be losing their jobs. I am not sure that government is aware of the enormity of what is happening.”
While McCormick hopes the downturn has reached its nadir, he is particularly concerned about the potential impact of the controversial new home reports, set for introduction in December. As the reports won’t guarantee the accuracy of information, he warns it will lead to multiple surveys and increased costs for consumers and predicts this could “kill the present precarious situation”.
The problem is compounded by factors beyond the current state of the housing market. Apart from the fact that potential buyers are struggling to get mortgages – and the much-vaunted stamp duty relief may have a more limited impact than hoped – the profession is facing the potential deregulation of the market.
How closely the Scottish Government’s proposals for alternative business structures will mirror the Clementi reforms south of the Border remains to be seen. Yet volume conveyancing has already arrived, with one company now offering to help firms cut costs.
Kyle Peddie, chief executive of Your Conveyancer – formerly PSM Direct, which was set up after the demerger of the PSM Law Group in 2006 – says the new service allows firms to outsource conveyancing while retaining their clients.
“We are not pinching their clients,” he says. “It’s a web-based system so ‘Smith and Jones’ would outsource to us but have the ability to track all the cases they’ve got online, get management information reports online and search individual cases online. It gives them control over the conveyancing process entirely without having to do it.”
While this might seem like bad news for those worried about their jobs, Peddie argues that these jobs are already going: “We are talking about hundreds, there’s no question of that, and that’s just paralegals,” he says. “There are partners now being laid off in legal firms, many firms working four-day weeks and many now working shared job situations where, rather than shut a department down, people job-share.”
While he claims to have had no great foresight, Peddie adds it was apparent from the mid-90s that the market was changing, with lenders entering into agreements for volume work at preferential rates.
He believes the credit crunch has simply brought problems on the horizon to a premature head: “It’s accelerated what was going to happen anyway – the writing was on the wall and has been for years,” he says. “But this going to change the whole landscape of conveyancers in particular over the next year.”
For those firms that stay afloat, Peddie predicts there will be opportunities.
“The reality now is people are having to look at what they do and how they do it – cut costs and change the way they do things,” he says. “The only silver lining is when we do come out of it, that a lot of the people who are left will be much stronger and leaner.”
Meanwhile the pain looks set to continue for the profession. So many paralegals have lost their jobs that plans for a new registration scheme have been put on hold until at least the spring of next year.
Scottish Paralegal Association president Christine Lambie says it’s not the time to put any additional pressure on firms, and adds that those already made redundant are finding it extremely difficult to find new jobs in the legal sector: “Most are doing temporary secretarial work or whatever they can get.”
The Law Society has been urging members to get in contact about how their businesses are affected, and it is also planning a conference to provide advice specifically for high-street firms, as well as directing people to the charity LawCare, which offers support to firms facing difficulties.
Neil Stevenson, the Law Society’s head of strategic change, says the society is “monitoring the impact” of the economic climate and providing support to individual solicitors affected by redundancy.
“The impact of redundancy on anyone is huge and the Society is concerned about individual solicitors as well as the overall health of the profession,” he says.
“The Law Society’s education and training department is offering support to those concerned about traineeships, and can advise and support trainees and future trainees on what they can do.”
• LawCare can be contacted on 0800 279 6869, and at
www.lawcare.org.uk