A market study undertaken by Ernst & Young reported that:
Based on data from the FLBA Week-At-A-Glance Survey, the relationship between hours of work supplied by barristers and the hourly rates for family legal aid and privately paid work were found to be insignificant. This could be interpreted as inelastic supply of family legal aid by barristers, which means that a change in rates for family legal aid does not affect the share of hours worked in this area. However in order to ensure the robustness of the overall research conclusions and to be cautious in the findings the analysis assumed that barristers are as price elastic as solicitors with a price elasticity of 0.34 as opposed to 0.00. This means that a 10% increase in hourly rates for a particular type of work, for instance family legal aid, will result in a 3.4% increase in the supply of hours for this type of work.
A quarter of family barristers have refused at least one legal aid case that they were asked to take on in the last year solely because of the fee
we have good evidence in other professions that behaviour is
Referral income has tended to make firms who take the work bigger (page 30) – if not more profitable.
“Each year law firms in the UK recruit roughly 5,000 trainees and, although growth has not been continuous, the number of trainees recruited increased by 62 per cent between 1989-90 and 1999-2000.” (page 1)
Report into US firms illustrates mass law-offs in a short term period (page 67). In another US example, a firm got rid of 1/5 of its lawyers (page 74) following bursting of bubble.
Solicitors working hours per week by gender and sector, part time, grade, and size of firm
Suggests that the ease of which solicitors can find suitable barristers for legal aid work varies over time (page 8). Over past few years, net increase in the number of barristers has been 2% per year (page 9). Survey of solicitors suggested anticipated broadly static demand for barristers over the last three years (page 47).
Analysis of quality for specialists
Suggests that the recession causes a 15% reduction in fee earner and support staff capacity across the industry (page 9).
Analysis of the difference in quality between generalists and specialists
Survey compares barristers numbers in 2006 with 2007
Breakdown of workforce expansion / contraction in the publically funded legal sector – by type of service provider (page 46). Table shows skills shortages by type of provider (page 48).
Survey of 303 legal aid solicitors firms reports that:
40% of respondent firms were willing to take on more publicly funded work at current remuneration rates. Responses varied by region with over 55% of firms willing to take on more work in the North compared to less than 30% in the South. Firms who held a larger number of contracts were more likely to be willing to take on more legal aided work at current remuneration rates. Close to 60% of
firms deriving between 75% and 100% of their fee income from publicly funded work compared to just over 20% of those firms deriving less than 25% of their fee income from publicly funded work. – Pages 38-41
Close to 50% of firms willing to take on more work responded that they would be able to do so using existing capacity. Of these, 25% also responded that they would need to hire more staff as well, suggesting just under 38% of all firms willing to take on more work potentially have genuine spare capacity. Page 42
Motivation of firms in providing legal aid work – Pages 42-42
Only a small number of firms who were unwilling to take on more legal aid work at existing rates stated bureaucracy or insufficient rates as a reason. – Page 44
Develops a mechanical estimation of supply and discusses the different characteristics of firms at different stages along the cost curve, looking at Crime, Family & Other Civil – Pages 50 to 55
Looking at elasticity of supply, the analysis found that:
the greatest sensitivity is found for the aggregate category,
all public work, indicating that a 1% increase in relative prices in favour of private work might generate a 0.34% decrease in all public hours supplied. Similarly, this suggests that a 1% increase in the price of legal aid might bring forth 0.34% extra public hours.
Family work shows lower levels of sensitivity, a 1% increase in the relative price would be associated with a reduction in hours of between 0.04% and 0.15%. Crime work lies in between the family estimates at 0.10%. The estimates for all Other Civil are closer to those found for all public work.
All the estimates are relatively small in the sense that (in the short run for firms in the sample) relatively large price changes would be required to have a significant effect on the number of public hours supplied.
Discussion of incentives for experts in delivering credence goods – where consumers are never sure how much of the good they need. Experts incentives are determined by the interplay of prices capacity and size of their client base. Pages 106-109
Economies of scale arise when the unit costs of production fall, and that requires scaleable products and services. In law not all services are scaleable . Many aspects of publicly funded advice relate to highly technical areas of law, applied to some of the most vulnerable in society. The technicalities of many aspects of social welfare and immigration law and their application to specific client circumstances are not yet susceptible to commoditisation and processes – they are not saleable and could not deliver economies of scale. Page 3
Number of registered pupils has declined over time – especially after they were required to be paid (page 85).
Number of solicitors on roll doubled from 1991 to 2005 (page 12). Further data on growth of solicitor numbers over time (page 26 – 28).