City lawyers have money. The UK legal aid system does not. The idea of a sectoral levy to fund access to justice will always have supporters as a result. The legal system’s big earners can neutralise the threat by contributing more. They should be clever about how they do it.
This year has yielded a windfall for London lawyers. Pre-tax profits rose almost 20 per cent at Magic Circle firm Allen & Overy. At both A&O and rival Linklaters, profits topped £800m.
Legal aid spending has dropped by a similar amount since the government restricted eligibility for free advice in 2011. Net spending declined from £2.6bn to £1.7bn in 2019-2020. Little wonder a levy to fund legal aid is enduringly popular with ministers.
Other sectors pay levies to fund public benefit advice. The Money Advice and Pensions Service is funded by financial services companies as well as the government. Its budget is only £157m, though. Plus the financial services sector is larger than the law. A more aggressive levy on legal revenues would distort incentives.
Partners could pay voluntarily in other ways. One model is a Labour party proposal that would require lawyers at firms bidding for government contracts to do 35 hours of pro bono work — free legal advice with a charitable purpose.
Assume a charge-out rate of £350 an hour. Revenue forfeited at a firm of 1,000 lawyers would then be more than £12m, or roughly six Magic Circle partners’ profits. Many firms are already close to that target. At Hogan Lovells, which has a dedicated pro bono partner, each UK fee earner is doing about 42 pro bono hours a year, according to Legal Week. In the US, large firms commit to contributing between 3 and 5 per cent of total billable hours.
There are limits to the usefulness of pro bono work by City lawyers, when the need is often for those with expertise in social welfare. But they can do more. A new voluntary scheme led by City law firms would be a good way to start.
The Lex team is interested in hearing more from readers. Please tell us whether you think City law firms should unify and ramp up their pro bono programmes in the comments section below