Subclause7 an absurd silly idea .... how is she better off getting a loan ???? no1 there is no guarnatee that her salary raise with or without LPC fee would be up to £4500 PA (so she is proabaly better off letting them pay her fees and still enjoying a small raise) ...2ndly repaying the firm is likely to be cheaper than repaying a loan ..as they probably wont charge interest as such
It's quite simple. A professional loan is paid off over many years, not the duration of the course. A friend of mine got one of her LPC which is repayable at about £100 per month for 9 years. So, not silly at all.
Obviously you pay some interest on the loan but on a month to month basis as long as your pay increase is more than £100 after tax per month you'll be better off. And obviously your salary will rise during the duration of the loan.
Just to correct a common misunderstanding - firms are not doing you a favour by training you. Trainees are amongst the most profitable employees of any law firm bar none.
There are two main reasons. Firstly they will work you to death and you (probably) won't quit - loads of billable hours! Secondly, as soon as you qualify your salary rockets, (in some cases doubling) but your billable rate doesn't go up by anything like as much. A newly qualified associate will cost a firm loads more, but only brings in fractionally more revenue. There is currently a massive shortgage of newly qualified associates, which is why they are paid so much, but you will need to work for the company for many years before you start to make the same profit as a trainee does.
Do the maths if you have any doubts - say you bill at £100 an hour and bill 1500 hours a year. Income to firm = £150,000 Cost of you to the firm £16,000.00 plus cost of your course at say £10,000.00 = £26,000. Net profit for firm = £124,000.00 per trainee
Hmm, not that I've started my TC yet, but... I doubt the average trainee bills as many hours as an associate - loads of time gets written off as work often takes a trainee twice as long as an associate who's done it all before. So, I guess the average trainee pulls in less. Also, you're not taking into account the lost billable time senior associates and partners spend helping/teaching trainees, HR, the PSC, overheads etc.
Meanwhile, an assistant - no seat rotation, less demanding of senior associates' and partners' time, no PSC etc. So, the maths... say £200 per hour for 1500hrs a year = £300,000, less salary of £30-50,000 gives a total of £250-270,000 profit.
I'm not sure where I read this, but apparently the top city firms reckon the approximate NET COST (after billings!) of a trainee from signing to qualification is between £150,000-£250,000 each - hence firms battling to hold on to their investments.
There are lots of people vying for TC places, so applicants bear the brunt of the competitive environment. At 0-2yrs PQE, it is the firms who are desperately trying to compete - what does that say about who is more important to a firm, the trainees, or the NQs?
PS - a friend of mine is on about £18,000 and has an annual billing target of about £60-80,000 - he works his butt off! Once the time spent on him by other fee earners, PSC costs, and overheads are taken into consideration, I doubt they make much out of him. The point is, firms that pay £16,000 aren't usually the type of firms that make £100,000s profit per partner.
Also, as (an inaccurate) rule of thumb, I was told that a firm's income is split three ways: one third salaries, one third overheads, one third profits for the partners. Assuming Robin's figures of £150,000 income for a trainee is correct, then after overheads (£50k) and salaries plus LPC (£26k), the firm would be left with £74,000. I still don't believe that's realistic though, especially not in a small local firm that pays near Lawsoc minimum.
Do the maths if you have any doubts - say you bill at £100 an hour and bill 1500 hours a year. Income to firm = £150,000 Cost of you to the firm £16,000.00 plus cost of your course at say £10,000.00 = £26,000. Net profit for firm = £124,000.00 per trainee
Still think they are doing you a favour?
I've done the math for my firm.
With my salary, bonus, NI, pension contributions, perks, psc costs, lpc and gdl costs, internal training costs, time written off, duplicated time, even though I have reached 1,500 billable hours (billable but not nesc. billed) I'm probably a net loss to the firm as a trainee.
My point was not really that the trainee bills more hours, but that they are cheaper to employ. Besides your example would require the hourly rate to double once qualified - this doesn't usually happen...
As mentioned in a previous post my brother is a trainee at a city firm - while they don't strictly have billing targets its assumed that trainees will bill about 1500 hours a year. They don't write time off for trainees as they bill less than associates anyway which compensates for the extra time spent (or so they tell their clients). Learning (excluding PSC etc) is done on the job - if a senior associate works through an issue with a trainee then both the trainee and associate get to bill the hours. It is also worth pointing out that the longer someone spends on an case the more they can bill - its not in the firms best interest to do the work at the quickest possible speed, which is another reason trainees are profitable.
He has not come across a trainee with a clawback clause in their contract. His firm want to hold onto NQ's, but do not financially penalise them for leaving.
I don't believe that, after billing is deducted, it costs nearly £85,000 a year to train a solicitor - the costs simply doesn't add up.
Anyway I guess the point I'm trying to make (in a very long-winded way) is not really that trainees are worth more than associates, but that firms do make quite a substantial profit on them. So you should insist that you get paid a fair wage - the firm really is making money hand over fist on you and you should get your fair share.
Just read the latest post - even in Hermans example the firm is still making £75K a year profit - so they are not losing money. It is a fair point that I am basing my maths on firms earning £100K upwards per partners. For smaller firms the numbers are smaller, but they are still making a profit. Common sense dictates that tt must be better for them to hire trainees rather than associates otherwise they wouldn't bother!
In response to subclause7, if you are billing 1500 hours and the firm is not making a profit, your billing rate must either be tiny or they are paying you one whole hell of a lot of money. Either way I don't think you are costing them money. It may however be in their best interest to make you think that they are - sword of damocles (sp?) springs to mind...
In response to subclause7, if you are billing 1500 hours and the firm is not making a profit, your billing rate must either be tiny or they are paying you one whole hell of a lot of money. Either way I don't think you are costing them money. It may however be in their best interest to make you think that they are - sword of damocles (sp?) springs to mind...
I have got a pretty decent billing rate but I am being paid at a relatively high level too.
I just think that once everything is taken into account (i.e. billed and recovered hours against all outgoings I mentioned plus probably a lot of others such as the actual cost of recruiting each trainee) I can't be making the firm much, if anything.
Doesn't bother me either way really. It's a law firm market as there are so many people wanting to go into law the firms can be picky but on the other hand salaries aren't being kept artificially low even though they could be.
Ashleigh, do you know what you make for your firm? If you do, that should give you an idea of how much you're worth and what you can ask for.
Re cost of training a trainee - I have no idea how law firms come up with the figures, but they seem to be fairly uniform in saying that trainees cost them money, not make them money. Having said that, I don't run a law firm, so that's just what I've read. It does seem high though...
My hourly rate is £100ph, however a lot of the work i do is fixed fee things ranging from £80 - £590. I would say based on this that the average I bring in a week is about £2250 from the mix of fixed fee work and hourly rate work.
So this equates to £117k per annum...
Less £16k salary...
Less £9k LPC fees...
Subscribe in a reader
Currently Active Users Viewing This Thread: 1 
Linear Mode
