Every year about 1,600 people graduate LLB or LLB (Hons) from New Zealand’s law schools. Every year about 900 new lawyers are admitted. And every year about 550 of those new lawyers take out a practising certificate.

Does that mean that two-thirds of law graduates are unable to get work as lawyers? Are there too many law graduates in New Zealand? Do a lot of the law graduates move into other fields? How many are completing degrees in other subjects as well? How many work in law-related fields but don’t need a practising certificate? It’s an area with many unknowns and, perhaps unsurprisingly, over the Tasman in Australia the same questions are being asked.

Concern at the situation led the Law Society of New South Wales to establish a working group to look at the scale of the problem and the resulting outlook for viability of the profession. The working group report, at the end of 2014, found there was a “high level of anxiety” within the legal profession about the number of law graduates emerging from NSW universities. Law students were very concerned about employment prospects. However, the working group concluded that while there were some gaps in the data, it appeared the NSW law graduates were “not exceeding” new entrants to the NSW profession.

Key conclusion

One of the key conclusions could probably have been written about New Zealand:

“There is a lot of anecdotal evidence about the oversupply of law graduates, but the common thread is the need for a strong foundation of evidence about where law graduates are going and whether they want a legal career.”

While the research continues, a couple of developments have brought the number of law graduates and those who employ or don’t employ them into focus again. These don’t appear to have emerged in New Zealand, but they are indicators of strong competition for legal jobs in Australia at least.

New Adelaide law firm Adlawgroup announced a two-year “employment programme” for law graduates in June this year. What aroused the ire of many was that the graduates were expected to pay Adlawgroup $22,000 in advance to participate.

In South Australia law graduates must be employed for two years before they can obtain an unrestricted practising certificate.

Uproar followed. The Law Society of South Australia began an inquiry as did Australia’s Fair Work Ombudsman. On 21 September the Law Society announced that following its inquiry, the firm had now decided not to charge participants an up-front fee.

“This is a significant shift from Adlawgroup’s earlier letter to the Law Society in July, which stated that employees of the program were to be charged a mandatory fee of $22,000. It also appears that Adlawgroup will operate more as an employment agency rather than a law firm, and source employment for lawyers in law practices,” the Law Society said in a statement.

One of the more interested parties has been the Australian Law Students’ Association (ALSA). It was active in criticising the Adlawgroup plans, with spokesperson Marie Iskander describing the business model as “quite exploitative” and taking advantage of an oversupply of graduates.

ALSA has been a prominent participant in another development in the legal employment field: unpaid internships. Last month it provided extensive feedback to Australia’s Productivity Commission on the issue. Referencing its recent National Advocacy Survey, ALSA found that 66% of 67 respondents had engaged in unpaid work experience at some stage of their degree or since graduating. About half of these felt their unpaid internship had not helped them obtain a paid position.

“The phenomenon of unpaid work experience placements is certainly not new,” the ALSA submission says. “However, ALSA is aware of a growing number of larger and mid-sized law firms moving away from remunerating students and graduates in favour of offering unpaid positions. Alongside this change, firms are requiring students to commit more time to their placements. Given the status of the legal profession’s employment market, ALSA is concerned that these firms are exploiting students who are desperate to remain competitive. Moreover, ALSA is concerned that with the continued increase in the supply of law graduates, this practice will also increase.”

Indicator

While anecdote and a lack of definitive data cloud the picture (ALSA’s survey received 106 responses in total), one indicator of some of the problems facing would-be lawyers and those who provide them with work experience came when Australia’s Federal Circuit Court decided that Melbourne lawyer Graeme Efron would have to provide 11 months back pay to a law student.

In Finberg v Efron [2015] FCCA 2470 (11 September 2015), Judge Suzanne Jones found Efron & Associates had not paid Saul Finberg his proper wages and superannuation contributions while he was employed from March 2013 to February 2014.

It appears that Mr Finberg approached Mr Efron with the objective of gaining an opportunity to gain experience in a law firm while completing his law degree. Judge Jones was satisfied that Mr Finberg was engaged in a range of legal work requiring the exercise of basic legal skills, and always under the supervision of senior solicitors. She decided that he was not paid the appropriate wage rates. Mr Finberg was apparently paid $10 an hour – well away from the appropriate classification under the applicable employment award.

The matter will return to court in December to determine the amount owed to Mr Finberg – who is claiming $28,883 plus interest and pecuniary penalties.