I accept that a basic issue is that the law schools and law providers are perhaps overproducing lawyers. The Bar Council and Bar Standards Board, potentially, should not fundamentally be concerned with this abundance of law graduates as their position always has been that the legal profession does not owe students a living. This is obviously hard to reconcile with any claims that the legal profession is making genuine progress in tackling social mobility and inclusivity.
Many students may be feel that they were led up-the-garden-path, in feeling that they would not have done the LPC or BPTC had they known that the odds were stacked against them in getting a pupillage or training contract – but would they do the course again? Some would say that – in this economic climate – there exists many people in many other careers are not guaranteed any job at the end of an education which they pay for. Even the Department of Health is beginning to talk about how there might not be enough preclinical posts for people who have completed a six-year degree in medicine (which is longer than 4 years, quite clearly.) After all, there is nothing to stop potential students doing due diligence about their potential job prospects after they qualify – but, then again, this should ideally be given before commencement of a legal education, and the problem is that due to the changing political, economic and social circumstances these data are likely to be updated on a frequent basis.
Law schools and law providers, under the auspices of the Bar Standards Board and Solicitors Regulation Authority, are able to choose their precise teaching methods against the background of an agreed curriculum. The discussion always has been latterly how entities such as BPP, Kaplan, the City Law School, and College of Law (and a handful of other providers) can, as businesses, ‘overproduce’ students. But this is to do the economic analysis of the markets a great disservice.
The starting point of any discussion of their business models, I personally feel, must be that they are oligopolies. The starting point should not be that they act as part of larger entities, and thus can price things competitively to increase market share. That is precisely not what is happening. They are not price-skimming, offering lower prices to increase market share. They are in fact increasing their fees, and this is having little effect on demand – i.e. their courses are relatively price inelastic. The starting point is not even then they can offer cheaper courses as a result of economies of scale – the criticism levied by students who can’t get jobs is in fact the courses are overpriced for what they are. The strategic positioning of private universities is in fact not to equate low price with cheap – but to equate a reasonable value with high value – in fact there is an argument for these businesses/legal education providers to be able to provide a ‘premium’ legal education, appropriately priced, in the same way that some people prefer FairTrade Coffee to Morrisons Own Brand. You don’t have to go very far in the analysis of markets in the UK to see how such market failures can get exacerbated through oligopolistic situations – take for example the utilities, where it can be successfully argued that high shareholder dividend has not always been matched by a high-quality, low-price offering. This is what we wish to avoid in education (and in the provision of professional legal services) too, surely?
The critical starting point of any discussion of business models, as for example in excellent, informed and interesting analysis by @charonqc, in my personal view only must instead be to acknowledge honestly that BPP, the City Law School, Kaplan and the College of Law, and a small number of “noteable others”, are oligopolies. In other words, in an entirely legal way, a low number of suppliers have enormous bargaining strength, discouraging market entry, and can mutually collude to keep their prices high as they can get away with it. That is what the precise economic argument is. That is what the Bar Council and Bar Standards Board have to get their head around in the pupillage debate – but unfortunately they do not owe qualified students a job. The problem is that these high prices are preventing diversification of a customer base, so that only people who can afford it now wish to risk finances on a legal education. The way to get round this in traditional management theory is to increase the number of suppliers so that market goes from being an oligopoly to one that goes 60% the way towards perfect competition. In the oligopolistic market thus far, there is not much of a relationship between supply and demand which is related to cost, but this relationship would be much stronger if there were simply more legal education providers on the market. And that means logically that we simply need more education providers for more students being trained at a lower price.
The problem is that you can’t have your cake and eat it. By not addressing the oligopoly point, you are not addressing the issue that more lawyers could be trained for cheaper – this is the basis of utilitarian justice. However, the problem would then be an explosion of potential market entrants applying for pupillages or training contracts. If there are more potential lawyers on the market, that surely ideally is good – as in the same way as people will always need medics, people will always need lawyers? Is there genuinely a shortage of legal work internationally? If you are not claiming that there is a shortage of legal work internationally, then perhaps you are getting closer to the root of the problem. And that is that the traditional business model of the law firms themselves is faulty. This might also help to explain why many newly-qualifieds don’t get jobs either – are the facts of this laid bare by the profession either?
