Paying for a graduate position – is paying $22,000 to join a start-up law firm like adlawgroup worth it?

Would you pay $22,000 for a graduate job? That is what a new breed of start-ups is asking “employees” to pay in return for a two year contract, mentoring experience and legal work. They claim they are giving admitted law students who have no current employment prospects in the legal market an opportunity to obtain the crucial two years of legal experience. The reality seems different. To me, it seems these start-ups are preying on vulnerable graduates who already have a $50,000+ HECS debt from a combined law degree plus their admission to practice course. One of the biggest problems of paying $22,000 to work as a lawyer is that after you have finished your two year contract at the start-up, it will be just as difficult as before to find a real legal job, as a graduate may be seen to have “paid” for this legal experience. In this blog article I examine adlawgroup, a start-up launching in July 2015 asking graduates to pay $22,000 for their position. Graduates should think carefully before joining such a program.

What is adlawgroup?

Adlawgroup is a start-up to be launched in Adelaide in July 2015, advertised as a new “law firm” targeting graduate lawyers. They will be taking-up around 15 graduates initially and another 15 in September, with a view to gradually expand the size of the program. “Employees” pay $22,000 upfront to be part of the “getting started in law program”. The program runs for two years, though graduates can leave the program at any time if they obtain a legal job they want to pursue.

How do they advertise?

Adlawgroup advertises positions as though they are offering a normal paid graduate position. This is far from the truth. In the below advertisement, there is no mention at all that you have to pay $22,000 for the position.

How is the $22,000 two year fee justified?

Adlawgroup claim that the $22,000 covers the cost of a practising certificate plus the comprehensive continuing education program they offer. The cost of an annual practising certificate in NSW is $816. Over two years this would be $1,632. That means about $20,368 of the $22,000 is allocated to the “getting started in law” program which includes mentoring and continuing legal and professional development. Mentoring will be conducted by a panel of senior members of the legal and business professional. Adlawgroup claims that the firm will be self-funded through client fees, which implies none of the $22,000 is going towards running the firm. One must ask where the $22,000 is going? If it is going towards paying mentors, that is a very expensive mentoring experience when there are a host of free mentoring opportunities available during and after university.

How is the relationship characterised?

Is adlawgroup an employer or an education provider? Adlawgroup claims it is a hybrid between employment and higher education. This is all very good, except in the eyes of the law, the business will need to be characterised in one of the categories. The adlawgroup website claims that graduates will receive their pay through the fees charged to clients. It is rare for junior lawyers to be paid on a commission basis. Junior lawyers working at traditional law firms are paid a fixed rate, which is set at Award rate or above. If the lawyers working at adlawgroup are characterised as employees, they will need to be remunerated by at least the Award rate. It is possible that adlawgroup will pay employees the Award rate plus commission based on fees charged, but at this point it is difficult to tell. To me, the relationship appears to have more “educational” characteristics, as graduates pay a fixed fee of $22,000 to receive mentoring, a learning program and professional development.

Other problems that may arise from paying for your graduate position:

1.       Ratio of experienced lawyers to graduates

Adlawgroup will be predominantly staffed by junior lawyers supervised by expert senior practitioners. This is very different from the traditional graduate experience where you will be the most junior in a team of five to ten more senior practitioners who all have the experience to mentor you and guide your legal development.

2.       Who will the clients be?

There are quite a few mentions on the adlawgroup website that graduates will be engaged in providing “quality and value” to clients. The firms is said to offer a full range of legal services at competitive rates, but that gives little indication of who the clients will be. There is some indication the clients will be individuals, as it is stated “young people, in particular, will be targeted to encourage them to seek professional advice and support in a timely manner”. This would not be ideal if you are aiming to work in commercial practice where clients are medium to large sized companies. As a graduate it is very important to know what kind of clients and what areas of law you will be working in, as your next employer will look at the clients you were working for to see whether you have the requisite experience for that job. For example, the difference between working for individuals, small companies, large companies, and public sector clients is vast and leads down very different career paths. The website is almost solely targeted at recruiting graduates, which very little information on clients, which is concerning. The website of a normal law firm is targeted almost solely at clients, with a very small section on recruitment.

3.       Reputation

There is a risk adlawgroup graduates would be perceived as having “purchased” their graduate jobs. In addition to adlawgroup being a start-up which is new to the industry, graduates from adlawgroup will have to do a lot of explaining in any job interviews they can get afterwards as to what adlawgroup is and why they could not get a traditional position after university. Adlawgroup is taking students from a variety of academic backgrounds. This could lower the general reputation of graduates from adlawgroup given the traditional emphasis on grades at law school in the job market up to five years post-graduation.

4.       Getting a job post adlawgroup

Adlawgroup claim that their graduates will have an advantage in a tight legal market. While it is true that after 2 years you will be eligible for an unrestricted practicing certificate, I query whether traditional law firms will consider the two years experience at adlawgroup commensurate to two years experience working at a traditional law firm. For example, if you are competing for a position as a junior lawyer advertised as a 2yr PQE job, an employer is much more likely to choose a lawyer who had been working at a traditional law firm with medium and large sized companies than a lawyer who has paid for their initial experience at a law firm with mixed clients.

The fact start-ups like adlawgroup exist is part of a wider problem

Those in the legal industry are well aware that in some Australian states such as South Australia and Victoria, the number of law graduates is in excess of the number of graduate lawyer positions available. Universities make a significant profit on law degrees, and have increased the number of positions available, due to the demand driven Commonwealth funding system. There is no easy answer to the problem of excessive law graduates. If numbers in law degrees was set to just above the ability of the legal industry to absorb graduate lawyers, students who want to study law but not practice law would miss out. However, the current system, which produces a large excess of law graduates does produce desperation to the extent that junior lawyers would be willing to pay $22,000 for a first job.