Picking up the Tab

By the time a barrister first addresses the bench, he or she could have debts of £60,000. Alexander Learmonth considers the young Bar’s debt problem.

Lord Neuberger’s Entry to the Bar working group assumed that students could leave university as much as £30,000 in debt. The average, according to the PUSH student debt survey (see www.push.co.uk), is £14,452 for students in England, increasing by about 10% per year. The cost of the Bar Vocational Course (BVC) year was estimated at a further £25,000. That’s a fair estimate: some providers are now charging as much as £14,495 for the year, which includes the Bar Standards Board’s validation fee of £395.


The minimum pupillage award of £10,000 is barely sufficient to cover living costs, and a pupil will probably have to buy wig and gown (£621 inc. VAT), a laptop, and a copy of Archbold or its equivalent. By the time a barrister first addresses the bench, he or she could well have debts of £60,000. Margaret’s aphorism in Cat on a Hot Tin Roof, “You can be young without money, but you can’t be old without it,” was never intended to apply to the Bar.

Scholarships

The Inns of Court fund scholarships worth an estimated £4m each year, the bulk of which is available to BVC students. Although this sounds a substantial fund, that is only enough to cover the cost of the BVC year for 160 of the 1,750 students who take the BVC each year, of whom over 500 will get tenancy, be it employed or self-employed. Those who are fortunate enough to receive family help during their student years may be reducing their chances of benefiting from scholarships. A, now employed by a firm of criminal defence solicitors told me: “I didn’t get a Middle Temple scholarship because I was full and frank with the assistance I had received from my parents. But that funding was exhausted by the time I was doing the BVC…I can say that the substantial outlay and subsequent debt leant considerable weight to me joining the employed Bar.”

Hard times

Some of that debt (up to about £7,500 per undergraduate year) could be in the form of a student loan, which is paid back at a rate of 9% of your annual income over £15,000. But that will not worry many criminal practitioners—it is estimated that about 5% of barristers earn less than £25,000 per annum before expenses. B, a recently qualified barrister at a respected criminal set, reports: “For my first 12 months on my feet, after chambers rent but before tax, I received about £14,500,” and predicts making £19,000 for the coming year. A agrees: “Financially, the hardest time of my pupillage was in the first month of the second six when the bursary from chambers had run out and I had not started receiving fees from my first cases.”

Cutting pupils loose

Some sets seek to cut their losses on pupillage at half-time, without regard for the difficulty in which that puts pupils. One pupil in a chancery set was told that if he stayed on for the second six, he would not be paid. In order to complete pupillage, he had to go without any income for six months, and only survived because his parents paid all his expenses. If aspiring barristers are reduced to this, a career the Bar will remain out of the grasp of those from less privileged backgrounds.

What can be done?

Soft loans, such as HSBC’s Professional Studies Loan scheme, can help, A says: “I still owe £10,000 but have been a beneficiary of the interest rate which follows the plunging base rate” (see box, p 18). Chambers also have a role to play, in tiding new tenants over those first few months while waiting for the cheques to arrive: “I benefited greatly from chambers lending me an interest free £2,000 loan. I have just recently paid this back after paying about £75 a month,” says A. But increasing the minimum pupillage award would be controversial; the number of pupillages dropped by 25% when the minimum award was introduced in 2003 (see http://www.barcouncil.org.uk/trainingandeducation/careers/TheStatistics/). Derek Wood QC will have to consider this carefully in his pupillage review.

End to rent fodder

Perhaps, most of all, barristers should remember the collegiality and generosity for which the Bar is or was famous. Convention dictates that a pupil should never have to buy himself lunch when out with his supervisor. So does the Bar Council really have to charge newly qualified barristers a Members’ Services Fee of £50? Likewise, recruiting tenants as “rent-fodder” has got to stop; the Bar Standards Board should enforce reasonable rent structures for those in their first few years and ensure guaranteed earnings agreements are kept to. C tells me, “I only got through pupillage thanks to housing benefit and a £7,000 award from my Inn. Although I supposedly had guaranteed earnings of £10,000 in my second six, in June I received only £650, and £335 in July. So in August I applied to the Government Legal Service. I really wanted to be a self-employed barrister, but I simply couldn’t afford to carry on not knowing if I’d be able to pay my rent at the end of the month.”

Alexander Learmonth is Chairman of the Young Barristers Committee and a barrister at New Square Chambers

 

What young barristers earn

The tables below show the general range of possible self-employed and employed barristers’ earnings in their first and fifth year of practice after completing pupillage (gross earnings). The self-employed figures do not allow for practice overheads such as clerks’ fees, chambers rent, professional insurance fees, travel, books as well as pension, healthcare and life insurance contributions, tax and national insurance. Employed barristers’ salaries are not directly comparable with the income figures given for self-employed barristers. In order to make a reasonable comparison, you would need to deduct in the region of 25% from the figures given for self-employed barristers’ figures to cover the practice overheads outlined above. Similarly, you would need to add 10%–20% to the figures for employed barristers’ earnings to allow for typical employers’ contributions such as pensions etc. Self-employed barristers do not receive holiday, sickness or maternity leave pay. (Source: Bar Council.)

Bar loans scheme

In line with Lord Neuberger’s recommendation that “a scheme be set up to offer loans on preferential terms, alongside the Inns’ scholarships and award schemes, to facilitate studying for, and entry to, the Bar” (Entry to the Bar Interim Report, para 24(d)), the Bar Council and Inns of Court have been working together to try to ensure that no one with the necessary talent is prevented from coming to the Bar solely by financial need. An agreement has been reached with HSBC Bank Plc’s London Barrister Commercial Centre in Fleet Street to offer loans to Bar students on favourable terms.

What are the terms on offer from HSBC?

Applicants need: to intend to practise at the Bar of England and Wales; to have obtained a BVC place; to have demonstrated their ability and commitment by applying to their Inn for a BVC award; and to satisfy HSBC’s credit requirements. The current terms on offer are an interest rate of 1% over HSBC’s base rate; no arrangement fees; no payments for the first three years (although interest will continue to be rolled-up); interest payments start after three years, and you will be expected to start paying the capital off over a five-year period, starting five years after drawdown; while any part of the loan is outstanding, borrowers must have their principal bank account, into which any income is paid, at HSBC. Most loans will be unsecured. However, HSBC may exceptionally seek security as a condition of lending to some applicants. See:

www.barcouncil.org.uk/trainingandeducation/careers/financialplanning/BarLoansScheme

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