The number of training places has fallen to its lowest level since 1998-99, as Pui-Guan Man reports

If any doubts remained about the size of the challenge facing aspiring lawyers in today's market, then it was starkly illustrated by the news that the number of training contracts on offer at law firms across England and Wales has fallen to the lowest level for well over a decade.

The Law Society's annual statistics report for 2012, released earlier this month, revealed that the number of training contracts registered in the 12-month period to July 2012 dropped to 4,869, down 10.5% from the previous year's equivalent total of 5,441. The figures are now at their lowest since training contract details were first recorded in 1998-99, when 4,827 were logged, with numbers almost 25% down on the pre-recession high of 6,303 in 2007-08.

Some within the market suggest the falling numbers are a consequence of changing business models across the profession, as cost-conscious law firms move to either outsource work or set up their own 'near shoring' ventures staffed by paralegals or others without legal qualifications.

Simmons & Simmons graduate recruitment partner Alex Brown said: "The profession is changing in terms of how jobs are resourced. The days of solely using London-based junior resources for labour- intensive tasks are over.

For example, it used to be that trainees were needed on big deals for due diligence or disclosure in litigation, but now clients look to firms to resource in different ways, such as law firm offshoring or near-shoring ventures. 

"Also, generally speaking, in-house teams are increasingly focused on briefing out where there is an expertise gap rather than purely where there is a resource requirement. That points to having a more senior resource mix in several areas."

Freshfields Bruckhaus Deringer graduate recruitment partner Simon Johnson (pictured) also noted the significance of the timing of the figures, given the dramatic effect of the credit crunch on law firm recruitment.

"There's an 18 to 24-month lag between making offers and law students joining us, and up to three years for non-law students," he said. "So these offers would have been made around 2009-10, in the midst of the banking crisis. 

"Despite this, I wouldn't expect things to pick up in the foreseeable future. Firms are still adjusting to the new normal, so it's possible that figures could go lower in the next year or two."

The report comes after a number of moves by top UK firms to shrink their trainee intakes, with Clifford Chance last December cutting the number it takes on in London by almost one fifth, while the previous year Allen & Overy scaled back the number of London training contracts it offered, taking on 90 trainees per year from 2014 – down from the previous figure of 105.

Meanwhile, this year Nabarro reduced the number of trainee vacancies it offers by almost 30% for the July 2013 deadline, down from 35 on offer last year to 25.

The Law Society report also highlighted a significant drop in new admissions to the solicitors' profession, which fell by a quarter (24%) in 2011-12 to 6,350 from 8,402 the previous year.

Norton Rose graduate recruitment partner Duncan Batchelor said: "The quality of applicants we are seeing has been increasing and we have seen a number of other international firms recruiting fewer people, but the extent of the fall in new admissions to the profession is surprising. It suggests there may be a real squeeze in other sections of the profession such as national and high street firms.

"While there is still some economic uncertainty we are seeing strong areas of economic activity, both in the East, where we regularly place trainees in our Asia offices, and in the Americas. Both areas give us a lot of cause for optimism."

Meanwhile, the number of English and Welsh law firms fell marginally during the year to 10,102, down from 10,202 in 2011, marking the lowest result since 2007 when 10,114 firms were counted.

Female entrants to the profession accounted for 60% in 2011-12, down 6% on the previous year. Nearly a quarter of trainee registrations were from black, Asian and minority ethnic (BAME) groups, a small increase on the levels seen around 10 years ago when trainee registrations from BAME groups amounted to 20%. Of the latest figures, the majority (58%) of these are of Asian background. 

Of the total number of solicitors on the roll, BAME solicitors made up 13%, while the proportion of female solicitors in 2011-12 came in at 48%, up from 39.5% in 2002.

Johnson added: "The proportion of Freshfields' trainees of ethnic minority groups has risen to one third. Diversity in recruitment is moving in the right direction – it remains at the top of the law firm agenda these days, both in terms of gender and ethnicity."