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Barristers’ earnings hit £1.5billion

the barrister life style October 28, 2015 No Comments on Barristers’ earnings hit £1.5billion
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  • Cuts to Legal Aid pose threat to some barristers’ income
  • Support still needed to manage cash flow

 

The total earnings of barristers have risen to £1.5 billion in the last year*, up 5% on the year before, and 11% on two years ago says LDF, the leading independent finance provider.

LDF says that, based on HMRC tax returns data, barristers’ average yearly income is now £118,000 in 2012/13 (latest data available) having dropped to £108,000 in 2011/12. 

LDF says that not all barristers will have experienced this rise in income. LDF says the gap between earnings of those in corporate litigation and those in areas such as criminal law has widened significantly due to heavy cuts to legal funding in recent years. 

Criminal Legal Aid fees have recently been cut by 17.5% from pre March 2014 levels and earlier this year criminal barristers and solicitors even went on strike to protest against these cuts. Legal Aid has also been removed from almost all family law cases.

Whereas, as the economy recovers there has been an increasing amount of work available to barristers who specialise in commercial work.

Changes in the way that barristers work may also be a reason for the increase in total earnings, LDF adds. Clients are now able to instruct barristers directly rather than only through a solicitor. Therefore clients will use barristers for some of the work that had previously been done by solicitors.

LDF says increasing numbers of barristers are choosing the direct access path. The Bar Council and Bar Standards Boards estimate that almost half of all barristers will be directly accessible to clients by the end of 2015. 

However, barristers themselves, also face a competitive challenge from solicitors. LDF says there is now increased competition from growing numbers of solicitor-advocates, employed by law firms, who are able to represent their clients in the higher courts, previously the preserve of barristers.

LDF says that pressure on some barristers’ incomes means that many may need financial support at key cash flow crunch points in the year. LDF points out that because barristers are taxed based on what they bill rather than what they receive, even when their earnings have risen they can still have difficulties budgeting for large tax bills if fees are not paid promptly.

Peter Alderson comments: “Although barristers’ total earnings have risen substantially in the last year, they still need to protect themselves against high tax bills and fluctuating cash flows.” 

“There’s an increasing disparity of earnings between different areas of law, and although the figures show that overrall earnings for barristers have risen, cuts to legal funding has meant that some barristers have experienced the opposite.”

“Many barristers will use finance to protect against their volatile cash flows. Giving them the security and peace of mind to pay their tax bill without having to deplete their cash cushion and cut back on mortgage payments or pension contributions.” 

A change to the Bar Standard Board’s practicing certificate has also hit some barristers with high additional fees, with many younger barristers having to pay double their previous fee. Practicing certificate fees come just after the January 31st tax deadline, which adds to barristers’ cash flow problems.

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