AN Adelaide law firm which was controversially planning to offer law graduates jobs in return for a $22,000 fee has abandoned the plan.

As revealed by The Advertiser in June, adlawgroup, which was set up by WBH Legal partners Cindy Hynes and Ronald Bellman, was expected to launch in July with its website spruiking a new legal business model, which involved a $22,000 fee for a two-year legal placement, with no base salary.

New lawyers would earn money through the fees they generated and would be expected to bring in their own clients.

But the Law Society of South Australia today said adlawgroup had scrapped the plan after the Society raised concerns.

“Last week, the Law Society completed its inquiry, and President Rocco Perrotta wrote to adlawgroup outlining the Society’s concerns,’’ the Society said in a statement.

“Since then, adlawgroup has responded to the Law Society, explaining that it did not intend to charge participants an upfront fee.

“This is a significant shift from adlawgroup’s earlier letter to the Law Society in July, which stated that employees of the program were to be charged a mandatory fee of $22,000.

“It also appears that adlawgroup will operate more as an employment agency rather than a law firm, and source employment for lawyers in law practices.

“The Law Society had previously written to the directors of adlawgroup in June outlining its preliminary concerns. The directors of adlawgroup responded to the letter in July, but after careful examination of the response the Law Society was still not satisfied that the concerns had been addressed.’’

Mr Perrotta said the Society had little information about the new model.

“It appears to be a significant departure from the original model that was proposed, and which formed the basis of the Society’s inquiry. The Society intends to work closely with adlawgroup to examine the integrity of the model.”

Adlawgroup said the business was on hold while it worked to address other concerns the Law Society had, but the $22,000 fee was gone.

“The Partners of WBH Legal have proposed launching a first stage of the Adlawgroup program on a smaller scale using their existing facilities,’’ spokeswoman Tina Hailstone said, adding it would not be an employment agency.

“They are currently working through the logistics of this. The intention is that WBH would absorb most of the costs of participation. They are, however, constrained from offering even the modified program at present.

“On 17 September Adlawgroup received a response from the Law Society. The Law Society has repeated its concern that there are aspects of the model that they believe are not consistent with an employment relationship and therefore suggest that it may not be possible for an employee to demonstrate the requisite ‘continuous period of two years fulltime employment as an employed practitioner…’.

“We believe that the Law Society has not fully understood the business model. The principals will continue to engage with the Law Society, but will not launch Adlawgroup until they can provide participants with complete confidence in the program.’’

Ms Hailstone said there had been strong interest in the program and the issue of a lack of opportunities for law graduates persisted.

The Law Society’s key concerns

- that adlawgroup’s model does not give rise to an employment contract. The fact that remuneration is based on participants generating their own clients appears inconsistent with an employment relationship. If there is no employment relationship, the participants will not qualify for an unrestricted practising certificate;

- If there is an employment relationship, the Law Society does not believe the participants will be able to generate sufficient work for full-time employment during their two-year contract period. A junior practitioner will not qualify for an unrestricted practising certificate unless they have undertaken the equivalent of two years’ full-time employment as a legal practitioner.

- that adlawgroup’s “fee-for-employment” model, as well as the requirement that all employees generate their own work, may lead to the exploitation of newly admitted practitioners;

- that adlawgroup has not addressed the issue of how the $22,000 fee is to be dealt with if the practitioner does not qualify for an unrestricted practising certificate after the two year tenure with adlawgroup.

Adlawgroup’s full statement

In July Adlawgroup announced the decision to defer the commencement of business operations for at least three months until the Law Society has completed its’ consideration of the business model.

Over the past three months Adlawgroup has been working to address the $22,000 fee for participation in the two year Getting Started in Law program. The Partners of WBH Legal have proposed launching a first stage of the Adlawroup program on a smaller scale using their existing facilities. They are currently working through the logistics of this. The intention is that WBH would absorb most of the costs of participation. They are, however, constrained from offering even the modified program at present.

On 17 September Adlawgroup received a response from the Law Society. The Law Society has repeated its’ concern that there are aspects of the model that they believe are not consistent with an employment relationship and therefore suggest that it may not be possible for an employee to demonstrate the requisite “continuous period of two years fulltime employment as an employed practitioner…”. We believe that the Law Society has not fully understood the business model. The Principals will continue to engage with the Law Society, but will not launch Adlawgroup until they can provide participants with complete confidence in the program.

It is common for young lawyers to work without any pay with firms to gain experience and yet that experience does not count for anything towards recognition of those skills as they not ‘employees’.

It is clear that the Law Society, universities and the Government are not addressing the real issues. Despite studying for years at law school, and then six months study for a Graduate Diploma in Legal Practice, new lawyers are nowhere near ready to practice law on admission. They need experience, high quality supervision and further training. This comes at a significant cost which must be met by someone now, and in the future, whether by; direct contribution, private sector investment, Government initiatives or a combination of these. To not act means that graduates coming out of law school are left with few work prospects, in practice and elsewhere. This situation is simply unacceptable on any level.

There is an untapped, and urgent, demand for fair, simple, affordable and accessible legal services. This problem was highlighted by Community Law Australia in its’ July 2012 report ‘Unaffordable and out of reach: the problem of access to the Australian Legal System’. A key component of the Adlawgroup model is to facilitate greater access to justice for a broader section of the community who are prevented from obtaining affordable access to legal services

Originally published as Law firm dumps plan to charge graduates $22k for job