THE LEGAL PROFESSION

Evening Star, Issue 21218, 27 September 1932, Page 10

THE LEGAL PROFESSION

SOLICITORS AND THE SLUMP WELCOME SIGNS OF RECOVERY The practice of law is a profession and not a business. Nothing, however, imperils the retention of this ideal so gravely as hard times, and the legal profession during the past two years has, in the best of company, it is true, digressed far from the way of prosperity, and lawyers have seen not only their standard of living lowered, but their livelihood menaced (writes A. W. Free, LL.B., in the 1 New Zealand Law Journal ’). The vague but welcome stirring among the mercantile community of a spirit of “ business is looking up ” has, because there is some connection between the prosperity and the maintenance of professional standards, a double significance. It can now be stated as a fact that among solicitors there has been at least a pause in the decrease in business activity. ■ , ~ Business activity in the legal world is fairly accurately computable from figures appearing in the Government Statistician’s publications if we assume, and the assumption is certainly justified. that the following matters produce at least two-thirds of the revenue of the law offices;—Transfers of land, mortgages of land, leases of laud, obtaining of estates of deceased persons, formation of companies, litigation (including divorce), patent registrations. All these matters, except leases, conveyances (deeds system), and unregistered conveyancing transactions, are covered by official statistics. Business consisting" of and connected with these excepted matters and with chattels securities, company debentures, and local body loans which also are not covered by appropriate statistics may, however, be deemed to have varied in volume proportionally with transfers and mortSa Durin g the years 1921-22 to 1929-30, memoranda and deeds of mortgage were registered at the rate of, on an average, £37.05 million per annum. In the first slump vear (1930-31) this dropped to £30.60 million. In 1931-32 it crashed to £13.46 million, and in the first quarter of this year the decline continued. This decline" appears definitely to have been arrested. There is, of course, no scientific basis for the belief that there will now be a continuous increase in business, but even if the main and melancholy interest of the figures lies in the tremendous difference between the recent figures and those of a few years ago, there is no denying that every depression has ended _ and there is uo scientific basis for believing that this one has not begun to lift. An interesting point that is worthy of mention is that, with reduced values, every hundred thousand pounds of consideration money represents a larger number of transactions than previously. Statistics covering litigation are not kept up to date in the same way as conveyancing figures are, but they suggest, as is the common experience, that there has been no great slump in litigation. From 1922 to 1929 the average number of civil actions commenced in the Supreme Court each year was 1,580, there having been a boom in 1924-25-26, followed by a decline, with a recovery in 1930 and 1931. The number of actions for these years was 1,454 and 1,481. In divorce business, there was a steady increase during the post-war period; 1929 was a record year, and in 1930 the record was beaten. 724 decrees nisi being granted. In 1931 there were 683 decrees nisi.

In the magistrates’ courts business appears to thrive on slump conditions, 1931 establishing a new record over the previous record of 1930, the plaints entered in the latter year claiming the aggregate sum of £1,544,601. Though the last year has shown a reduced number of companies incorporated, the principal lesson the figures teach is, apparently, that the business world has developed the habit of forming private companies, and considers the formation of public companies with decreasing favour. Both tendencies are consistent with lack of confidence, but they are not so new that a suggestion of other causes is eliminated. Useful figures are readily available only from 1925. From 1925 to 1929 the annual average number of private companies incorporated was only 594, as against 793 for tbe first slump year. In 1931 this fell to 702. On the other hand, in the five-year period mentioned public companies were incorporated at the

rate of 113 a year, decreasing in 1930 and 1931 to 87 and 77 respectively. . The- subject of estates is of more importance than its position- in this article indicates, but it is unquestionable that the slump has not reduced estate work except in so far as it consists of conveyancing. New estate business depends upon mortality which does not depend upon economic conditions. and whatever profit may be lost through the reduced values of estates is more than compensated for by the extra work involved by difficulties in administration caused by abnormal circumstances.

Abnormal conditions have, of course, created a vast amount of work which would not have required doing in normal times, but even without the fixation of costs chargeable in respect of applications under the legislation for the relief of mortgagors and tenants this would provide negligible compensation for the general loss of business. This special work is inevitably troublesome, and bad debts and nominal fees (the virtue of necessity) are too common to allow of much profit. Shrinkage in business is offset to some extent by reductions in expenses. Expenses in law offices have, however, proved very elastic. Overhead has been reduced by rent reductions, statutory or conventional, and by salary reductions, but these have been in no way proportionate to the reduction in turnover. A law office cannot, as some businesses can, “ put off ” and “ take on ” staff in proportion to the week to week variations in the public demand for their services, and the proportion of offices carrying staff in excess of their requirements of the moment or of even the less immediate future must be very large. The position may_ be summed up by saying that the principal raw materials of the forensic and legal industry are stationery and knowledge, and the reduced use of these makes little difference : to the debit side of a profit and loss account. And that makes signs of recovery all the more welcome.