Graduate recruitment, especially in regional centres, is headed for potential disaster under the new Legal Services Award 2010, claim numerous sectors of the legal community.

The award, which came into effect on 1 January 2010*, is the first award to give national coverage to law clerks and graduates, and dramatically changes requirements relating to salary, work hours and study leave.

Under the award, firms will have to pay pre-admission graduates a revised minimum wage - which represents an increase of more than 25 per cent in NSW alone - as well as overtime for every hour worked above the 38 hour threshold.

Graduates will also be entitled to four days of paid study leave per subject of their practical legal training - equalling up to 20 days - as well as paid leave to attend lectures and courses.

While investigations conducted by Lawyers Weekly have revealed industry awareness in relation to the award is startlingly low, those who are aware of it are concerned about its potential consequences.

Kriss Wills, director and consultant at Kriss Wills Consulting, Management & Training in Victoria, says the award could signal catastrophe for many smaller and mid-sized firms, and will lead to a dramatic drop in the number of graduate places offered.

"It is a disaster ... in terms of employment for graduates. At one level, it looks like graduates will be getting more pay, but fewer people will be getting it. You've got to question whether that is really a win," she says.

While changes in relation to salary do not take effect until 1 July 2010, and firms can take advantage of transitional arrangements over the next four years to gradually meet requirements, Wills predicts that many firms will simply be unable to cope with the additional costs.

"I have a concern in regards to access to justice. I just don't think we are going to have smaller firms, especially in regional areas, where we already have incredible problems," she says.

"To get this, on top of what we know is already a massive shortage, is a real concern."

Mark Ireland, principal solicitor at Mark Ireland Lawyers in Bathurst, NSW, believes the changes under the award will further aggravate a situation which regional lawyers already find financially challenging.

"Even now [many regional firms] can't afford to put on another employee. If they have now got to put them on for $45,000, plus overtime, plus study leave, then that becomes prohibitive ... They just can't get the cash flow to do it," he says.

"In a lot of these situations, the graduate is so raw and so inexperienced that they have no billing capacity whatsoever ... it takes a couple of years for a [graduate] to start to earn their keep."

Ireland says the award will force regional firms to hire lawyers who are already admitted, thus making attracting and retaining new lawyers harder than it already is.

"I can guarantee that 95 per cent of applicants [for graduate lawyer jobs in Bathurst] are going to come from [the metropolitan area]. I can just as well guarantee that if they get a start here, after two years they will hot-foot it somewhere else," he says.

Ireland adds that the pool of talent from which regional firms can draw lawyers is already extremely limited, so having to exclude pre-admitted candidates will create further difficulties.

The Australian Law Students' Association (ALSA) has also expressed concern, particularly in relation to the future of law students hoping to get into the industry.

While ALSA president Jonathan Augustus welcomes the award in terms of reducing the potential for exploitation of graduates, he believes that the long-term effects of the award will have to be closely monitored.

ALSA vice-president (education) Fiona Cunningham echoes the concerns of Wills and Ireland: "Rural, regional and remote firms are in need of incentives, not obstacles, in order to entice graduates ... The lack of access to legal services in [these] areas may be further accentuated by the inability to employ graduate lawyers," she says.

But it is not just smaller firms that will encounter difficulties in relation to the award. Although many larger metropolitan firms will easily be able to absorb the minimum wage, it is still likely to create difficulties, particularly in relation to monitoring.

"It's an issue for larger firms too, because they are accustomed to people actually working longer hours. But they are not accustomed to having to monitor every hour [graduates] are there after 38 hours," says Wills.

"Everybody is trying to work this out."

While the award appears to be well-intentioned as far as minimising the exploitation of graduates and improving working conditions, Wills believes it may have gone too far.

"It will be a telling year as to how this plays out. Anything that makes it more difficult and more costly to train graduates is not good for anyone," says Wills.

And while it could be argued that if graduates were paid a higher wage, they might be more likely to be drawn to practices in regional areas, this seems an unrealistic prospect.

Ireland, for one, feels that the award has been applied in a blanket fashion and does not take into account fundamental differences between metropolitan and regional centres.

"Costs of living out here are less than Sydney and as a result the minimum wage should be less ... Within regional centres, you wouldn't put [a graduate] on for $45,000," he says.

"It is just a fact of life ... This award is going to whack a big hole in people's pockets."

*States whose graduates were already covered by a state award will continue to be bound by that award until 2011. States which did not have a state award in place are affected immediately.