This month brings you a late opportunity to lend a hand to the preservation of one of the pillars of the Scottish nation, the legal system of Scotland. Developments took place in England about 14 years ago for the deregulation of legal practices permitting the sale of shares in these practices in the commercial market.
The vigorous rejection of that notion in Scotland was led by the President and Council of the Law Society of Scotland (CLSS). That was until 2008 when that policy was turned on its head so that CLSS came to support an even more liberal sell-off than was permitted in England. This became known as Alternative Business Structures (ABS). It then transpired that the senior partners of certain large legal firms which were in financial difficulty had seen the opportunity to hugely increase personal returns by selling off the firms to banks and other commercial investors.
Members of the Scottish Law Agents Society are mainly high street solicitors and they have consistently polled at above 80 per cent in opposition to ABS and that opposition is maintained today. Some of the main reasons for that opposition are:
Consequences of Deregulation: Similar deregulation in the UK banking sector was followed by the total disappearance of the Scottish banking sector and there is evidence that severe damage would be done to the Scottish legal services sector along with its substantial contribution to the Scottish economy.
Professional Independence: The Code of Conduct for European Lawyers requires lawyers to avoid any impairment of independence such as would arise from ownership by non-lawyer entities.
Consumer Detriment: Ownership of legal practices by external capital is likely to increase the already unacceptable incidence of Scottish consumer contracts being subject to English standard terms and referral to the English courts so Scottish consumers would have no practical means of raising or defending proceedings arising out of these contracts. Instead of promoting this trend through ABS, we should be seeking ways to re-wind a trend which moves business and jurisdiction out of Scotland.
The Guarantee Fund and the Master Policy: Clients of Scottish solicitors are completely protected against dishonesty or negligence at the hands of the legal profession but the current guarantee and indemnity undertaken by the Scottish legal profession is based upon the training and ethics undertaken by members of that profession and cannot possibly be extended to include new owners whose training and ethics are unknown or uncertain.
Private Interests: The private interests of the present owners of Scottish law firms have influenced the move towards ABS and it is inappropriate and unconstitutional to construct public legislation in order to further private interests.
Access to Justice: The cost of legal services in Scotland is already a substantial barrier to access to justice and the costs to be paid by clients of ABS law firms would be swollen to feed the new and justifiably avaricious foreign investors.
The Act of Union 1707: This guaranteed the independence of the Scottish legal system and Scottish courts in all time coming. That has held for 300 years but the introduction of ABS will bring English law and the jurisdiction of English courts into Scotland.
Impracticability of Regulation: Just how would you ever be able to regulate the conduct in Scotland of a commercial entity situated on some other part of the planet? Why hand any control of our legal services to such an entity? A previous attempt to bring ABS into Scotland in 2010 has already failed for lack of an acceptable regime of regulation.
The Scottish Government has shown clear misgivings about this policy and has set up a review into the future regulation of legal services in Scotland. Now the Scottish public has until the end of this month to write to the Independent Review into Scottish Legal Services, GW10, St Andrew’s House, Regent Road, Edinburgh EH1 3DG to explain why Scottish legal firms should not be made saleable, in whole or in part, outwith the Scottish legal profession. You will find full details of the review questions and more about this sordid tale and also an email link to the Independent Review on the SLAS website at www.slas.co.uk.
Michael Sheridan is Secretary of the Scottish Law Agents Society