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Up or down? Digging deeper

21 January 13

A glass half full or half empty? With a Society survey showing solicitors almost evenly divided between optimism and pessimism over the future, the Journal tried to find the reasons for the differing attitudes

by Peter Nicholson

“I am optimistic about the future of the solicitor profession in Scotland.” Agree or disagree? Put to a representative cross section of the profession last autumn by Ipsos/MORI, carrying out a member survey on behalf of the Law Society of Scotland,* the question produced a markedly split response.

Overall, a bare majority (51%) of solicitors questioned felt able to express such optimism, while 45% disagreed. A small number answered “don’t know”. What lies behind the respective attitudes? Is there any pattern as to who takes what line, or as to their reasons? The Journal has been attempting to find out. The result, even if not a scientific study, certainly reveals a few common threads.

It is difficult to find a commentator who believes that the UK’s economic prospects in 2013 will be much better than in 2012, a year in which strong Q3 GDP growth (the latest figure available) was barely more than enough to reverse the declines of the two previous quarters. That being so, it is not surprising that the more optimistic answers tend to reflect firms that have managed to find some growth in their own practice areas.

It’s the economy

Philip Rodney, chairman of the newly merged Burness Paull & Williamsons, is one who believes that even a difficult economic outlook presents opportunities. “My view is that the economy is going to be rocky for the foreseeable future”, he comments. “Nevertheless, there will be a dynamic. Any dynamic brings with it business problems which lawyers are in pole position to deal with. Those lawyers who are progressive and can deliver solutions in a way that is relevant to their clients will succeed. Those who think that our role is merely to advise on the law will find that there is a reducing market.”

Rodney, who describes himself as “a legal Darwinian”, adds that he feels positive about those who are prepared to adapt and deal with the challenges that lie in wait; but “the future will undoubtedly be very tough for those who stand still”.

Those in higher profile firms might be expected to show a more upbeat attitude, and Chris Smylie, chief executive of Maclay Murray & Spens, is another who expresses confidence for the future. “But that, I think,” he observes, “is a rather different thing from saying that I have confidence in the current shape and constitution of the profession. In that respect, I think we will see significant change.”

Smylie believes that Scotland will remain a strong core market for legal services in the future, with deal activity levels picking up gradually over the next three or four years. But he is not alone in his view that: “The sector is still overlawyered, however, and it seems likely that further consolidation and associated attrition will occur.”

One ground he gives for being more optimistic than last year is that “we are another year into a recession which logic dictates will come to an end at some point in the foreseeable future”, even if there is as yet little sign of that recovery. That view is, however, challenged by Ewan Macdonald of Stewart & Bennett in Dunoon, whose reason for feeling more optimistic than previously is that “it seems to be slowly dawning on the profession that the recession is the new reality – it’s been that way in Japan since 1990. The sooner you adapt to that reality the better”.

From the small end

What that means for the high street firm, if true, is a matter of argument. Bennett claims to be finding “that new lines of work are opening up for me as a high street (sole) practitioner… high-end conveyancing is coming to me like never before and that may be because the customer base is saying ‘enough’ to the fee-charging strategies of larger firms”.

In contrast, Paul Carnan, a former Dean of the Royal Faculty of Procurators in Glasgow, puts himself in the “pessimistic” camp, on the view that as a high street practitioner he is seeing fewer transactions, perhaps due to increasing consumerism and commoditisation. Carnan is one who questions whether the still-growing solicitor profession remains one profession, rather than several, split into legal aid lawyers, high street, in-house or corporate. “Is there a collegiate spirit to bind them all? (apologies to Tolkein),” he asks.

Another rural voice, Jim McKeown of C & D Mactaggart, Campbeltown, a self-confessed optimist by nature, sees a future but more likely for a reshaped legal profession. Apart from legal aid work, his firm’s business is showing signs of picking up – though he recognises that performance of the property market, for example, remains variable from area to area, within Argyll and further afield.

“I know from speaking with other solicitors elsewhere that there is great pressure on business, with city practitioners telling me that their conveyancing fees have halved in the past two years,” he says. “That drop in fee income is unsustainable, but there is plenty of other legal business, and perhaps those of us in a small practice (we are two partners), geared mainly to the private client but with substantial court work, have been able to satisfy our clients’ needs.”

He accepts that geographic location works in his firm’s favour, there being only one other firm in the area, “so for once, practising in a rural location has its benefits. We may not get the cream, but in our own niche, we have continued to tread water and meet our clients’ needs.”

Legal aid troubles

McKeown, however, is not alone among the optimists in recognising that the outlook is rather different for those in legal aid work. He speaks from experience. “We are finding that more and more it is becoming a loss leader from a business perspective. Yes, we can make a profit on summary criminal trials in the local sheriff court, but solemn work on a time and line basis is not well paid… when you are a chamber practice and largely private client, the comparison on fees is staggering.

“We have been considering giving up on civil legal aid for some years now, but our sense of civic responsibility has prevailed and we continue to offer that service. However, as a profession we are getting no thanks for it from politicians. For many years it has survived because of our private client bank who pay substantially more for the same service. We will shortly have to review that issue.”

He concludes: “The tightening of the public purse affects everyone, directly or indirectly; it is the sense of injustice at the actions and stance of the present politicians that is to be frowned upon. If they are not careful, they will have no one to discuss the issues with as no one will want to do legal aid. They have just compounded the problem and put another nail in the coffin.”

McKeown’s comments highlight a theme that runs through many of the comments from the more pessimistic side: the Scottish Government has done little over the past year to endear itself to solicitors. Whether or not you agree with the view that the distinctive nature of Scots law is under threat from enacted or proposed reforms, the image of an administration at loggerheads with most of the legal community has been enhanced this past year by arguments over loans for Diploma students, the corroboration rule, and legal aid contributions in summary cases, to name but three issues. (The Government is also implicated, through its budget plans, in the court closure programme drawn up by the Scottish Court Service.)

Blame the Govenment

Thus James Savage, senior partner of the Savage Law Practice, Alloa, writes: “Given the court closure programme, the Scottish Government’s attitude to consultation in relation to the various reforms and the proposals regarding contributions, I am pessimistic about the future of solicitors acting particularly in the legal aid and criminal section of the profession. The approach to reform is piecemeal and driven by electoral and populist issues, rather than a mature consideration of what is good for the administration of justice.”

Government control of Scottish Parliament committees, he adds, means that there is no effective consideration of proposed legislation; and “The ruling party is not held to account and is not listening to reasoned arguments.”

Similarly, for Gordon Addison of Falkirk, the future is “pretty bleak” under a Government that dictates, refuses to listen, has stopped consulting and is now marginalising the profession.

George MacWilliam of Inverness, dean of the Highland Faculty, calls himself optimistic, but only long term, as he is “pessimistic regarding the next 10 years”. The current downturn, which no longer seems about to turn the corner, is likely to see the profession emerge as a “stronger, but smaller body”, but the immediate future “is also affected by the intransigent attitude of the current Scottish Government”, which has hardened in the last 12 months.

And for family lawyer Liz Welsh of Ayr, who puts herself “just” on the optimistic side, one reason for a more positive outlook is that the criminal bar across Scotland, supported by the Society, is “pulling together to fight to defend access to justice through criminal legal aid”. She adds: “I just hope that if they succeed, the fallout doesn’t land on civil legal aid. Now that would be cause for considerable pessimism!”

Asked to comment, a Scottish Government spokesperson said: “There is every reason to be optimistic about our justice system. Recorded crime is at its lowest level for 37 years and the crime clear-up rate is at its highest level in over 30 years. Meanwhile, violent crime is at a 30-year-low, crimes of handling offensive weapons are down to the lowest level in over a decade and 1,000 extra police officers mean Scots are feeling safer in their streets and communities.

“It is vital that Scotland’s justice system continually adapts to reflect changes in society, which is why this Government is pursuing a wide-ranging programme of reform. There is, and always

has been, a clear willingness on the part of Scottish Government to engage with members of the Law Society of Scotland and other stakeholders.”

* For the full survey, see www.lawscot.org.uk/members/member-services/members-research-2012

 

Interesting times

Aside from further economic difficulties, what is 2013 likely to bring? Plenty of headline issues is a safe prediction.

Court reform, civil and criminal, will continue apace. The civil side will see further work to implement the Gill reforms, including the setting up of the Scottish Civil Justice Council. Sheriff Principal Taylor will report on the funding of civil litigation; and we will see the first moves to implement – with or without modification – the court closures recently consulted on by the Scottish Court Service.

Affecting criminal lawyers, the Scottish Government will continue to push to abolish the corroboration rule, among other evidence and procedure reforms, and the “not proven” verdict could go the same way in the wake of the latest consultation on potential accompanying measures. And on present indications, ministers will force through their summary criminal legal aid plans, collecting of contributions included.

Alternative business structures will begin to become a reality, though early impact will be limited. Any that wish to operate will have to apply to the Law Society of Scotland for a licence, as no other approved regulator will yet be in being.

Life will continue to be difficult for law graduates seeking traineeships, and trainees seeking newly qualified posts. The regular announcements of mergers of legal practices will continue, as will practice closures and, with larger firms, the steady shakeout of jobs to reduce overcapacity.

Other legislation will provide for same-sex marriage in Scotland, and for a referendum on independence to take place late next year. High-profile public law cases will include the challenge to the Alcohol (Minimum Pricing) (Scotland) Act.

Big changes in the welfare system will bring many reports of hard cases. Less headline-grabbing but also significant, property lawyers will find themselves gearing up for the availability in 2014 of e-conveyancing and registration under the new Land Registration (Scotland) Act.

And you thought 2012 was eventful?

 

President's perspective

Cutting our cloth to meet market demands

“I am on the side of the optimists, though as I am an enthusiast and a can-do type generally, I may not be the best person to ask for an objective, hard-faced view. However, as with so many other aspects of the legal profession generally, I take my own/my firm’s experience and extrapolate across a wider field.

“We as a small suburban general practice were hit the same as everyone else with a failing property market, lack of money allowing clients to pursue ventures that needed our agency, and a broad pessimism among the population and financial community. But rather than sit and grimly hold on until it got better, we went root and branch into our structure and methodology, worked out what we should stop doing and what we should keep doing either as we were or under change, and then start again. It has worked for us – we are leaner and stronger than before, and are in a much better financial shape than we have probably ever been in.

“As President, I have been going around local faculties and firms selling that message – if a pretty ordinary player like me can thrive, then better firms and better lawyers can do so. Many don’t need the advice – there has been a huge amount of innovation and adaptation, as well as retrenchment in the core values and skills of solicitors. The phrase and idea of the man (/woman) of business has popped up again in a new and more potent form.

“A modern society will always need solicitors. We have a product that is valuable and reliable. All any of us needs to do is to be sure of the market, and structure the offering accordingly. OK, there is no guarantee of riches, but there is everything to play for.”

Austin Lafferty

 

Further comments

Brian Inkster, Inksters

“Things appeared bleak across the board a few years ago with no law firm, including my own, escaping the effects of the recession. Since the height of the recession we have seen year-on-year growth at Inksters which can only make one ever more optimistic… My optimism has perhaps been assisted by an investment in technology and marketing. These are areas many law firms possibly cut their spend on during a recession but ones where, for Inksters, an increase in spend and/or effort (as it is not just about pounds and pence) has paid dividends.”

Ian Wilkie, Scottish Borders Council

“I am pessimistic. The profession appears to have a poor public image; competition will drive fees down to a level where smaller firms will find it impossible to continue; there will be greater specialisation, leading to legal services being concentrated in the larger cities and towns only; there are too many law graduates, making it difficult for new young lawyers; we are not ‘flavour of the month’ with the public/stakeholders at large generally; the legal profession, as a leading profession, may have had its best days; we have legal aid fees reductions, greater competition generally, Tesco law.”

Professor Stewart Brymer, Brymer Legal

"I am personally optimistic for the future but understand the concerns of many members of the profession. There has been a massive period of change in the past 25 years with, no doubt, much more to come. The issue will be how solicitors adapt to change. As with other walks of life, it is all about viewing change as an opportunity rather than a threat.

"There are also major issues surrounding the recruitment of graduates to the profession which are creating pressure.

"[The reason for my answer] is largely due to the pace of change, e.g. in the practice of conveyancing. There has been massive change with e-registration of titles; combined standard clauses and conveyancing case management. The technology is there already. Those who want to (and not all will) need to be able to be harness same. I accept that other areas of the profession are facing considerable challenges, however, and not everyone will feel the same way."

Liz Welsh, Elizabeth Welsh Family Law Practice

"It is pretty finely balanced, but I come down, just, on the side of being optimistic for the future of the profession.

"... for family law solicitors, there are big changes coming. We can expect a bill next year to implement some of the recommendations of Lord Gill’s Review of civil justice. Instead of district judges we are to have summary sheriffs. Personally that is not necessarily something to be optimistic about. I, along with most family practitioners think that specialist judges are needed. While there may be an opportunity for summary sheriffs to specialise, it seems likely that most will be generalists. The intent is that most family cases will come before the new tier of judges, which, in my view, suggests that family cases are of less importance.... These cases are often of the utmost importance to families and deserve to be given the highest calibre of judge, specially trained, not only in the applicable law, but also in the skills needed to deal with the challenges of divided and broken families.

"I understand that in the Court of Session there is a pilot family court being introduced. My reason for optimism is that this will surely establish the benefits for all to see and we can then look forward to family courts being available throughout Scotland....

"I also find it heartening that the criminal bar across Scotland, supported by the Law Society, are pulling together to fight to defend access to justice through criminal legal aid. I just hope that if they succeed, the fallout doesn’t land on civil legal aid. Now that would be cause for considerable pessimism!"

Ronnie Conway, Bonnar & Co

"I tend to optimism. I genuinely believe the profession is better trained, more technology savvy, and more client orientated than at any other time. In my field of personal injury law there are about three or four specialist firms who are providing an excellent service for clients.

"I personally doubt if ABS will gain much traction here. It is a question of trust. I believe that at the important times when clients need advice, the profession has never been better placed to provide a service."

Gordon Addison, Nelsons, Falkirk

"The future of the profession is pretty bleak. Indeed the future of Scotland is pretty bleak.

"It is difficult to see how this economic climate will improve with such a narrow minded, short sighted Scottish Government dictating and refusing to listen to its electorate about anything. They have stopped consulting and are trying to dictate their way into the next election, ignoring the plight of our economy and refusing to invest in manufacturing industries whilst wasting what little we have on renewables which have limited economic value. Their constant reliance on the sunset oil industry is disturbing and naïve.

"As a result the legal profession too will shrink as economic activity is reducing. The over supply of solicitors is apparent. Huge firms are being rescued by English firms whilst the high street practices are merging or dying out. It is equally tragic for us and the populace."

Euan Macdonald, Stewart & Bennett, Dunoon

"On balance I am optimistic. The main reason is empirical evidence – I find that new lines of work are opening up for me as a high street (sole) practitioner and I can only extrapolate this and assume that bigger entities are seeking and finding new ways to keep up profits. That said, I find that high-end conveyancing is coming to me like never before, and that may be because the customer base is saying 'enough' to the fee-charging strategies of larger firms. I draw a distinction between fee charging rates – it is up to the parties involved to decide whether they will pay £400 an hour – and strategies. Anyone who says the big firms are not making work up to fill timesheets is naive in the extreme.

"I am more optimistic now than a year ago because it seems to be slowly dawning on the profession that the recession is the new reality – it's been that way in Japan since 1990. The sooner you adapt to that reality the better."

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