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Legal market reform consultation published

7 January 2009

Ministers have published their consultation document on their proposals to open up the market for delivering legal services in Scotland.

The consultation is the precursor to the Legal Profession Bill, expected to be introduced in June. Justice Secretary Kenny MacAskill claimed the bill would allow Scotland’s legal profession to compete in the domestic and international markets and was a “once-in-a-generation opportunity to create a more flexible and modern regulatory framework for legal services”.

The paper sets out a number of different alternative business structure (ABS) proposals and asks for comments on which should be permitted, and under what safeguards. The options include ABS involving non-lawyer ownership, external ownership, and multi-disciplinary practices. These proposals are currently prohibited by the Law Society of Scotland, although it has indicated its willingness to remove such restrictions in its policy paper adopted last year.

The paper also asks whether certain legal work should continue to be reserved to lawyers.

Ministers accept the Law Society of Scotland's position is that it is not a particular business structure which should guarantee the protection of professional values, but the regulatory framework within which legal businesses operate. However they state that there are some special circumstances applicable to the Faculty of Advocates.

Proportionate framework

Mr MacAskill said the proposals put forward last year by the Law Society of Scotland and Faculty of Advocates were “in tune with our direction of thinking”, and that the regulatory framework had to be proportionate to the size and scope of the legal services market in Scotland.

The Government does not think the approach for England & Wales, as set out in the Clementi report of 2005 and now in the Legal Services Act 2007, is appropriate because of the much bigger size of the legal services market in England & Wales and because the regulatory framework in Scotland is not as complex. Under the English approach, a Legal Services Board oversees "front line" regulators such as the Law Society of England & Wales and the Bar Council.

Instead it proposes that the Scottish Government, with the agreement of the Lord President of the Court of Session, should authorise regulatory bodies to act as regulators of ABS. In doing so, they will require to be satisfied that the regulators meet criteria to be set out in the ill, including that the regulator is adequately resourced and organised, has developed an appropriate scheme to comply with the regulatory objectives and ensure public protection; and is sufficiently independent of bodies being regulated to ensure public confidence and avoid conflicts of interest.

The Justice Secretary added: “We must guard against having too many bodies and unnecessary tiers of regulation. Instead we should concentrate on developing a robust system of regulation to protect the profession's core values and enshrine the profession's commitments to service, probity and excellence."

Encouraging business success

The paper states that a flourishing Scottish legal system is a crucial part of a supportive environment for business, and reform is necessary if that profession is to remain successful, innovative and affordable. Mr MacAskill said the legislation would be aimed at improving access to high quality legal services.

He continued: “The Government knows that the current economic situation is seriously affecting many law firms, as well as many other businesses and families. It is only natural in the face of such uncertainty to take comfort in the tried and tested forms of business.

“However, I believe that now is the time for the profession that has served Scotland so well for over 300 years to embrace change and look to the future. In doing so, the profession will continue to be a source of pride for decades to come.”

Society welcome

Welcoming the paper, Richard Henderson, President of the Law Society of Scotland, said: “The consultation is an important step along the road to further liberalisation in Scotland’s legal profession and the forthcoming Legal Profession Bill represents a huge opportunity to modernise legal services and boost the potential for legal businesses to thrive both at home and internationally, while retaining high standards and promoting access to justice.”
Chief Executive Lorna Jack added: “These proposals for change come at a challenging time, but Scotland’s solicitors and our legal system are respected around the globe and there is an opportunity here to make sure that even within the current tight financial constraints, we are building towards future success.
“The Society welcomes the opportunity to comment on the government’s proposals and I would urge all of our members and those with an interest in legal services to respond to the consultation."

The document is available at . Written responses should be submitted by 3 April 2009.


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