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Legal Services Bill enters stage 2

7 June 2010

Holyrood's Justice Committee begins its detailed scrutiny of the Legal Services (Scotland) Bill tomorrow as the bill enters its stage 2 committee hearings.

Almost 380 amendments have been tabled to the bill, and lobbying of MSPs continues on the key question of whether to permit external capital investment in legal practices.

The Scottish Law Agents Society has sent a further briefing to MSPs calling on them to recognise that the "Dailly motion" – permitting non-lawyer ownership only by those working within a firm, up to a maximum of 25% – received the highest number of votes at the Law Society of Scotland's AGM.

The paper claims that no solution has been found to the "areas of client harm" previously identified by SLAS, including conflict of interest, legal professional privilege, confidentiality, and the Guarantee Fund. It goes on to warn: “This may mean therefore you may be in danger of creating a two tier profession,

  • those in Division 1 with client protection as at present and
  • those in Division 2 who cannot offer that client protection but are championed by the consumer bodies!!”

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The Law Society of Scotland continues to support allowing alternative business structures for law firms with a minority of non-lawyer ownership and investment, but has called for enhanced consumer protections and for the Lord President’s role to be strengthened. It has proposed around 150 amendments to achieve this and to underpin professional independence.

Jamie Millar, President of the Society, said: “We want to see the legal profession have opportunities to develop their businesses in order to compete in a fast growing marketplace and meet the demands of their clients, but not at the expense of our professional standards or consumer protections – effective regulation will be key.”

He added: “The Society adopted a new policy on ABSs after listening to its members and their concerns. It’s clear that there have been polarised views within the profession which we must – and have – taken into account. However, we are at the stage where the shape of the bill is being finalised and we hope that the Government and MSPs will recognise why the Society is proposing to allow a 51% majority of solicitors and regulated professionals rather than 75% solicitors.

“In practical terms, allowing only 25% of non-solicitors would severely limit those who do want to restructure or set up as an alternative business structure. One of the perceived advantages of ABS for rural firms, and a protection for access to justice is to allow the 'amalgamation' of a high street firm of solicitors with a high street firm of e.g. accountants, sharing overheads and providing a seamless one stop shop to their clients. The restriction of 25% of non-solicitor ownership could effectively remove this as an option."

Mr Millar described a tabled amendment to set up a new representative council for solicitors as "surprising", in the light of the recent referendum in which solicitors supported the continuation of the Society's representative role in addition to its function as statutory regulator. He commented: "It is difficult to see any advantage in these proposals which would be disproportionate in a small jurisdiction like Scotland and inefficient, costly and burdensome."

Stage 2 hearings are expected to continue to the end of June.
 

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