Turning up the heat

The Legal Profession Bill and other regulatory developments continue to demand work by, and comment from, the profession in response

The Journal, June 2006, page 14

The ongoing drive to reform the legal profession in Scotland has attracted an unprecedented response from lawyers.

Concern about the Legal Profession and Legal Aid (Scotland) Bill was clear when it was published in early March – no fewer than 550 of the 605 written submissions to the Justice 2 Committee were from practitioners, firms and faculties. That impressive level of engagement has been maintained since. It has taken a variety of forms – involvement in faculty meetings, briefing MSPs, gaining positive media coverage and responding to adverse or misleading comment – but always with the aim of getting the message across that the bill has the potential to cause serious harm.

The work of the bill team at the Society has been intense. A lengthy written submission on the bill was followed by an appearance before the Justice 2 Committee to give verbal evidence. Discussions with all interested parties and efforts to raise awareness through the media of the changes necessary to make the bill work have continued, often with encouraging results.

Over and above the bill

Although most of the attention has focused on the bill, there have been a number of other regulatory developments in recent weeks. On 3 May, the Research Working Group on the Legal Services Market in Scotland reported. It was set up in 2004 to examine the different legal services markets in Scotland and the potential for reform or otherwise. The Society was represented by Chief Executive Douglas Mill and the Director of Law Reform, Michael Clancy, although all other stakeholders, including practising solicitors, also sat on the group. Unfortunately published after the bill, when it could have little or no influence, it concluded that the forces of supply and demand were currently regulating the legal services markets and intervention was not necessary, although the situation may be reviewed in the future.

Then, on 24 May, the Department for Constitutional Affairs (DCA) published the draft Legal Services Bill designed to liberalise the market in England and Wales. The bill follows on from the recent review of legal services by Sir David Clementi and contains a number of far-reaching reforms. Not unlike the Scottish Legal Complaints Commission north of the border, it proposes a new complaints-handling body, the Office for Legal Complaints, to be overseen by a Legal Services Board which will also supervise “front line” regulators such as the Law Society of England and Wales and the Bar Council. More controversially, it would pave the way for Alternative Business Structures (“ABSs”), which would allow non-lawyers to own and run legal firms – the model popularly known as “Tesco Law”.

But what is the profession’s view of all these developments? The Journal sought a cross-section of opinion, including from those with a direct interest in the reforms south of the border.

The view from the south

Catherine Hackney, the Council member representing Scottish solicitors in England and Wales, has a warning for the profession. “I have been warning colleagues south of the border about the effects of Clementi for long enough, particularly in relation to non-lawyers owning firms. Unfortunately, it is only since Lord Falconer’s reported comments about the effects on high street practices [that many smaller firms could close] that people seem to be sitting up and taking notice.”

The dually-qualified head of civil litigation at Derby firm Eddowes Waldron, Catherine Hackney believes the same changes are planned for Scotland. “Thankfully, the Law Society of Scotland has a strong executive that is willing to take this on and fight it, but everybody should be raising it with their MSPs – sitting back and doing nothing is not an option. It is only a matter of time before they try to go down the same road as they have in England and Wales.”

The big four firm

As one of the big four firms in Scotland, and with an office in London as well as Edinburgh, Glasgow and Aberdeen, Shepherd+ Wedderburn is perhaps more interested in the DCA bill than many others, particularly in relation to issues such as ABS. For instance, allowing non-lawyers to own firms could have benefits, according to property partner David Smith. “Although we don’t expect to be of interest to the AA or an investment bank, if other professionals currently employed in senior executive positions by legal firms were able to have some status and contribute capital to the business it would give them a greater feeling of ownership, rather than the ‘them and us’ attitude which can exist at the present time.”

But David Smith also shares some concerns of fellow practitioners in relation to the new complaints-handling model for Scotland. “I don’t think the Scottish Executive has an inkling about the potential numbers of people who will complain under the new system. It’s ill thought-out and hastily cobbled together and quite frankly, I would be surprised if members of the public viewed the new ‘independent’ model as an improvement in five years’ time.”

The medium city firm

Willie Young, managing partner of Glasgow and Edinburgh-based Brechin Tindal Oatts, is more wary of the introduction of ABSs and one-stop shops. He says: “It is not something that particularly applies to us. A number of businesses in other sectors have got into difficulties in the past by taking their eye off their core activities and spreading themselves too thinly. We are keen to continue practising law and only law.”

But, while there are concerns that Westminster legislation will impact on access to justice, Willie Young fears that may also be a problem with the Scottish bill. “It will affect the public as much as anything else because access to justice in certain parts of the country will be denied.” His own 24-partner firm may be insulated to a certain extent against the changes, but small firms will suffer, he says. “It will be very difficult for some small firms to survive because of increased regulation and the constant pressure on fee levels.”

The sole practitioner

Like many sole practitioners, Clive Franks, of Franks Macadam Brown, Edinburgh, has a varied workload of conveyancing and litigation. In addition, he does insolvency work and has carved out a niche in recalling bankruptcies. Like many, he is concerned about the impact of the bill on his business. Also like many, he is particularly worried about the financial implications of the proposals.

“Solicitors have certainly woken up to the fact that the bill, as it’s presently formed, is extremely dangerous to the profession and the public. The representations made to the Scottish Executive before the bill was published appear to have been largely ignored.

“One serious concern is that solicitors will pay a fee to be found innocent. That, along with the other potential costs, will mean that solicitors might raise their fees or, in some areas of work, the public will be unable to get representation.”

The rural firm

Grigor & Young may be the largest firm in the Elgin and Forres area, employing 50 staff in total, but it has already stopped doing legal aid work because of the potential difficulties involved. One solicitor is involved in matrimonial work – there used to be three. Another local firm has hived off its conveyancing work to a sister estate agency. Partner Neil Ross says: “Nobody’s happy in, for instance, a divorce – we found that clients were too demanding and often more likely to complain about the service they received. We may have to look again at what legal services we provide in the light of the changes proposed in the bill going through the Scottish Parliament.”

As a member of the research working group, Neil Ross believes that any changes should be evaluated carefully first, something which does not appear to have happened with the current bill. He says: “The working group has built up a body of evidence – it is a good start for any future reform.”

The Past President

Caroline Flanagan, who has just handed over the presidency of the Society to Ruthven Gemmell, is ideally placed to view recent regulatory developments. She says: “As President for the past year, I have been in the fortunate position of being able to influence recent events. Improvements in areas such as communications have been made and the response of the profession to developments has been hugely encouraging. But concerns remain too. The bill passing through the Scottish Parliament has many, well-publicised flaws, but the DCA draft legislation is also worrying.

“While it may apply directly to England and Wales, its impacts may yet reverberate in Scotland – and not only among firms with a cross-border presence. The Lord Chancellor, Lord Falconer of Thoroton, has already been quoted as suggesting the reforms may force firms to close, with those in rural areas particularly at risk. We have been promised Scottish solutions for Scottish issues, yet already aspects of the DCA proposals have been imported to our own legislation. We must ensure that further damaging effects of reform do not spread north too.”

Craig Watson is a freelance writer specialising in legal affairs