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This is the text of the submission to the Consultation on Law Society's draft Constitution from former Council member Walter Semple.
This response will explain why I submit that the Law Society should change its constitution by setting up a new representative committee to oversee the representative functions of the Society.
The committee would comprise only solicitors and the Council would be forbidden from unduly interfering in its work. The Law Society's website confirms that the Society intends to apply to become a regulator of Licensed Service Providers. On that basis, the draft constitution does not meet the requirements of the Legal Services Scotland Act 2010 ("the 2010 Act") section 27.
Sections 27 to 31 of the 2010 Act came into force on the 1 April 2011. Under Solicitors (Scotland) Act 1980 ("the 1980 Act") section 1, the object of the Society shall include the promotion of the interests of the solicitors’ profession in Scotland and the interest of the public in relation to that profession. Under section 1A of the 1980 Act the Society may act as an approved regulator within the meaning of part 2 of the 2010 Act. The Society has no power to promote the interests of Licensed Service Providers (“LSP”).
As regards LSPs the role of the Society will be that of regulator.The 2010 Act makes express provision for the internal governance arrangements of an approved regulator. Therefore as the policy of the Society is to become an approved regulator, its internal government arrangements require to conform to the 2010 Act. Section 27 of the 2010 Act will apply to the Law Society because the Law Society has representative functions. The consequence of this is that its internal governance arrangements must incorporate such provision as is necessary with a view to ensuring that the Law Society will always exercise its regulatory functions independently of any other person or interest and properly in other respects (in particular, with a view to achieving public confidence).
Section 27(2) of the 2010 Act provides that in relation to an approved regulator which has representative functions (e.g. the Law Society), a relevant factor in relation to the incorporation of provisions in its internal governance arrangements is (amongst others) avoiding conflicts of interest in relation to its regulatory functions. The result of this is that the in order to the carry out its policy to act as regulator of LSPs, the Law Society must include in its constitution express provision that it must avoid conflicts of interest in relation to its regulatory functions.
The draft constitution fails to do this, and therefore will not conform to the requirements of the 2010 Act when the Law Society applies to act as regulator of LSPs. One example of an area where this will cause difficulty in practice arises in the Professional Support Protocol published by the Law Society on 18th January 2010. The protocol provides that information provided by an enquirer seeking advice will be kept confidential unless it involves dishonest handling of client's money or money laundering by a solicitor.
The Law Society will require to avoid conflicts of interest in relation to its regulatory functions. If in a particular case those carrying out the regulatory function of the Society decide that they wish to see information which the Law Society has been given by one of its members in confidence, a direct conflict of interest within the Law Society will arise.
There is no legal basis for the Law Society to maintain any purported obligation of confidence, for example in relation to a conduct complaint. On the contrary section 48 and schedule 4 of the Legal Profession and Legal Aid (Scotland) Act 2007 make it clear that the Society may require any of its members to produce necessary information.
I believe that this difficulty is fundamental.
Before the Council presents a new constitution to the members for approval, it will have to make changes so that it will comply with its obligations under section 27 of the 2010 Act.
John McGovern and I have carefully discussed this matter. There has emerged from this discussion the idea that the Council should set up a representative committee in which it should not unduly interfere. This would oversee the representative functions of the Society, and would consist only of solicitors, elected by members of the Society. It would mean that both the regulatory and the representative functions of the Society were part of a balanced governance system, which there was a chance that solicitors might regard as fair. It would create a system structured to avoid conflicts of interest. This would mean that the constitution would have to be rewritten. However there is time because the Society has not yet applied to become a regulator of LSPs.