The Scottish Law Agents, who have called on solicitors to make representations individually to their MSP, have provided the following briefing paper on the Legal Services Bill, presently at Stage 2 of the Parliamentary process.

THE LEGAL SERVICES (SCOTLAND) BILL (the “Bill”)

1. SCOTS LAW AND LEGAL PROFESSION IN A UK CONTEXT

· The Scottish legal system has remained a distinct system despite the Union. It has done so by considering its own solutions to problems, not by slavishly copying those adopted in England and Wales. There is a supreme irony in an SNP administration pushing a pre-financial crisis regulatory structure based on a discredited Thatcherite/Blairite philosophy.

· The big four Scottish law firms (the “Big Four”) are already registered in England. A decision to shelve the Bill will not result in the Big Four ceasing to be registered in Scotland. And the Big Four will continue to provide legal services in Scotland come what may, for that is where their know-how and lawyers are based: their competitive advantage is having expertise based in Glasgow and Edinburgh which does London work at half the price of London firms.

· The Big Four have repeatedly said that their business will always come before their wider duties to the Scottish public. We could introduce the Bill tomorrow and still the Big Four might leave: they will threaten to leave again the next time the Scottish Government or Parliament doesn’t do as they are told.

· It should be noted that one of Scotland’s largest law firms (Brodies) remains opposed to external ownership, on the grounds of preserving independence of the profession.

· The English Act appears to be less permissive than the Scottish Bill, restricting to 25% the non-solicitor ownership for law firms which are regulated by the SRA.

2. THE RISKS FOR THE PUBLIC

· If the Bill proceeds there would be a reduction in the availability of legal services outwith the major conurbations and particularly in rural areas.

· The functions performed by solicitors have a quasi-public nature: solicitors are officers of the court. The involvement of third parties in the ownership legal service providers is likely (despite “safeguards”) to lead to the involvement in the legal system of persons or interests whose basic reasons for being so involved has nothing to do with the rights and interests of the public and all to do with money.

· At present, every solicitor in Scotland is liable for any losses occasioned by the fraud of a solicitor (by virtue of the Guarantee Fund).

· Every consumer, at present, is insured against the negligence of a solicitor, even if that solicitor has no insurance, by virtue of the Master Policy that covers the whole profession. No other profession, anywhere in the world, provides such robust protection for the consumer.

· But the Guarantee Fund and Master Policy will not survive the opening of the profession to outside investors/other professionals. The Bill will replace robust regulation with discredited light-touch regulation.

· The real benefactors of the Bill will be the partners of large corporate firms who, at the moment, have no ready way, in the present market, of extracting their capital investments from their respective firms.

3. SCOTS LAW IN INTERNATIONAL PERSPECTIVE

· The independence of the legal profession is an international benchmark for the rule of law: International Bar Association Code of Ethics and the Council of the Bars of Europe, Core Principles for the European Legal Profession.

· Within Europe, only independent lawyers are entitled to claim legal privilege on behalf of their clients. This is a human rights issue. The Bill (see s 60) is subject to human rights (unlike the Legal Services Act 2007).

· The position in Australia is that (a) the legal profession appears divided on the issue of independence as the Government seeks to reform the regulatory tangle which has developed, and (b) class actions at the instance of plaintiff ABS’s are being thrown out by the courts because the independence of the plaintiff (ABS legal practice) is compromised by their shareholders’ interest in profit. Further evidence can be supplied.

· All professions, in all countries, have barriers to entry. That is the whole point of a profession: society recognises that it is important that only those with the appropriate qualifications are allowed to decide matters involving the health and liberty of the citizen.

4. THE BILL IN WIDER REGULATORY CONTEXT

· The regulatory philosophy underlying the (English) Legal Services Act 2007 was conceived prior to the collapse of Lehman Bros. The collapse of Lehmans and the ensuing credit crisis has led to a change in the regulatory world. To allow the Bill to proceed would be to ignore the lessons of the Financial Crisis.