Take a firm approach

The debate spinning around the proposed alternative business structures requires us to take a major step into the modern business world. 

As a profession, we accept that change must happen, and some propose that access to professional services and the viability of firms could be enhanced through the prospect of solicitors entering into partnerships with other professionals in multi-disciplinary practices (MDPs). But the nut we still have to crack is who will be the guardian of standards and ethics, and how. 

In the past, we have shown ourselves to be business people and realists. We have to adopt that attitude again now.

To begin with, the current system is not perfect. The rules and regulations of the Law Society of Scotland were first devised over 50 years ago, and whilst constant efforts are made to update them, the climate in which we operate has changed significantly, as have client expectations. This is the opportunity to genuinely evolve – not simply revise – and create a system that is relevant today and for the future. 

Accountability must remain at the heart of any new system, but regulation by a professional body of the individual beyond clearly defined technical accreditations, as is the current way, is now inconsistent with modern business structures. We should look to the employing firm to uphold ethics and to the individual to be technically competent; were an employee not trustworthy the firm should be held to account, and if an individual’s qualifications were in doubt, recourse would be through the regulator of those accreditations.

For me, therefore, following the consultation which will form the basis of the Society’s policy moving forward, the next step has to be an overhaul of current regulations to ensure that they meet the realities of the commercial world. They should be rules that both uphold the value of the brand “solicitor” and allow firms to operate in a modern and progressive business environment. Gaining and retaining membership of the Society should, therefore, be more stringent and dependent upon business practices as well as technical qualifications. 

The onus has to be on the firm to manage its staff and its business along the lines of best practice. The principals of the firm must ensure there is adequate supervision over those who provide legal (or any other) advice, which means training and management systems to monitor and evaluate activity. If mistakes are made, the firm, not an individual, should be called to account. A lawyer may be technically superb, but not a man manager, so let’s accept that the pressures of modern business are such that it is a combination of experts and expertise that will ultimately drive the expansion of the legal profession. 

Over and above this, there are a number of regulatory options that should be discussed for MDPs. The first is to create a common standard across the professions, which may involve the creation of some kind of super regulator but it is unlikely that there is the will, time or desire to see this happen. 

The second is to allow firms to choose membership of an association or industry regulator according to the weight of numbers: if more accountants, go with ICAS, if more financial advisers, go with the FSA, and so on. For me this is an artificial constraint and is inconsistent with the view to allow firms to operate in the way they deem best for themselves. I remain steadfast in my view that I want Pagan Osborne to be a law firm and so align myself to the Law Society of Scotland. 

If we wish to offer non-legal services which are regulated by another body, then whilst maintaining our Society membership as a firm (and complying with its rules and regulations), we should be required to meet the standards of the other regulator, should they be higher than those imposed by the Law Society of Scotland.

In practice, this is happening now. 

This is partly driven by agreed codes of conduct, but is it also driven by good business practice. As solicitors, we need to have credibility with our clients through our memberships and should never compromise ourselves by ducking out of any regulatory framework. Compliance, therefore, becomes a management issue as discussed earlier, and failure to comply would lead to a firm losing its membership.

Finally, the argument that the arrival of external stakeholders would put undue pressure on lawyers to make profits always surprises me. From where I stand, equity partners have had the same desire for years! If poor ethical standards or the performance of a company put that firm’s ability to operate successfully under threat, the shareholders would act.