Seconds out

Yes: 2,245 votes; No: 2,221 votes. The forthcoming General Election will be hard pushed to produce a more intriguing outcome than the Society’s referendum vote on whether to accept, subject to safeguards, alternative business structures (ABS) as proposed under the Legal Services (Scotland) Bill.

The second question, whether if ABS go ahead, the Society should be involved in their regulation, produced a much more decisive result, 3,622 in favour to 844 against, or 81% support.

The Special General Meeting called at the instance of the Scottish Law Agents Society, adjourned following debate on 25 March, will have concluded by the time this edition is published, and can be expected to vote against the ABS principle of external ownership of legal practices, given the balance of the 3,260 or so proxies lodged. But the Society, recognising the closeness of the referendum result (on a 43% turnout) and the divisions generated by the campaign, has undertaken that Council policy will be determined in the light of both votes, along with the discussions it has undertaken to continue.

President Ian Smart said following the result: “The narrowness of the result clearly illustrates just how the issue has brought out widely divergent views across the profession.

“While there have been a few heated remarks on the wider fringes of the debate, I believe that the vast majority of solicitors still wish to try and find a united way forward. These results will therefore inform the ongoing policy debate which will also continue both in private and at the reconvened Special General Meeting.

“There are, I believe, already areas of consensus on some models of ABS but more work still requires to be done to find an overall solution to what is, undoubtedly, one of the most important issues faced by the Society in my more than 30 years of professional life. Trying to find an agreement will continue to be the number one priority of all of us within the leadership of the Society.”

Michael Scanlan, SLAS President, responded to the vote by saying that SLAS was very pleased that the profession had engaged with the debate in significant numbers. The result reflected the divisions of opinion on whether the proposed structures would be beneficial for either the profession or the public.

He added: “Such a narrow margin does not provide any clear mandate. Unfortunately a referendum can provide an answer to only a very crude question and the debate, certainly from our perspective, has been carried out from a principled approach seeking answers to what are generally acknowledged to be the critical questions of independence of the profession, client confidentiality, the benefits of the Guarantee Fund and the Master Policy.”

Confirming that SLAS would proceed with its motion at the adjourned SGM, he concluded: “We hope that the Council of the Law Society will now work with us in seeking to move forward in a constructive way in relation to the bill.”

Line to be drawn

Much more, then, waits to be said on ABS. But what meantime of the second referendum called, on the question whether the Society should continue to combine representative and regulatory functions?

This ballot, in which voting is planned between 26 April and 10 May, follows a requisition by 65 solicitors (50 are needed to call such a poll), from the Glasgow Bar Association, MacRoberts, Thompsons, and Govan Law Centre, and also including Robert Pirrie, chief executive of the WS Society.

The signatories declared their concern that the Society could not continue as both regulator and representative of solicitors in light of the Legal Services (Scotland) Bill – in particular s 92, which as introduced would give ministers a default power to prescribe the number or proportion of non-solicitors to be appointed by the Society to its Council, and qualifications to be met. The Government, as Minister Fergus Ewing announced at the Society’s Edinburgh ABS roadshow, has decided that these powers, which have proved controversial, can be amended out of the bill, but Robert Pirrie, while welcoming this development, says the problem did not begin and end with s 92.

“It was a symptom, not the underlying condition, which is Government influence and powers in relation to the Law Society”, he comments. “The Scottish Government, and Scottish Parliament, must decide whether it expects the Society, because it has a regulatory role, to be aligned with Government policy. If it does – and it is unfortunate that some feel over ABS that the Society has been more focused in being so aligned than in eliciting and representing its members’ views – then there has to be a question mark over the Society’s representative role.”

Pirrie, who emphasises that he is offering a personal view, accepts that it is not unusual for modern regulators to be close to Government, but maintains that unless the Scottish Government and Parliament “signal legislatively that they recognise there is a line they cannot cross”, solicitors face the question whether they want to be able to opt out of representation by the Society in favour of an alternative.

His comments reflect his evidence for the WS Society to the Justice Committee at stage 1, when he referred to the Law Society’s potential role under the bill as upsetting the “delicate balance of regulation and representation under the Solicitors (Scotland) Act 1980”. Pirrie explains that if as a result of the ABS vote the position changes so that the Society is asked to do no more than possibly regulate legal practices with a minority non-lawyer stake, he considers that the dual function would “in principle become tenable once more” – but with a reservation.

“In my role I speak to many lawyers and it saddens me that so many tell me they feel the Society’s reputation as a representative body has been damaged by the conduct of the ABS debate”, he comments. “The Society’s style and communication strategy concern many members.

I think they would like to see a change of approach and tone from their representative body.”

Groundswell

In this he is not alone. The SLAS, according to spokesman Ian Ferguson, do not (at time of writing) have an official position on the second referendum, but Ferguson expressed his dissatisfaction with aspects of the Society’s handling of the ABS poll.

Former President Caroline Flanagan – who supported the SLAS motion at the SGM – is another who sees more concerns being expressed about the Society’s twin roles now than in the past. “There appears to be a groundswell of opinion that the Society is no longer promoting the interests of the solicitors’ profession”, she says. “The s 92 debate is a classic case in point. The Society was heavily involved in drafting the bill and the Council appeared content with the terms of s 92. It was only after others raised serious concerns that an amendment was agreed.”

The Society demurs from that view; but is the “groundswell” simply due to it being faced with an unusually determined, at times vitriolic, attack on what it thought was settled policy, or are any difficulties symptomatic of something more fundamental?

Some of those calling for a referendum are in no doubt. Three of them, John McGovern, President of the Glasgow Bar Association, Mike Dailly of Govan Law Centre and Frank Maguire of Thompsons, are also standing for Council’s Glasgow constituency in this May’s elections. They did not respond to the Journal’s invitation to comment, but in the press release issued along with the requisition John McGovern, who maintains the Society can only regulate in a post-ABS world, stated: “Law Society reform is a major feature of the Legal Services Bill. It is vital there is a referendum to allow the profession to decide whether, given the threat to our independence from Government that the bill poses, it still thinks the Law Society should continue to represent, as well as regulate the profession.”

Mike Dailly claimed: “The Law Society’s role as both regulator and representative of the legal profession is rendered untenable by the Legal Services (Scotland) Bill. Solicitors should be free to choose their own independent body to represent them in the same way that workers are entitled to choose a trade union to promote their interests.”

In response to the ABS vote McGovern was reported as saying that the professional interests of high street firms were clearly different to those of big commercial firms, and the Society should recognise that it could not continue to represent both.

Ability to influence

Some have pointed out that the terms of the requisition do not strictly reflect the Society’s current s 1 duties, the “promotion” of the “interests of the profession” and of the interests of the public in relation to the profession. As Caroline Flanagan notes, “We are all free to subscribe to membership organisations that will represent our interests. Many do.”

However with the Society’s own internal reforms having created three “overarching” committees, one of which is Representation (along with Registration, i.e. admissions, and Regulation), it is clear that the Society itself sees representation as one of its central roles.

Neil Stevenson, the Director of Representation and Support, could be said more than most to have a vested interest in the result of the referendum, but argues that the ABS debate has underscored the Society’s representative role. “Those seeking to change policy did not simply campaign at the door of Government, they campaigned to change the policy of the Society, because they knew it was only the single and unified voice of the profession that was likely to resonate in debates with Government and others.”

His comments were echoed by Council members who already represent Glasgow, whom we also invited to comment.

Austin Lafferty has been leading the Strategy Group which directed the Society’s reforms. “I have found that the engagement of ordinary members in the doings of the Society has been of an extraordinarily low level, and hence the knowledge of the huge range of work – often unexciting, routine, but absolutely essential work – done by the Council and the staff at Drumsheugh Gardens”, he says. “Only a unified and empowered Law Society of Scotland can do that.”

“Sadly though, in the furore about ABS and representation, all that is ignored, and the Council and Society are painted as bumbling fools at the beck and call of Government.

“Not remotely true. Never was, and is not now. I would not be part of a Council that was a sham or a weak vessel for any passing politician to push along their political stream.”

Alison Atack, who convenes the new Regulation Committee, insists that Council is acutely aware of its dual statutory role.

“As convener I can confirm that the importance of the regulatory function is understood by Council, and its independence from the representative function has already happened”, she says. “This has been achieved by a division within the Society structure which brings integrity to and underlines the duties of the Society to the profession and public accountability. The split allows a new focus on the role and remit of each overarching committee.”

The other Glasgow candidate to comment, President-elect Jamie Millar, asserts that it is the ability to both represent and self regulate which is the hallmark of a profession.

To Millar it would be folly to give up the dual role voluntarily. “We need only look at the experience of the architects, doctors and dentists to see how separation of regulation and representation has left the professional bodies which retain the representative role far less influence. RIBA, RIAS, BMA and BDA would all welcome the chance to have the joint role enjoyed by Law Society of Scotland, RICS, ICAEW and ICAS. In England the profession is now regretting that it did not fight the split of functions between the Law Society of England & Wales and the Solicitors Regulatory Authority.”

Divide and be ruled?

A key issue solicitors will have to consider is whether their interests can be better represented by others independent of the Society.

Flanagan does recognise the tension between being close to Government as a way of achieving things, and the view in some sections of the profession that being seen as too close is not helpful when it comes to standing up for the profession. She also points out the possible consequence, in the event that ABS are permitted, of the Society then also requiring to regulate those who are currently in competition with the profession – a matter also of concern to Gilbert Anderson, an opponent of external ownership, who suggests that it would compound the tensions that currently exist if the Society were to act as regulator.

Flanagan concludes, however, that “if the Society is not the representative body of the profession, we will end up with a number of disparate bodies that struggle to represent the profession effectively. We will have carried out the division ourselves and will be easier to conquer”.

One thing the decisive result on the second question may have made less likely is that a split would leave the Society with its representative rather than its regulatory role. The possibility was floated by Chief Executive Lorna Jack, who suggested that it might be an attractive solution to Government to hive off the regulatory functions, perhaps giving them to an enhanced Scottish Legal Complaints Commission to avoid creating another quango.

Robert Pirrie discounts in any event the prospect of the Government compelling solicitors to be regulated by another body. “The bill itself contemplates the possibility of a choice of ABS regulator. It would be inconsistent to deprive solicitors of the choice of being regulated by the Law Society.”

There is not the space here to record the comments received, welcoming the effect of the ABS debate in energising the profession and its interest in Society matters. With that inevitably comes a greater degree of critical scrutiny. The ultimate question for those voting in the second ballot is whether the current structure can continue to prove its worth after the dust has settled on the ABS debate.

Have you a comment? Follow the debate at www.journalonline.co.uk/Referendum/, or send a contribution to peter@connectcommunications.co.uk

But what does representation cover?

Solicitors may tend to think of representation in terms of negotiations with Government and others. But the Society cites a much wider spread of work as coming under the role, including its extensive law reform work.

As representational successes Janet Hood, Group Convener of Representation and Professional Support, instances the helpline functions of the Professional Practice Department (20,000 enquiries a year), the Master Policy (a regulatory body would only be able to set the rules for PII), CPD provision, on which half the profession currently relies, the 12% increase in pre-action protocol fees agreed by insurers, and the 5% rise in rates in the judicial tables of fees.

She adds: “The Thomson review of rights of audience also showed the Society able to negotiate a superb position for members by pushing for a proper review, rather than responding to one set of comments made about solicitor advocates. That ability to represent was again demonstrated when we negotiated to ensure smaller firms could remain on the panels of leading banks and other lenders. This was only achieved because we also managed the Master Policy and Guarantee Fund so we could quickly get the reassurance coordinated that the banks needed – it would simply not have been possible with a split organisation, and we saw small firms in England & Wales lose out.”