Hang tough

Jennifer Young, chairman, Ledingham Chalmers

The key to success in 2014 is investment in the future. There is no doubt there remain challenges in the wider Scottish legal sector, with potential for growth in some geographical areas stronger than in others. The same goes for particular legal services. However, we must stop thinking about short-term gain and focus on long-term sustainability.

In our view, corporate, litigation and private client services will continue to grow and strengthen throughout 2014. In Aberdeen particularly, the commercial market is showing no signs of slowing.

But the challenges that the legal sector experienced in 2013 will most likely continue in 2014. Skills shortages remain a concern, particularly with the opportunities open to the next generation of lawyers to diversify within the private sector. That is not new in the Aberdeen market, but is perhaps more acute at present, as the demand for talent grows.

You can’t discuss 2014 without considering the impact of the independence vote. However, we are seeing little evidence of uncertainty curtailing the flurry of activity in the north-east. Aberdeen’s strong, reciprocal relationship with London will remain whatever the outcome.

Ultimately, building long-term sustainability should be a critical focus in 2014. Meanwhile, lawyers must continue doing what they have always required to: adapting to whatever regulatory system is in place.

Douglas Connell, senior partner, Turcan Connell

It seems to me that the longer-term financial robustness of the legal profession, at least in private practice, represents a great challenge. During a period of incredibly low interest rates, some surprising firms seem to be struggling with liquidity and this can only become a bigger problem as we see interest rates begin to rise. Some firms also have exposure to final salary pension deficits, and the combination of providing for these liabilities coupled with bank debt puts several firms into a potentially precarious position.

If the legal profession applied the kind of capital adequacy tests which the Financial Conduct Authority applies to those of us with FCA-regulated businesses, there might be an avalanche of consolidation. The need for capital adequacy rules for many solicitors’ firms may be difficult to justify, but common prudence suggests that certain firms should not be running on empty, as seems to be the case.

As you can readily see from the growing number of ABSs in England, alternative sources of finance are being very actively considered by a large number of firms. This has not been the main driver for some of our recent cross-border mergers, but I believe that more and more firms will require to explore third-party funding.

In short, I have reached the conclusion that the traditional partnership model for financing working capital may become a threatened species, at least for larger firms, in the medium term. It is those considerations which form the backdrop to my comments.

Robert Sutherland, advocate and convener, Scottish Legal Action Group

Unfortunately, I don’t think that 2014 is going to be any easier a year than 2013 was. National and local government cutbacks to be implemented by April will lead to all sorts of services being further reduced, while the demand for help from vulnerable people continues to increase.

CABx, Shelter and all the other advice services are going to have another busy year dealing with some very complex cases. Changes to the funding of legal advice and representation will mean that not everyone in the country will get access to the level of help or representation they need. The court closures programme will continue to increase the workload of already busy sheriff courts, and cause problems for victims, witnesses and accused.

The Scottish Government will probably succeed in abolishing the requirement for corroboration in criminal cases, but it is unlikely that doing so will lead to the significant increase in conviction rates which the supporters of abolition believe will follow.

The good news is that there are many lawyers, advice workers, and others, who will be working very hard to find innovative ways of doing even more with even less while trying to protect access to justice for the most disadvantaged in society.

Brandon Malone, solicitor advocate and chairman, Scottish Arbitration Centre

The coming referendum on Scottish independence will focus global attention on Scotland in 2014. My personal hope is that we will see an informed, balanced and mature debate about the pros and cons of independence for the profession.

Independence would cement Scotland’s position as a neutral, cost-effective, quality alternative to London for legal services. It would also open up new legal markets in investment treaty work and international trade. There would be a huge demand for legal advice on regulatory matters between the date of the referendum and independence day, and beyond.

Independence would also bring the benefit and opportunities of having a global capital in Scotland, which cannot be overstated.

Against that are the potential advantages of staying part of the UK. Those opportunities have not been exploited to date. On the contrary, the profession in Scotland has suffered in London’s shadow. However, last year the UK Government launched its revised Plan for Growth, which now includes reference to Scottish legal services.

If the UK Government follows through on its plans, there are opportunities for the profession in having the weight of the UK machine behind it, albeit such promotion will inevitably present the Scottish profession as complementary to London rather than as a genuine alternative.

It is essential that the profession fully explores these issues, and exploits the opportunities that the referendum presents to their full potential during this year of focus on Scotland, so that it is best placed to prosper regardless of the outcome of the vote.

James Wolffe QC, Vice Dean, Faculty of Advocates

In Scotland, political debate in 2014 will be dominated by the independence referendum.

For the Scottish legal system, significant matters on the agenda will include the abolition of corroboration and court reform.

Irrespective of the outcome of these debates, people in trouble – whether accused of a criminal charge or involved in a civil dispute – will continue to need the skilled and independent legal advice and representation which advocates provide.

The Faculty of Advocates will continue to promote the rule of law in a democratic society. The Faculty will be proud to fulfil that historic responsibility, whatever constitutional choice the people of Scotland may make in the referendum in September.

Claire Mitchell, advocate

In the world of criminal law and human rights, my predictions for the forthcoming year are, I’m afraid, not positive. A perfect storm of a bitter recession, underfunding of legal aid solicitors in the criminal sphere and a concerted public campaign by politicians to bring “human rights” into disrepute means that protection of individual rights, in the criminal sphere and otherwise, is weaker than it has been for many “law” generations.

In the forthcoming year, the removal of corroboration as the cornerstone of the Scots legal system will make our house of justice a building condemned as “unsafe”. The cracks in the walls may not be immediate, or indeed dramatic, but the people of Scotland may well be suffering the repercussions of the removal of this procedural safeguard in the trial process for many years to come, as unintended consequences reverberate through its shoogly walls.

Moreover, at present there is talk of the removal of the Human Rights Act 1998, and although constitutionally difficult or almost impossible to achieve without removing ourselves from the EU, it is still a worrying prospect. 2014 may be a year of dramatic change in the world of criminal law and human rights and not, unfortunately, for the better.

Ian Ferguson, Mitchells Roberton, Glasgow

My predictions for 2014, as variously an individual, a partner of Mitchells Roberton, secretary of Glasgow Conveyancers Forum and council member of the Scottish Law Agents Society, are in no particular order.

(1) Scotland will remain part of the UK, slowing the Scottish Parliament’s wanton wholesale dismantling of the Scottish legal system and Scots law.

(2) The GCF will continue to develop into a conveyancers’ club with a website and online resources available to practitioners young and not so young, with some excellent CPD and guests.

(3) “Sep rep” will reappear as the only way of proceeding, following the Regulatory Committee’s examination of the case for it. The arguments based on conflict of interest will be of concern to the committee, which I predict will wish to ensure that genuine concerns on that issue are not brushed aside and must be addressed. SLAS and the Law Society of Scotland will work on how to word a new practice rule based on the committee’s recommendations and that will have broader support.

(4) There will be sustained gradual economic improvement, building on 2013’s gradual but continued growth. My wish for 2014? Let us face our fears and concerns with new determination to overcome them and to have some fun, yes FUN!

David Morgan, accredited specialist in employment law, Burness Paull

2013 saw a period of unprecedented change in UK employment law and its impact looks set to continue in 2014.

The measures introduced in 2013 have been the most radical that I’ve seen in my career: the increase in the qualifying period, and reduction in maximum compensation, for unfair dismissal claims; and, most significantly, the employment tribunal fee regime which requires claimants to pay up to £1,200.

There are two judicial reviews challenging the fee regime and a third challenging the reduced compensation cap; the decisions are eagerly awaited.

I predict that the Government will retain lodging fees for tribunals, but there may be some modification of the level of fees, given the significant drop in claims since fees were introduced and the backlash from unions and employment law commentators alike. I think there will be a new landscape in the approach to tribunal litigation as the trade union movement and insurance market step in. Parties will increasingly reach for mediation to resolve workplace disputes outside the tribunal system.

The flip-side of this reining in of employment legislation (which I expect to continue this year) is that we will see an increase in judge-made law (from Europe in particular). Holiday-related claims will be the most prolific in terms of employment litigation, on the back of a number of recent decisions on relevant factors in calculating holiday pay.

Tom Johnston, accredited specialist in licensing law, Young & Partners

Old Johnston’s Licensing Almanack for 2014 foresees change (and decay?). My prophecy is a new Licensing Bill. No insight of genius, as we have been told it is being drafted. Sadly, I foresee a mess. In addition to liquor, it will cover other issues, including adult entertainment. Any regulated activity covered by more than one piece of legislation spells muddle. What liquor licensing law needs after the fifth Act in 10 years is a consolidation. I am willing to bet we will not get that.

After much campaigning by the police, we will get back something akin to the “fit and proper” test. What I fear, however, is that it will be in a newly drafted guise. As Scots, we are not used to legislation based on principle as opposed to strict interpretation. We have not yet fully explored the meaning of the licensing objectives: this is more scope for confusion. I also predict that while some of the flaws in the 2005 Act will be fixed, some obvious ones will be missed, and there will be at least one new section with unintended consequences (which the Government may seek to cure by issuing more dodgy guidance).

Work for lawyers; uncertainty for the licensed trade. O Lord (of licensing), abide with me!

Fraser Tait, Tait Macleod, Falkirk

I hope that although this year may not be any better for the profession than last, it will not be any worse. It appears that middle-sized firms are disappearing, generally through amalgamation. This will leave the marketplace with small firms at one end, and cross-border behemoths at the other.

As a profession, we need to be far more united to face the challenges to ourselves and to the public. Changes to criminal legal aid adversely affect many accused. Many people can no longer obtain civil legal aid to access courts or tribunals. This is either because lawyers have stopped providing legal aid or because clients do not meet the increasingly narrow criteria to obtain it. In 21st century Scotland, access to justice is more limited than even 10 years ago. There is no sign that things will improve. Our voice must be heard and be effective to protect the interests of society at large. My hope is that those of us left will be able to continue to practise and make a living while positively influencing those around us, locally and nationally.

Iain Macniven, commercial property partner, Maclay Murray & Spens

There will be further mergers of law firms, in recognition of the continuing oversupply of firms and lawyers in the UK. That will inevitably lead to some fallout, with some lawyers in the merged firms doing very well while others will find the situation tough.

Due to client pressure, billing on the basis of time recording will continue to be replaced by other more sophisticated methods, such as fixed fees, retainers, volume discounts etc. Time recording will increasingly become principally an internal management tool for measuring profitability and other efficiencies.

In-house general counsel will continue to exercise significant control over external law firms in terms of what they require from these firms, including free value-added services, free or cheap secondments and the like.

Law firms will be forced to align themselves more with the long-held view of clients that more areas of legal practice are commodity work than lawyers have hitherto been prepared to admit.

The vote for Scottish independence will be lost (partly with my assistance).

The debate amongst the biggest Scottish law firms over whether the “Scotland only” model beats the “UK” model will remain unresolved.

Robin Baxter, VP Business Development, Iona Energy Company (UK) Ltd

The part of in-house law that I am involved in is oil, gas and energy. A safe prediction is that significant new legislation around shale gas will be brought into force.

Personally I do not believe that shale gas will affect our energy sources for five to 10 years, and much money will be spent proving the option as realistic. There will be legislation and more tax incentives to make success more likely. Additionally, since wind turbines are a devolved power, the Scottish Government will continue to support the approval of more wind farms, and to seek to reduce the decision-making time frames. I also predict that it will continue to state that renewables will generate 100% of the country’s electricity needs by 2020, although nuclear power still provides about 34% of our electricity, and most scientists argue that a similar base load is necessary to keep the lights on.

A substantial part of our heating is still provided by North Sea gas, and the UK Government will give tax incentives to find and produce more gas to fill some of the shortfall in UK supply so that we do not continue to require to import substantial volumes of LPG. This will again require significant enabling legislation.

More powers will be given to DECC to allow the call-in of applications from smaller oil and gas companies to allow improved access to existing North Sea infrastructure.

Fiona McAllister, senior solicitor, Burness Paull, and President, Scottish Young Lawyers Association

Having spent the past six months on secondment to the RBS litigation team, some patterns have emerged which will continue into 2014.

First, it is likely that there will be more litigation generally: the deadline for raising claims arising from the 2008-09 banking crisis is fast approaching.

Secondly, bank lending policies will remain under scrutiny. At the end of 2013, the Inner House made a clear distinction between pre-contractual discussions and a final written loan agreement, commenting that major banks do not normally lend private individuals or companies millions of pounds without setting out terms and conditions in writing, and that without specification of the essential elements there could be no concluded enforceable agreement. The Supreme Court is now to decide on the same issue.

More generally, I think there will be more scrutiny within the legal profession on gender imbalances. The Law Society of Scotland released the results of its survey in September 2013 and announced it would carry out an audit in 2014. PWC also released a survey recently which highlighted gender pay gaps and the continued absence of women in boardrooms. It also revealed that harassment and discrimination in the workplace have increased. There is a suggestion that this is due to the economic crisis, as people are more concerned about having a job and holding on to it, and bigger issues slip through the net. Some of these issues will be discussed at the SYLA Women in Law event on 6 March.

Tim Haddow, trainee solicitor and fair access campaigner

Having made the transition last year from law graduate to trainee, I am more conscious than ever of the challenges facing LLB students who want to become lawyers. 2013 also brought unwelcome confirmation that the slow progress of past decades has been reversed and that socio-economic diversity in the profession is in retreat: of the youngest solicitors, more are privately educated than their immediate elders; far fewer are first-generation graduates.

My prediction for 2014 is for the trend of increasing exclusivity to continue. A marked increase in availability of traineeships seems unlikely. Student living costs and DPLP fees will inevitably rise. The recent Scottish Government announcement that some DPLP students will be eligible for small living cost loans is positive and may assist some. But the costs and risks of the current route from LLB to NQ will make undertaking the DPLP an increasingly unpalatable gamble – or simply unaffordable – for many talented individuals, especially those from less privileged backgrounds.

My new year wish: to see the Society’s current fair access review lead to bold and imaginative reform of the route to qualification, clearing away financial and structural obstacles to fairer access and leading to a more representative legal profession for our nation.

Ethnic Minorities Law Centre

The Ethnic Minorities Law Centre is looking forward to another hectic year. First, given the rapid demographic changes in Scotland, including the BME (black and minority ethnic) population, which, according to the 2011 census has increased dramatically, we hope to complete our expansion to include all the major towns and cities in Scotland.

Secondly, we hope to consolidate our partnership working especially with the CABx, and continue our provision of training in areas of cultural awareness, employment and discrimination law, immigration, human rights and asylum law.

Finally, the EMLC will be closely monitoring the impact of employment tribunal fees, introduced last summer, in terms of access to justice for our clients, and free movement rights opened for Bulgarian and Romanian nationals from 1 January 2014 and the planned restrictions to immigration and human rights appeals under the Immigration Bill due to receive Royal Assent in spring 2014.

Alberto Costa, Costa Carlisle, solicitors, London, and Law Society of Scotland Council member for England & Wales

I believe that the changes taking place throughout the UK legal regulatory framework will continue, and present further challenges to both regulators and practitioners, regardless of the outcome in the referendum.

2014 presents an opportunity and a challenge for the Law Society of Scotland to add real value to those of us who are dual qualified and practising in England & Wales. Many of us are actually regulated by the English SRA, but we choose to remain on the roll in Scotland and pay our dues to the Society out of pride in our qualification, rather than from a tangible business need. But firms like mine in 2014, more than ever, need to consider the bottom line and question what benefit is gained by paying for two legal regulators.

As Council member for England & Wales, I am very keen to facilitate greater positive interaction between the Society and its members practising south of the border. I hope that the work I am presently doing on Council will help the Society focus more fruitful attention on my constituents, to ensure that they have positive reasons to remain regulated in 2014 and beyond by both the Scottish Law Society and the English SRA.