Opinion: Alison Hook

Quis custodiet ipsos custodes? Who watches the watchman?

How can society ensure that those who regulate professionals or other regulated activities, are subject to proper scrutiny and oversight themselves?

This is a live issue in Scotland right now, as the legal services regulatory regime undergoes its first major overhaul in nearly 15 years. As it looks to legislate on legal services, the Scottish Government has to determine how to ensure that regulation is independent both of government and of the legal profession, and that oversight mechanisms provide a guarantee of both.

There are significant risks in getting the answer wrong. Even in democratic societies, governments would love to have the power to tame lawyers who bring judicial reviews, challenge policy by defending groups like asylum seekers, and complain about public funding of legal aid. But if a government has too much direct say over who can practise law and challenge what they do, through the influence they can exert on a regulator, the rights of everyone in society are under threat.

This is not just a theoretical concern. The Regulation of Legal Services (Scotland) Bill proposes powers for Scottish ministers that Henry VIII could only have dreamt of. Under its provisions, ministers can not only withdraw or sanction designated regulators if they do not approve of the way in which they are carrying out their functions, but can intervene directly in the market, setting the level of fines and directly granting licences to specific forms of practice, among other powers.

While the drafters might argue that there are checks and balances on the intervention powers of ministers against regulators, these rest largely in the Lord President. But although the judiciary may be well placed to provide oversight of the courts and broader access to justice questions, they are not necessarily experts in legal market innovation and purely transactional activities.

So what other oversight options are there? The Law Society of Scotland and Faculty of Advocates might argue that the current system works fine and is a version of the “co-regulatory” model found in many other jurisdictions. In this model, professional bodies regulate subject to checks and balances, such as lay involvement in decision-making or a separate complaints authority like the SLCC. But co-regulatory models cover a broad spectrum. If oversight authorities only have an ex-post right of review of specific cases, or are treated as appeal bodies, or comprise a minority non-lawyer voice, they can do little to combat the three risks of ill-designed oversight: regulatory capture, regulatory inertia and an overly narrow field of vision.

Regulatory capture arises where regulators take decisions, wittingly or unwittingly, in the interests of their regulated community rather than the wider public interest. In 2019, the US Federal Trade Commission found that the North Carolina Dental Board, then made up entirely of practising dentists, had acted anti-competitively in banning non-dentists from offering teeth whitening services. The FTC’s view was that this was an example of incumbent actors acting purely in their own interest. This underscores the principle that best practice in professional regulation demands lay majorities and lay chairs of decision-making authorities. Oversight needs to police the implementation of lay involvement and ensure a genuine separation of interests.

Regulatory inertia is another trap for largely self-regulating professions. It is all too easy for regulators drawn from the existing market to take a reactive, over-cautious and evolutionary approach to regulatory change. The OECD Competition Committee documented this phenomenon in detail in its 2016 investigation into how legal professions in the major economies handled disruptive technologies. They found examples of bar associations prohibiting lawyers from engaging with consumer focused legal services marketplaces, or excluding new entrants from offering services in new ways that might have improved access to legal services. It is not impossible for traditional professional regulators to act in the interests of consumers of legal services rather than the interests of the profession; it is just much harder for them given their inevitable closeness to the profession itself. Effective oversight needs to challenge regulators to act proactively in the interests of consumers.

Finally, self-regulating professions often suffer from a narrow field of vision. They see the answer to problems such as a lack of access to justice as “more lawyers”. This was recognised by the UN Special Rapporteur for the Independence of Lawyers and Judges, whose most recent report to the UN Human Rights Council called out the self-regulated legal profession for too often obstructing those outside the profession, such as paralegals, from providing services that lawyers themselves do not want to provide. Effective oversight needs to come from a body that has a wider view of and role in the market than a simple complaints perspective.

What might that mean for Scotland? There are various oversight options to be found between the Scylla of direct ministerial oversight and the Charybdis of the status quo. A wider, more proactive and upstream role for the Scottish Legal Complaints Commission would be an obvious starting point.