The choice for the profession

Solicitors face a choice at the Society’s Annual General Meeting next week. They can rally behind a motion that promotes a compromise on alternative business structures and has the potential to unite the profession. Or they can back a position that, I believe, will fail to provide a long-term solution for the profession in a fast changing legal marketplace.

Throughout the debate on legal services reform and the proposed introduction of new business structures, the unity and reputation of Scotland’s 10,500 solicitors has remained uppermost in the minds of those at the Society who develop and promote policy. The Society’s Council has therefore put forward a motion that takes into account three important votes: the 2008 AGM decision to support any form of ABS; the 2010 special general meeting decision to overturn that position; and the recent independent referendum in favour of new structures, as long as appropriate safeguards are in place.

Clearly, these contrasting votes represent a stark division of opinion. With the numbers almost evenly split, we must look for a compromise that solicitors from across all areas of the profession can accept and support.

The motion from the Society’s Council supports majority ownership (at least 51%), management and control of law firms remaining with solicitors or solicitors with other regulated professionals. This would prevent wholesale ownership of firms by big business – the so-called Tesco law model that has caused so much concern – while allowing considerable scope for firms to grow their businesses by attracting external investment.

Creating a level playing field for firms competing with counterparts in England & Wales is vital if we are to avoid the possibility of solicitors choosing an alternative regulatory regime. As well as any loss of income there might be for the Society, this could impact negatively on the future viability of the Guarantee Fund and Master Policy. The Council’s motion is a significant compromise for those members who support all forms of ABS and, while the 51% ownership model was rejected at last month’s SGM, that vote was based on proxies granted before any compromise had been proposed. Hopefully, members have now had time to consider the issue more fully.

The second motion at the AGM, proposed by Mike Dailly, of Govan Law Centre, would allow no more than 25% of a firm to be owned by non-solicitors, who must also be involved in the firm. It prevents all forms of external capital. While this is a movement towards ABS, a compromise needs to be acceptable to both sides if it is to unify. Unfortunately, the Council does not believe this goes far enough to satisfy the needs of our members who are competing with firms south of the border and, therefore, will fail to reunite the profession.

The third motion, put forward by the Scottish Law Agents Society (SLAS) and voted through at our recent SGM, prevents all forms of ABS. As with Mike Dailly’s motion, this will clearly fail to satisfy a large section of the profession, which has already backed far-reaching change in a democratic vote.

With a split already apparent, doing nothing is unsustainable. Rather than resolving the issue conclusively, endorsing the SLAS motion could cause further division during the process of enacting and implementing the Legal Services (Scotland) Bill. Ultimately, MSPs will decide what form ABSs take, not the Society or anyone else. However, there is cross-party support behind the principle of reform and adopting an anti-ABS policy would damage the credibility of the profession and weaken our voice at a critical time in the legislative process.

The Society has continued its development of a regulatory structure, with the profession’s input, that will safeguard the independence and integrity of solicitors while allowing firms to compete and innovate. Amendments to the legislation are also being prepared, for instance to clarify the definition of a regulated professional as that contained in the European directive on the recognition of professional qualifications. That work continues.

All members are urged to attend the AGM on 27 May and vote. Alternatively, please complete a proxy form in favour of myself, Ian Smart, President whom failing Jamie Millar, Vice President, by 10am on Tuesday 25 May, and we will exercise them on the day on your behalf. More AGM information and proxy forms are available via this link.