The resumed SGM: who said what

The reconvened Special General Meeting of the Law Society of Scotland on 21 April, being the continuation of the meeting of 25 March 2010 called on the requisition of the Scottish Law Agents Society, ultimately passed the SLAS motion against non-solicitor ownership of solicitors' firms, but not before debating an amendment proposed by Richard Masters of McGrigors which put forward a compromise position.

At the outset of the meeting, following the introductory remarks of Vice President Jamie Millar who took the chair, Council member Walter Semple, supported by Gilbert Anderson of Andersons LLP, raised as a point of order that no reference had been made to the meeting of 33 solicitors that had taken place on 16 April, on the basis that the Society having initially sent a notice to members reconvening the meeting for that date, could not validly change that date. They questioned whether the meeting now being held was a valid and lawful meeting without a reference to the meeting on 16 April, and questioned the opinion of counsel received by the Society which stated that it was, under reference to contrary advice they had obtained.

Jamie Millar said the Society was entitled to accept counsel's advice and if there was a challenge to the validity of the meeting it would have to be brought elsewhere: the meeting could not decide on its own competency. He had no difficulty acknowledging that a meeting of 33 solicitors had taken place if that was what was requested.

Richard Masters then moved his amendment, introducing himself as speaking in the two capacities of managing partner of McGrigors, and as a Scottish solicitor. We were, he said, in danger of causing long term damage to the profession. The referendum had approved ABS subject to appropriate safeguards, and ABS had been supported by more votes than the big firms could have amassed. He doubted we could stop the bill; his amendment was about safeguards for professional independence.

Some were already in the bill, such as the "fit and proper person" test; he proposed to go further by providing that majority ownership must lie with solicitors, or solicitors together with other regulated professionals. Subject to that, those who wanted to access external capital could do so.

Setting our face against change would not work. We would look unsure of ourselves and scared of competition. We had to have a seat at the table.

At the start of the debate, he had wanted a level playing field with England & Wales, but he had modified his position to recognise that the potential damage through splitting the profession was not where we wanted to be. He concluded: "Let's take the opportunity to change, but stick together."

Seconding him, Patrick Andrews of Shepherd and Wedderburn said the Emperor was being seen to have no clothes. The position of the profession would not be protected by supporting the status quo.

It was unnecessarily divisive to say that the big firms were looking to their own interests. We all had a common interest for example in the Master Policy and Guarantee Fund. His firm wanted to preserve and promote the Scottish legal profession. We had a fantastic international reputation, and a competitive advantage regardless of size. Our lawyers were the envy of other jurisdictions, as were our standards of professionalism and ethics. It had taken a substantial investment to achieve that, but the principal objective would be lost if we could not compete. That was why his firm had engaged with the Society and the Scottish Executive from the earliest stages, and why he had serious concerns at the irrevocable damage that could be caused.

Survival was not simply for the fittest but of those with the ability to best adapt to change. We would lose that if we did not stand together.

Austin Lafferty had two questions for those who opposed him in the Council election for Glasgow: Do you trust yourselves to maintain ethical standards no matter what pressures are put on you; and if so, why are the rest of us so untrustworthy that we have to be prevented from developing business strategies such as the amendment would permit. Did they not trust their own voters? If ABS were going to happen, it was better to be part of the solution than part of the problem.

Simon Mackintosh of Turcan Connell reiterated Douglas Connell's support at the earlier meeting for allowing non-solicitors in their business to become equity partners, as they were people of the highest professional standards who shared the firm's ethos and ethics. He entirely supported the amendment which was a practical way forward, accepting the bill.

Ross Anderson, now of Glasgow University, who had trained at Maclay Murray & Spens, disagreed with the content of the compromise. It was said that no change was not an option, but only we could control our destiny. He backed the view that you can't be 99% independent. It wasn't that he didn't trust other professionals, but you couldn't control others that you didn't know anything about. Independence was manifested in international declarations and he could not support the positions now being adopted in England and Australia.

The big firms would lose credibility if they threatened to leave, and then did not carry it out.

Even 25% external ownership left unanswered questions, for example concerning legal professional privilege.

John Elliot of Lindsays asked what would happen if the original motion were passed, and what the Government would make of the referendum vote where half the profession did not vote, a quarter were in favour of ABS and a quarter against. The movement for change was coming from the EU, the OFT, the Consumers Association and others. The Government would probably continue with its bill. The amendment was a sensible compromise, otherwise the profession would look foolish, and things would happen that we had no control over.

Janet Hood, chair of the In-house Lawyers Group, supporting Austin Lafferty and John Elliot, asked if the Government would ever listen to us again if we could not come to a compromise. She restated that employed solicitors were just as capable of giving independent legal advice as others. The bill was a Government one and not a Law Society one, and followed from the super-complaint. The worst possible scenario would be a fractured profession. Perhaps three quarters of the profession did not really require a practising certificate – would they go on paying for one if they did not have a strong representative body?

Magnus Swanson of Maclay Murray & Spens challenged Ross Anderson's analysis. The big firms were not threatening to leave: the amendment was evidence that they were wholly committed to remaining members of the Scottish profession.

England & Wales had changed, and we might be faced with competition that was more to the liking of commercial clients. Firms would inevitably react as they saw fit. The possibility that Scotland would not be affected was the elephant in the room.

He concluded: "In a world affected by volcanoes, we must not behave like dinosaurs."

Balfour + Manson's Andrew Gibb recalled that the end of the world had been predicted when divorce was allowed in the sheriff court, and when the Law Reform Act of 1990 was passed. We had to be sanguine and move with the flow. We had to be permissive, and support the amendment to allow the profession to move on. This issue was bigger than anything in 1980 or 1990 and would continue to grow.

Graham Matthews of Inverurie, a Council member, had some answers for Austin Lafferty: the Consumers Association had no interest in where the big four got their capital from; for them it was all about cheaper legal fees for the consumer – but "How they will become cheaper than now I don't know." It shouldn't be a big firm v small firm debate, and the amendment would suit his small firm in some ways. He pointed to the experience of the Guarantee Fund Committee, and to the controversial legal advice over the Iraq war, as suggesting that solicitors, and in-house solicitors, were not always as independent as they should be. However he supported the amendment.

Fiona Westwood, formerly a solicitor and now a consultant working across the professions, said that other professionals were very good. They regarded lawyers as not that great at leadership, and we would have to adapt. There was no conflict between being commercial and being professional – look for example at private hospitals. We shouldn't be so insular and intent on scoring debating points.

Richard Henderson, Past President and a former Government solicitor, said that when he accepted the invitation to stand for the Presidency, he did so because of his vision for the profession – strong and independent, making a contribution to Scotland, offering standards to clients and to the country. A vision to be a leader in civic Scotland, leading to success for its members, success for the country, success and respect for lawyers. But more than that, the profession should be a leader. It must have standards, and it must have unity. These didn't come from a golden gift but from compromise. We were asking for that today, so that it could become the leader we should be in this country.

The vote was then taken on the amendment: 74 in favour, 18 against with 8 abstentions. A poll was then called, on which the amendment was lost by 1,812 votes to 1,285, with five abstentions.

The original motion was then put: defeated on a vote by 67 to 24, with 8 abstentions, but passed on a poll by 1,817 to 1,290, with five abstentions.

After the vote Craig Bennet, interim President of SLAS following the resignation of Michael Scanlan last week, said the vote was a "noteworthy mandate that ABS in its current form is not acceptable to the profession", and asked the Council of the Law Society to observe the spirit of the motion in negotiations with the Government. He recognised that the vote required to be ratified at the Law Society's AGM (set for 27 May) but asked the Society not to get involved in a "proxy war". However he added that SLAS was never averse to constructive discussions with the Law Society or otherwise. "I hope that I can speak with Ian Smart, not to compromise, but to commence discussions which might, just might, bear fruit."

He concluded: "The SLAS position is that the direction taken by the Law Society on this matter must change course. The decision today vindicates our stance.”

In response Ian Smart, President of the Law Society of Scotland, thanked the meeting for the tone of the debate. The Society, he said, had a longstandng relationship with SLAS, but had to represent the profession as a whole. There were two ways to go – to recognise that the profession was split, or to try and bring people together. The Legal Services Bill was a Government measure and the only chance of changing it significantly was to go to Government with a united voice.