The SGM: who said what

The Special General Meeting of the Law Society of Scotland, called on the requisition of the Scottish Law Agents Society, ultimately adjourned without a vote to see if the two bodies could agree a common position as to the way forward, but not before a full and instructive debate had taken place.

At the outset the motion, which declared it essential in the public interest in an independent legal profession that ownership of legal practices be reserved to solicitors, was amended to clarify that it was not intended to affect the position of in-house lawyers - which, said SLAS President Michael Scanlan in proposing the motion, had never been the intention.

He went on to explain that once the SLAS membership realised how the Legal Services (Scotland) Bill would affect the issue of ownership, of 400 who had given their views, 85% were against the change.

There was a real fear that it could compromise independence, to be owned for example by a financial institution answerable to its board and its shareholders. Even all the now-disgraced bankers would have passed the "fit and proper" test - what about others less desirable?

No evidence had been put before the Justice Committee of consumer demand and it would not be in the interests of his clients in Govan.

The CCBE code required the absolute independence of the lawyer, which was as necessary to trust and confidence as the impartiality of the judge.

Seconding, Ian Ferguson sought to illustrate the potential for external ownership by inviting us to imagine the privatisation of the Crown Office and Procurator Fiscal Service, on the slogan "Convictions for cash". Someone would promise lower costs and more convictions - could it happen?

Gilbert Anderson, supporting the motion, said it was the most important General Meeting we had ever had. The bill was an immense threat to independence, which was the hallmark of a free and democratic society. Once it was lost, we would not be able to put the genie back in the bottle. The large firms, he claimed, would not be prevented from competing down south.

Former President Caroline Flanagan had voted in favour of the Society's current policy two years ago "because it was clear that something had to happen", but it was clear now that we still didn't know how ABS would be regulated. The Society's current consultation paper left her none the wiser. She had no difficulty with MDPs with majority lawyer ownership, but "vast difficulties" with 100% external ownership. She thought there should be room for some compromise and supported the motion "with regret".

Christine McLintock of McGrigors, opposing, said that 15-20% of Scottish law graduates already pursued their careers in England, and if we were unable to compete, we would lose the majority of our talent. A large number of firms there were already working towards external investment in 2011. Other industries and professions had found that if you can't be fleet of foot, you won't survive, and we mustn't be King Canutes and let the waves wash over us.

Alistair Morris, also a Council member, called the motion a wrecking one - it would put the Society in an impossible position in working with Government. Like Caroline Flanagan he argued that we needed to be united in discussions.

He warned that if the large firms left the Society's umbrella, the Master Policy and Guarantee Fund would not be able to function without their contributions.

Janet Hood, chair of the In-house Lawyers Group, said the bill was not creatred by the Society but by the Government and the Society was working on behalf of the profession to mitigate its effects. She was pleased to see the positon of in-house lawyers recognised and pointed out that non-independent legal advice would be worthless. There were threats in the bill but also opportunities.

Past President Richard Henderson, in office at the time of the 2008 AGM, said he respected the sincerity of the movers of the motion, but (1) they were wrong in their appreciation of ABS, as the key to ensuring independence was the regulatory regime; (2) he did not believe they could achieve their objective of stopping ABS, as the OFT was watching and waiting and wouldn't let go; (3) the Society had decided it was better to be in the driving seat, had been able to influence policy and it would send out the wrong message now to change it. The motion showed "a gloomy view of the future", and the profession would flourish if it met the challenges head on.

Douglas Connell of Turcan Connell explained how he wanted to introduce as partners, client-facing professionals who were not solicitors - "we only want those who share the highest professional standards". His was not a large corporate firm, but served private clients, families and charities, like many others present. He wanted to compete with banks, IFAs, CAs and others, and the bill would give him the opportunity to do that.

Mike Dailly of Govan Law Centre criticised the referendum question as biased for assuming there would be appropriate safeguards. The only two aspects of the bill that provided protection were the fitness provision (s 49), and the provisions for a head of legal services, which effectively based the protection of independence of solicitors on one individual. He was involved with the FSA in overseeing financial services institutions and many didn't comply even with a whole department in charge. The bill would not provide the protection it sought to.

Dundas & Wilson's Alan Campbell said that our commitment as solicitors was to give advice independently. It was not a necessary consequence that external ownership would affect this. Whether it allowed influence was a matter for regulation. Nothing changed the duty on the solicitor and what the bill did was introduce an additional regulatory framework for the entity - very straightforward.

Patrick Maguire of Thompsons argued that the Justice Secretary's "No change is not an option" was just a catchphrase. The bill had not received an easy ride before the Justice Committee and its members' minds were not made up. It would serve a purpose to support the motion.

McGrigors' Richard Masters, commenting on the likelihood of the big firms choosing to re-establish themselves down south, said it was the last thing they wanted but if the bill didn't go ahead and national law firms had access to external finance, they "would have to look at it as a serious option".

Stephen Gold said he had begun as a sole practitioner and ended up a partner in a large English based firm. The elephant in the room was the small firms' fear that they would be "rolled over". That was misplaced - they should use their imagination to see the opportunities, as had Turcan Connell, for example. We could make a strong brand capable of resisting the Tescos. Property centres were a good example of how to use our collective clout.

Professor Alan Paterson was worried about losing the high street firms but also about losing the large firms. The problems of regulating MDPs were as big as they had always been, but he didn't want to see the profession divided.

Magnus Swanson (Maclay Murray & Spens) agreed. The bill had "a regime we can all buy into". If we wanted to preserve majority control, that was something we should seek.

Council member Alison Atack asked if the proposers thought the Law Society wanted to spoil the badge of solicitor, or the profession's recognition by the public. "We aren't going to throw our standards away." The bill was about opportunity, for those at all levels.

The President, Ian Smart, thanked everyone and said it was good that more were involved than had been in 2008. The Council's objective, and its difficulty, was keeping solicitors as one profession, which would be to the benefit of all - especially for the likes of the Master Policy.

"Our objective from the outset was to try and keep a regulatory regime that could serve the interests of all parts of the profession", he said. Had we been too enthusiastic? Perhaps. Had the SLAS done us a favour by kicking us in a tender place? Possibly. He apologised if he had contributed to any antagonism in the debate. But a rejectionist view would not move it forward. It was naive to think the profession could have a veto on the bill. But it needed to speak with one voice or the politicians would take their own course.

Because of discussions that had taken place during a break and indicated the possibility of agreement, he moved the adjournment to see if a way forward could be identified. This was carried, after procedural points as to voting rights were resolved, by 76 to 33 with 12 abstentions, the chairman, Vice President Jamie Millar, pointing out that proxies lodged would remain valid when the meeting resumed.

After the vote Michael Scanlan said it was wonderful that they had had the debate; SLAS wanted to be part of a strong and united profession and would work to see if there was a way out of where we were and to seek consensus. He hoped that the continued meeting would not be beyond the passage of the bill.