"Drastic need" to modernise legal services regulation, Society argues

The way legal services in Scotland are regulated is in drastic need of modernisation, the Law Society of Scotland said today.

In its submission to the independent review being carried out by Esther Roberton, the Society calls for wide ranging reforms that will allow it to keep pace with global developments within the sector and improve consumer protection. These include expanding consumer protections to currently unregulated areas of legal services, regulating firms operating beyond Scotland and overhauling the legal complaints system, which it says is overly complex, expensive and lacks proper oversight.

The recommendations also include:

• better regulation of legal firms as entities in addition to the regulation of individual solicitors to better protect consumers;
• new powers to suspend solicitors suspected of serious wrongdoing;
• widening the Society’s membership to improve standards amongst other legal professionals;
• protection of the term "lawyer", as well as "solicitor", to mean those who are legally trained and are regulated.

Graham Matthews, President of the Law Society of Scotland, commented: "The Scottish legal sector is highly successful. It provides for over 20,000 high quality jobs and generates over £1.2bn for the Scottish economy annually. However we have long argued for the need for reform to the current patchwork of regulation that governs legal services in Scotland.

"There has been enormous change within the sector in recent years and the current system – some of which is almost 40 years old – is struggling to meet the demands of today’s fast changing legal market. That’s why we have called for completely new, flexible legislation which will allow much needed reforms and ensure we have a regulatory framework that is fit for purpose, addresses the challenges of modern legal practice – from cross-border working to technological advances enabling AI legal advice – and which puts protecting consumers at its core over the long term.

"We believe the scale of the changes needed justifies a new, single piece of enabling and permissible legislation that can adapt to changes within the sector over the next four decades and beyond. Any new prescriptive legislation, or simply making further amendments to existing legislation will quickly be outdated."

The Society is seeking the ability to regulate law firms operating beyond Scotland and to strengthen its regulation of firms as entities, as well as its individual solicitor members.

Mr Matthews explained: "There is a strong economic case for the Law Society being able to seek to become a regulator of legal services beyond Scotland, as having a single regulatory model for cross-border firms could make Scotland a more attractive jurisdiction for a firm to base its operations. Additionally, as firms must meet robust financial compliance and new anti-money laundering requirements are due to come into effect in June, it makes sense to extend the regulatory regime on a firm-wide basis to help improve consumer protection."

He added that new legislation should encompass the unregulated legal advice sector. "No one knows the full scale of the unregulated legal sector, but many consumers who believe that they have obtained advice from a qualified, regulated legal professional only find out they have no recourse to redress when things go wrong. As we look to the future, there is no doubt that technological advances will mean increasing use of artificial intelligence in delivering legal services around the globe and it’s our view that any new regulatory framework must be flexible enough to make provision for this."

The Society also criticises the current legal complaints system as being complex and confusing and has called for the creation of "an independent legal ombuds" which would have oversight of the Scottish Legal Complaints Commission (SLCC). Unlike the Society and the Faculty of Advocates, which are overseen by the SLCC, there is nothing in law to stipulate oversight of the SLCC itself.

Mr Matthews said: "We want to streamline the complaints system, which for many is slow and overly bureaucratic, and have recommended that while the SLCC would continue to handle service complaints and the Society would continue to deal with all matters of professional discipline of Scottish solicitors, a key difference would be to allow either organisation to receive complaints and pass on those relevant to the other body to create a simpler, speedier and more cost effective process.

"Another critical improvement would be to introduce proper oversight of the SLCC. While the SLCC must submit its draft budget to the Scottish Parliament each year and ministers can make recommendations, they do not actually have the power to interfere with its budget or operation. This has led to significant, above-inflation hikes in the annual levy on Scottish solicitors for the past two years. Having an independent ombuds would also simplify the appeals process and make it much less costly than the current process of taking appeals to the Court of Session."

Click here to access the full submission.