Faisal, Charlene and Diana were law student scholars, participating in the WS Society Summer Scholarship programme during August 2020. This article summarises their research and presentation.
Introduction
The regulatory framework of legal services in Scotland is considered by many as overly complex. Many have argued for reform, especially given a rise in the number of client complaints against the work undertaken by their solicitors. The Law Society of Scotland (“LSS”) initially prompted the Scottish Government to review the current regulatory framework and recommend improvements.
The Roberton Review (“the Review”) was established in 2017 by the former Minister for Community Safety and Legal Affairs, Annabelle Ewing. Esther Roberton, Chair of NHS 24 was tasked with undertaking the independent review. Ms. Roberton’s remit was to scrutinise the current regulatory framework of legal services and make recommendations to reform and modernise the system to better serve the public, the profession and the Scottish economy.
“Over an extensive period of time, there have been consistent indications that consumer complaints are on the rise, the major issue being the manner in which complaints are handled. ”
Processing of complaints is often slow and the system criticised as being cumbersome and difficult to navigate. It has been frequently said that the current complaints system is not fit for purpose, as regulation has not been kept up to date with the current landscape of the legal services sector.
The Current Regulatory Framework
The solicitor’s profession is made up of approximately 12,000 practitioners, which constitutes a relatively small professional pool, when considered within a populace of five million in Scotland. The Review considered what basic principles were required to provide an efficient regulation and consumer principled framework. Ensuring legal services are properly regulated is essential to maintaining; an effective rule of law; an efficient administration of justice in Scotland; and upholding public confidence. With public interest weighing heavily on the agenda of the Review, it was vital to consider whether the current system of five different organisational regulators was fit for purpose. The three significant regulators are: The LSS, the Faculty of Advocates (both of which have a representative professional body role, as well as a regulatory role) and the Scottish Legal Complaints Commission (“SLCC”).
The LSS’s role as a regulator is primarily to govern the conduct of legal practitioners, whilst enforcing standards for entry routes to the profession, accreditation of the educational institutions, and supervision of other financial provisions, such as: anti-money laundering; the client protection fund; and ensuring legal firms are fit for purpose.
“The LSS is responsible for both the regulation and representation of solicitors, which suggests that the waters should be somewhat clearer between the two roles.”
The LSS has championed a procedural reform, challenging the framework set by the Solicitors (Scotland) Act 1980 and current models for dealing with complaints.
The SLCC oversees all complaints concerning the legal services. In its current structure, it is heavily burdened, to such an extent that it struggles with current demand from both the legal providers and consumers. The timeframe to process complaints can some instances be in the excess of 4 years. In some cases, it can even take up to 22 weeks to have the initial complaint classified. For concerned parties that can be a very frustrating and stressful waiting period which the Review has highlighted.
The Consultation Process
The LSS opposed a single regulatory body, as it would crucially increase costs for consumers and thus weaken public protection. It was agreed that the complaints system is cumbersome and confusing at present, but not without hope for redress.
The Scottish Law Agent Society (“SLAS”) was also against a single regulatory body, as they stated the idea ‘lacks credibility’ and that additionally there appears to be no evidence of this being a consumer preference. This is coupled with a concerning disregard for the rule of law, with a regulatory body potentially leading to an unreserved and problematic concentration of power in one body.
The SLCC was a supporter of the Review, arguing that there has been a widespread and long-lasting failure to challenge whether five separate bodies are effectively needed. The Review proposes to abolish those five legal bodies, which comprise the SLCC itself.
Key Recommendations
The Review made 40 recommendations with the aim of providing a proportionate approach to regulation whilst supporting growth and competitive provision within the sector and placing consumer interests at its heart. The most notable recommendations are detailed below:
The primary recommendation is for a new regulatory model and single independent legal regulator in the legal services.
The second key recommendation is that there should be a statutory provision which requires the legal regulator to implement an efficient complaint handling process for the consumer to raise any concerns which they may have against a solicitor or advocate.
The third key recommendation is to introduce regulation of the term ‘lawyer’, as there is public misperception about the differences between the terms: solicitor and lawyer. It is crucial for the term ‘lawyer’ to be regulated as anybody can call themselves a lawyer without formal accreditation. However, if one represents himself as a solicitor, then they must have a practicing certificate from the LSS, failing which they would be incurring criminal sanctions.
Implications of the Roberton Review
“Would an autonomous regulator, entirely independent of those it regulates and governmental influence work in practice?”
The Review recommends that a single independent regulator would govern everything from entry to the profession, to practitioners’ conduct, and the totality of complaints. It is conceived as a “one-stop-shop” to simplify a complex legislative and complaints framework and would be designed to be proportionate and risk-based.
Should the Review have instead looked to improve current infrastructure within regulators, instead of wiping the model clean and starting from scratch? The Faculty of Advocates and the LSS are extremely troubled with the prospect of losing their regulatory power. They are concerned that the model recommended would give government a stronger hand in governance of legal services and challenge independence. This is despite the Review stating that the new regulator would be accountable to the Scottish Parliament, rather than the executive. The ability to act independently and represent clients without fear or favour is an integral aspect of both branches of the legal profession.
Legal Services – The Landscape of Business Structures
The Scottish legal market is presently worth £1.2 billion, generating more than 20,000 jobs. Despite political upheaval, the still felt aftermath of the financial crash, and the COVID-19 crisis, the Scottish market has proved resilient, with no significant market failures being registered. However, essential differences exist with its English and Welsh counterparts in terms of regulation. When assessing the need for regulatory reform in Scotland several variables must be considered: the very nature of the legal profession and its societal significance; the economic fabric in which legal services exist; and the manner in which services are being delivered.
As highlighted in the Review the legal profession at large is concerned about the quality and ethical value of the services it provides. Regulatory protection of the very term ‘lawyer’ is widely desired in light of the particular societal role and higher standards the profession is held to. More widely than the regulation of lawyers themselves and their conduct, the business structures in which they operate look set for change.
“The branches of the Scottish legal profession are centuries-old, characterised by distinctive culture, prestige, an exceptionally high-level service provision and a strong institutionalised presence.”
The solicitor’s profession is dominated by the traditional law partnership model and this has remained unaltered for decades. Globalisation has impacted the Scottish market through numerous English and international mergers and acquisitions, but the dominance of the current partnership model persists. Currently, the profession stands at a crossroads, with the provision of legal services shifting towards a more commercialised and outward looking practice, featuring business efficacy as its main drive. Is the landscape of business structures changing and should the Review have taken this into account?
Alternative Business Structures
The introduction of Alternative Business Structures (“ABSs”) in England and Wales, via the Legal Services Act 2007, has sparked much debate. The traditional LLP only allows registered lawyers to legally own shares of the firm. In this pyramidal model, the partnership will benefit from all revenue exceeding the coverage of the firm overall business costs. ABSs allow non-lawyer ownership, effectively opening the gates for multi-disciplinary practice, where lawyers interact with other business providers, consultants and advisors. In this model there is no longer a monopoly of the delivery of legal services, tied solely to registered lawyers. The role of General Counsel has become crucial, with the Big 4 Accountancy firms aggressively expanding their legal teams, seeking to establish a firmer position in the progressively more valuable legal market. It is believed that the billable fee structure associated with the partnership model may be pushed towards a system of predictive fixed fees with the introduction of ABSs and evolving client demand.
However, the progression of the Legal Services (Scotland) Act 2010, allowing for the introduction of ABSs, has stalled since 2017, and would nevertheless require a 51% minimum ownership by lawyers to proceed. This has been received not without criticism by some practitioners, notably the Scottish Law Agents Society, who claim the inability to operate ABSs is hindering an effective delivery of legal services. Arguing ABSs enhance client experience, and allow for more price transparency, better investment, and strategic allocation of resources.
Final Remarks
Overall, regulation allowing for a more flexible multi-service delivery approach is welcomed by many. But particular attention should remain on the invaluable ethical standards the profession abides by and the quality of service provided. The Review provides significant recommendations for change to the framework in which the profession operates. Not all of the recommendations are supported by both branches of the profession and responses to the Review have highlighted that the across the sector the ability to operate independently is of crucial importance. The regulatory framework of legal services in Scotland looks set to change, as well as business structure in the industry but the debate as to what the future will look like seems set to continue. It is hoped that continued engagement will see the legal profession attain the contemporary, proportionate, and effective regulatory framework it deserves.