Council reports 2012
Council Meeting, 25 October 2012
Draft regulatory regime
The proposed scheme to allow the Society to regulate new legal services providers was debated by the Council.
In a wide-ranging discussion, members considered the:
• challenge of developing rules for entities – licensed legal services providers (LPs) – rather than individuals
• fit and proper test for investors in LPs
• role of the Guarantee Fund and Master Policy in the reformed marketplace
• resources available for regulating LPs
• Society’s dual representative and regulatory role under the new system
Much of the debate focused on the percentage stake in a LP that should require a non-solicitor investor to undergo a fit and proper person test. Under the Legal Services (Scotland) Act, no such test is necessary until an investor holds more than 10% in a LP.
However, some Council members said a test should be triggered when an investor takes a considerably smaller stake.
It was argued that a more rigorous test was needed to protect the public as well as the reputation of the solicitors’ profession and the Society.
The Society’s Director of Regulation, Philip Yelland, said the feedback would be considered by the working group developing the scheme and then brought back to the Council next month.
He added that the profession would be kept informed. The final scheme will be submitted to the Scottish Government to consider the Society as an approved regulator.
President Austin Lafferty paid tribute to the staff working on such a "huge exercise".
Society pension scheme
The Society should continue to make phased contributions to the deficit on its previous pension scheme rather than pursue a full buy-out, Council members agreed.
The scheme trustees had requested that the Council consider a buy-out, which would involve an insurer taking on the scheme’s pension obligations.
However, a report before Council members explained that this was a costly option.
It said: "The cash flow impact of a buy-out, compared with continuing to manage the scheme in accordance with the recovery plan, is unacceptably severe.
"The Society would have to borrow a significant sum to finance the buy-out and still provide a reasonable level of working capital. Market conditions are particularly disadvantageous at present."
It was agreed that, in the meantime, the Society will continue to manage the deficit and work closely with the scheme trustees on a risk reduction strategy.
A buy-out will still be considered in the future when conditions are more favourable.
Electronic voting for the election of the Society’s president and vice president will be possible following a change to the standing orders.
Council members agreed the amendment to ensure the standing orders are in line with the Society’s constitution, which was altered at last month’s special general meeting.
The election of the vice president for 2013/14, which begins on 30 November, will now use an electronic ballot system. Council members can access the secure section of the Society’s website with their logins and passwords.
Electronic voting was successfully piloted at last month’s Board elections, the Council heard.
Dumfries solicitor Paul Matthews is to join the Council as the representative for the constituency of Dumfries, Kirkcudbright and Stranraer, it was announced.
Lynda Towers, solicitor at the Scottish Parliament and incoming Chair of the In-House Lawyers’ Group (ILG), will also join the Council for a three-year term after her co-option was agreed.
Society President Austin Lafferty paid tribute to the outgoing ILG Chair Janet Hood, saying she had given "eminent, dedicated and brilliant service over all these many years".