In-house lawyers news archive

In-house and the Society’s regulation consultations

30 October 2014


ILG Committee members Allan Steele, Sara Scott, Graeme McWilliams and Ros McInnes participated in a survey to glean views on possible changes to regulation of the legal profession, specifically the Society’s consultations on (1) entity regulation and (2) principles and outcomes focused regulation.

This article discusses their views and the in-house impacts, such as significantly reduced practising certificate fees. 


1. Entity Regulation and Charging  

The present system of regulation of the solicitors’ profession by the Society is largely individual. The idea mooted is a more hybrid system where entities also become regulated, as well as individuals, in line with a global trend in this direction. “Entities” means private practice law firms so this won’t make any changes in the way in which in-house teams are regulated but the new charge for entities would result in significantly reduced practising certificate fees for in-house solicitors. The consultation paper provides an example that an in-house solicitor working in a local authority would be £410 annually if entity regulation was implemented, compared to £630 at the moment.   

ILG Committee member, Ros McInnes (BBC Scotland), said “I thought it a good idea in principle. We’re already in a patchwork situation and more coherent consideration of that is needed.  The disadvantages outlined don’t strike me as insuperable or without precedent in the current system and some of the advantages- especially the possible reduction in a blame culture and better protection for the consumer- looked cogent. The regulation proposed is in addition to the regulation of individuals, so wouldn’t be at the expense of our personal responsibility as officers of the court.  

It’s maybe worth saying that this was winning my vote before I turned to the projected in-house example, which is clearly to the benefit of our membership as a whole.” 

Committee members, Graeme McWilliams (Standard Life) and Sara Scott (The Royal Bank of Scotland) commented that the advantage, quoted in the consultation paper, of a reduction in blame culture would not apply to in-house as entity regulation would not apply in-house. So if blame culture is an issue in-house then it would continue to be one. Sara also wondered if it had the potential to make in-house solicitors second-class citizens.    

Graeme and Sara both thought that better regulation of firms could benefit in-house solicitors in their capacity as clients, as it could benefit the public at large. With this in mind, both also felt that entity regulation would provide a fairer basis for regulation so long as it was implemented in a risk-based, proportionate way and they called for a register of regulated firms for clients/ the public to use. Clearly there are also plenty of lessons to be learnt from other areas, including the implementation of this in England and Wales.  

2. Principles and outcomes focused regulation  

The present system of regulation requires solicitors to adhere to rules promulgated in accordance with the Solicitors (Scotland) Act 1980.  The idea mooted is that the profession considers a move away from a rules based system of regulation in favour of adopting a principles and outcomes focussed regulation (POFR) system.  

POFR has been described by Professor Julia Black of the London School of Economics as: “moving away from reliance on detailed prescriptive rules and relying more on high level, broadly stated rules of principles to set the standards by which regulated firms must conduct themselves.” 

Committee Member, Allan Steele (RAF Wing Commander), saw some merit in a move away from a system based on detailed rules.  He said: “The system of regulation is ultimately there to protect the public interest and our system of justice in general.  It is imperative that all Scottish solicitors are required to uphold the highest standards of integrity in their professional lives.  That integrity test may be best described as doing the right thing when no one is watching.  If we are agreed on who the rules are there to protect i.e. the public, there may be some merit in ensuring that the rules are well understood by the public and solicitors alike.  General principles may better achieve that aim.   

However, I would urge caution before any change is made.  Solicitors, being creatures used to implementing rules, deserve certainty in their dealings.  If a general rule is ambiguous, the honest and conscientious solicitor rightly deserves guidance on a proposed course of action.  Any system of general principles should therefore be backed up by a dedicated customer service unit on hand to address solicitors’ concerns inadvance.  It would be simply unacceptable to allow solicitors to guess as to whether a proposed course of action adheres to rules and then have a regulatory body criticise them later when interpretative help was either not available or of an adequate standard.”  

Similarly, Graeme McWilliams and Sara Scott were broadly in favour of POFR but believed that the issues of lack of certainty and retrospective regulation were real ones. A clear advantage would be increased flexibility and future-proofing of requirements. Sara questioned if POFR would be a more expensive form of regulation to administer and whether this would therefore impact on practising certificate fees – a question there was not yet an answer to. Both called out the need for training from the Society and ILG on POFR to help with implementation and a clear need to learn lessons from other areas such as England and Wales and financial services.  

Ros McInnes had different views, saying “On the whole, I’m not sold on the concept. Some of the claimed advantages seem self-contradictory: it would be a rare situation where increased flexibility creates increased consistency, to my mind. I’m not convinced that to regulate by principle would enable greater client focus.  It does, however, seem likely that it would lead to an increased burden in terms of regularity guidance.  Scots law is traditionally rooted, at least in part, in a principled civilian tradition, and to that extent it’s consonant with our system to have principles and out come focused regulation, but philosophical historical consistency is hardly a prime consideration.    

We have all have plenty of experience these days in dealing with the interpretation of broad brush principles, between the ECHR and the CJEU, and can we honestly say that it’s simplified matters? You can inscribe Art 6 or Art 8 on a grain of rice, but that simply pushes the detail into the jurisprudence. It’s necessary in any situation where differing traditions and languages are engaged to have, bluntly, wiggle room, but for the Scottish legal profession? I’ve also got experience of this indirectly through Ofcom and the PCC and to be honest, I prefer dealing with the BBC Editorial Guidelines. They are contained in a doorstop of a document and there is further guidance on the rims in a manner which is unwieldy, but there’s a better chance of getting a clear steer and they’re the product of much learning. 

We’ve also got to remember that, in effect, some code violations can be penal matters for solicitors and, in that context, specification and narrow construction are generally considered fairer.” 

The ILG as a whole, in common with the Council of the Law Society or the Regulatory Committee has no fixed view for or against POFR, but it welcomes the work being undertaken to ensure that the system of regulation is kept under regular review in order to protect the public interest.  

Both consultations closed on 10 October 2014.

Read more about the regulation consultation.

So what do you think? The consultations were just the start of the process though and we’d love to hear your views on these proposals at any time so we can fully represent our members. Please do get in touch via our Committee Secretary, Elaine MacGlone.