How does the Act guard against corrupt influences on the legal profession?
In general terms, the Act guards against corrupt influences by setting out very stringent criteria for each stage of authorisation that must be met before a LP can operate. These stages include:
- authorisation of approved regulators
- approval of regulatory scheme, including examination of licensing and practice rules
- eligibility criteria of licensed providers
- approval of appointment of head of legal services, head of practice or member of practice committee
- determination of fitness of outside investors
Scottish ministers may monitor the performance of approved regulators and, in turn, the approved regulators would require LPs to submit an annual performance report. This level of scrutiny reduces the potential for undesirable influences on the legal profession.
The Act also addresses the question of external ownership and/or control of law firms, which is of most concern among those who fear that the Act might result in the corruption of the legal profession. Under the Act, approved regulators must first determine the fitness of outside investors before issuing a licence to a LP. There is a list of relevant factors as to fitness, which includes details about the background, finances and probity of potential investors. Some of these factors would, if met, automatically result in a presumption of unfitness. These include:
- if the investor is subject to a trust deed
- if the investor has been adjudged bankrupt and has not been discharged from bankruptcy
- if the investor is disqualified from holding, or has been removed by a court from, a position of business responsibility (eg director of a charity)
- if the investor has been convicted of an offence involving dishonesty (and has either been sentenced to 12 months or more in prison, or has been fined at least the maximum level four amount on the standard scale)
For corporate investors:
An outside investor must not act in a way that is incompatible with the regulatory objectives. The role of the head of legal services is important here, as he or she (who must be a qualified solicitor in possession of a practising certificate free of conditions) must report any failure of the LP to fulfil its duties under the Act or any other enactment to the approved regulator. This would include anti-terrorism legislation, proceeds of crime legislation and the serious organised crime provisions of the Criminal Justice and Licensing (Scotland) Bill.