Introduction and history

How was the Society's policy on alternative business structures developed?

Business practice and the regulatory environment has changed enormously for legal firms and, following the Clementi Report and the introduction of the Legal Services Bill in Westminster in October 2006, the Society set up an ABS working group in January 2007 to consider how alternative business structures might work and what impact they might have in Scotland and the potential impact that new legislation in England and Wales would have in Scotland.

In September 2007, the Society held a conference in Edinburgh, The Public Interest - Delivering Scottish Legal Services. By this time, the OFT had made its recommendations to the Scottish Government following the Which? super-complaint and the cabinet secretary for justice, who was the keynote speaker at the conference, stated that "no change was not an option". He then gave the legal profession the opportunity to take the debate forward and advance proposals for how restrictions on the legal profession should be lifted.

The Society conducted a three-month consultation with its members on how restrictions might be removed. The results of the consultation informed the Society's policy paper, The Public Interest: Delivering Scottish Legal Services. That policy was then voted on by members at its AGM on 22 May 2008, with a majority vote in favour of the Society's proposal, with an amendment. The hand vote was 57 to 20 in favour; the proxy vote was 801 for, which included the 600 from four large firms, and 132 against.

In April 2009, the Society's response to the Scottish Government's consultation, backed the modernisation of legal services by allowing alternative business structures. It also suggested that the Scottish Government should take the necessary steps to amend or repeal the legislation that currently impedes or prevents alternative business structures as soon as possible.

The Society has promoted four key points throughout all stages of policy development and during its evidence sessions before the Justice Committee at the Scottish Parliament. These are:

  • a robust regulatory system must be put in place to provide strong consumer protections and ensure that high standards are maintained among those delivering legal services
  • independence of the legal profession must be maintained
  • a level playing field is required for those in the legal services market, whether as a legal services provider or as a regulator
  • access to justice must not be hindered

In 2010, the Society also consulted widely and held a series of roadshows and faculty meetings as part of its policy development on ABS. The profession voted on the issue a number of times, bringing divergent views. The Society changed its policy to rule out 100% external ownership as a result. Its revised policy in favour of legislation that would allow for 51% ownership of firms by solicitors or solicitors with other regulated professionals and 49% external capital prevailed when MSPs debated and voted on the Bill at stage 3 in October 2010.