We planned to assure our members’ clients and employers by setting and upholding standards that ensure excellent legal and customer service.

2016-17 highlights

•	339 financial compliance inspections carried out at Scottish firms

•	58 new claims were made against the Client Protection Fund in 2015/16: o	1 rejected in full  o	38 agreed in full  o	2 partially agreed o	13 carried forward to 2017/18 o	£488K was paid out•	Conduct complaints: o	New investigations: 318 o	Investigations closed: 238 o	Active investigations at year end: 360 o	Suspended file at year end: 131•	Professional Conduct Committee decisions: o	Complaint rejected: 134 o	Misconduct: Solicitor referred to fiscal for prosecution before the tribunal: 25 o	Unsatisfactory conduct – censure: 4 o	Unsatisfactory conduct - censure and compensation: 7 (£4,350) o	Unsatisfactory conduct censure and fine: 2 (£1,300) o	Unsatisfactory conduct censure and training order: 3 o	Continued into new year: 9•	Scottish Solicitor’s Discipline Tribunal decisions: o	10 – Struck off o	6 - Censure and fine o	4 - Censure and restriction o	5 - Censure o	1 - Not guilty o	2 - Not guilty and remitted back to the Law Society o	1 - Finding under Section 53(1)(b)]

Assure projects
Action Summary of progress for the year Complete/Not complete
Legislative change
We will make a positive case for change during the Scottish Government’s review of legal services regulation, arguing strongly for modern and flexible legislation which protects the public and meets the needs of a modern legal profession.
Our working group has met on several occasions and is currently considering several draft chapters of a paper we will submit to the review group as a follow up to our December 2015 paper – ‘The Case for Change’.

We have engaged with the chair of the review group and the chair and three members of the group attended our Regulatory Committee meeting on 2 November.
Anti-money laundering
We will improve our performance ahead of our 2018 Financial Action Task Force inspection and provide new information and guidance on the 4th Directive to ensure continued role as an AML supervisory body.
We’ve passed all the required information to HM Treasury (HMT) ahead of the FATF inspection in March 2018 and work is progressing for implementation of 4th Directive and regulations.

The Special General Meeting scheduled for 15 December to consider and approve rule changes is likely to be delayed until issues with the legislation are resolved and draft HMT guidance in relation to compliance is issued to firms . The final version will be available after HMT’s review – probably early 2018.

Our internal work on complying with the processes required by the regulations are on target.
Regulatory Committee
We will use the expertise of our Regulatory Committee to review the way we fulfil our regulatory objectives, ensuring all aspects of our processes are fit for purpose and that the interests of the profession and public are properly served.
The Regulatory Committee have been closely involved in projects throughout the year including the new complaints regime approach, AML and the challenges of the 4th Directive and the review of sub-committee remits and delegated powers.

The committee is also looking at the implementation of the internal audit report and the six recommendations arising following a review of the operation of three regulatory sub committees: Admissions, Appeals and Reviews and the Practising Certificate Sub-Committee.
Handling complaints
We will build on our recent performance and improve the way we handle complaints through an international benchmarking exercise and learning from other world class complaints handling bodies.
The outcome from the court action with the SLCC is almost finalised; matters are with the courts and we have added extra resource to the team to deal with backlog issues and improving performance over the next twelve months.

The SLCC are considering our proposals for an ‘interim fix’ by reforming their gateway process to improve performance and our Council and Regulatory Committee have now signed off the proposed longer term complaints model to form part of our submission to the independent review of the regulation of legal services.
Consumer research and advocacy
We will actively support the Scottish Government’s development of a new consumer and competition strategy to ensure there is strong and effective consumer research and advocacy in the legal services market.
In December 2016, the Scottish Government announced it was deferring any decision on setting up a unified consumer body for Scotland until Autumn 2017. At 31 October 2017, this is still awaited. Not complete
Rules review and development
We will continue to ensure our practice rules are relevant, effective and proportionate, starting the first year of a two year reform project on (i) Financial Well Being, (ii) Conflict of Interest (iii) Whistleblowing and (iv) third party managed accounts.
The consultation on ‘raising concerns’ ends on 10 November and the Rules, Waivers and Guidance Sub-Committee will review the responses and consider the way forward thereafter.

A paper has been produced on the issue of ‘Financial Wellbeing’ which recommends a guidance type approach rather than rules – that is now before the Regulatory Committee for comment.

Work is yet to progress on third party client accounts because of additional pressures caused by AML issues. This will be caught up in year two of the project.
Licensed legal service providers
We will seek to conclude the process of applying to become an Approved Regulator of licensed legal services providers and issue the first licences.
There has been some progress this year. Whilst we have been authorised as a regulator by Scottish Ministers, they have yet to authorise us and therefore we are not able to act as a regulator at this time.

Discussions continue with Scottish Government officials and the SLCC about the Approved Regulator complaints regime where it will be necessary for regulations to be approved before authorisation can be considered.
Not complete
Permissible ways to practise
We will clarify what “regulated by the Law Society of Scotland” means for consumers by reviewing the scope of existing legislation and practice rules in terms of permissible ways of practising and the requirements in terms of insurance, the Accounts Fee and Client Protection Fund subscription for consumers.
This project is in the process of concluding. The main issue has been around ’designated bodies‘ and with the help of Senior Counsel a flow chart was produced to ascertain whether solicitors operating in businesses met certain tests around designated body status and that has led to engagement of those in relevant businesses. As a result we can now be satisfied that those with the status should have it. It is intended going forward that this check will continue each year. Complete
Alternative routes to qualification
We will consider new alternative routes to qualification as a Scottish solicitor, working with Skills Development Scotland and the Scottish Qualifications Authority in assessing the feasibility of a Foundation Apprenticeship and Modern Apprenticeship in Law.
We received around 50 responses to our consultation on alternative routes to qualification and the Education and Training (Standard Setting) Committee asked for two new routes to qualification to be progressed:
  1. A form of apprenticeship route
  2. Creating a method for non-Scottish LLB/JD graduates to be able to access the DPLP via our examinations.
A small working party has been set up to look at this area of work.
Equality and Diversity
We will deliver the year-three projects from our equality strategy.
Our Equality and Diversity Committee agreed that it would give the profession one more year to embrace the equality and diversity standards before conducting a review.

The committee also agreed that it could not set a future strategic direction until the new profile of the profession report, due in 2018.

Regulatory committee annual report 2017

The role of the Regulatory Committee of the Law Society of Scotland is to oversee all regulatory activity in respect of every aspect of the legal profession from initial training and education through entry to the profession and professional practice, waivers and rules to financial compliance issues and conduct complaints.

It is important to emphasise that conduct complaints only form a small part of the regulatory regime. The Regulatory Committee also oversees enforcement of sanctions where things go wrong, ensures that the right standards are set in the first instance, and that those standards are regularly reviewed.

The Regulatory Committee also has a duty to protect the public interest and the interest of the legal profession.  These are not conflicting responsibilities and some of the work carried out in the course of the last year has highlighted this.  Maintaining trust and respect for solicitors is as much in the interest of the solicitors themselves as it is in the interests of the public.  An honest, reliable, effective legal system is the basis of an ordered society and that is in everyone’s interests.

The role of the Regulatory Committee is to ensure that there is an efficient and effective procedure for each area of regulatory activity.  The further development of key performance indicators and regular reporting by Regulatory Sub Committees is designed to facilitate the monitoring process and identify areas requiring further attention.  It is important to reflect on emerging trends to assist in considering future challenges and how to meet them, and in highlighting areas where, for example, more education might be provided to the profession to help them improve and understand either existing or new areas of the sector.

Both the non-solicitor and solicitor members of the Regulatory Committee consider their role to be a challenging one, but one which they are happy to undertake.  The combination of legal expertise and outside opinion provides a solid basis for oversight of a regulatory system which meets the needs of the public and the profession.

Our work in 2016/17

In April the Scottish Government announced a Legal Services Review chaired by Esther Roberton, the Chair of NHS24.

The review commenced its work by receiving information from the Society following the original paper put to Scottish Government in December 2015 seeking a new enabling Act to allow the regulation of the legal profession and legal services to be brought up to date for the 21st century and to be futureproofed. 

Earlier in the year an event was held involving the complaints team, the Regulatory Committee and others currently involved in various parts of the complaints process to consider how a new complaint process might look, given the challenges presented by the system which currently exists under the Legal Profession and Legal Aid (Scotland) Act 2007.  A number of views were discussed and a benchmarking exercise undertaken with other jurisdictions and professions to investigate how they deal with conduct and consumer complaints.

As a result of that, an updated paper will go to the Legal Services Review when they call for evidence in early 2018.  The Society will propose a clear model for dealing with complaints in the future.  In addition, the Society will propose immediate amendments to the current legislation which would improve the speed at which complaints flow through the process, in particular looking at the eligibility process operated by the Scottish Legal Complaints Commission. 

The committee believes that it is important that a complaint system is fair to all parties involved, and that it is simpler and more transparent than the current system appears to be.

In the early part of the year the appeals to the Court of Session arising from the Anderson Strathern case progressed.

The Regulatory Committee agreed with the decision of the Council that it was right to challenge the Scottish Legal Complaints Commission about its approach to categorisation of complaints following the outcome of that appeal, and whilst judicial review was contemplated at one stage, it was decided to take matters forward on the basis of a series of appeals.

The reason for seeking a Court Decision in this area was to bring certainty to the process because there was, as acknowledged by the Court in its Judgement, room for doubt as to what was intended. 

Whilst the Society’s position was not vindicated by the Court, the outcome has brought certainty and has again highlighted the challenge of the current system and the need for reform.

The Regulations bringing the Directive in to force were passed in June 2017.  The Society contributed to the consultation exercise, although the final regulations turned out to look very different to those which had originally been suggested.

The Regulations do bring some additional regulatory burden for the profession, and equally, the Society, as an Anti-Money Laundering Supervisor, now has further obligations which will be overseen by the newly created Office for Professional Body Anti-Money Laundering Supervisors (OPBAS).  OPBAS takes over this role from HM Treasury and will be charging the Supervisors for their oversight work, unlike HM Treasury.

The Society has worked hard to develop an AML regime for big firms, in particular, and the work done over the course of the year has moved the Society forward significantly in this area.  As the year ends work continues to be done on the guidance in relation to anti-money laundering, which is common across the whole UK legal sector, and, in addition to that, work continues to be done to finalise Practice Rules which will implement the regulations under the Directive.  The challenge at the present time with this is that there needs to be amendment to the Solicitors (Scotland) Act 1980 to enable the Society to carry out its supervisory functions in a proper manner and these issues are being pursued both with Scottish Government and HM Treasury.

The Society’s internal auditors again this year looked at three regulatory sub committees.  It was reassuring that their report indicated “substantial” assurance but there were six recommendations which it was agreed to implement across regulatory sub committees.

Amongst the recommendations was the need to ensure that criteria for decision making are clear and known to those making the decisions, as well as being transparent to those who are the subject of these decisions; that the scheme of powers delegated by the Council to the Regulatory Committee, sub committees and executive is adequate, and that powers are delegated at the right levels; and to ensure that the papers being given to regulatory sub committees are appropriate and sufficient to enable them to make reasoned, consistent decisions.

A number of issues have come up over the course of the year which the Regulatory Committee have discussed connected to the Legal Services Review:

(a)   Entity Regulation

This issued was discussed again and the Council, in a debate which followed a discussion by the Regulatory Committee, reaffirmed its commitment to entity regulation, although the detail will need to be worked out at a later stage.

(b)   The Unregulated Sector

This issue was highlighted in various discussions arising from a review of designated bodies under Section 35 of the Solicitors (Scotland) Act 1980.  Work was done in order to regularise the way in which designated body applications were dealt with, and as a result of this the question of those in legal services providing advice who are not regulated was highlighted. 

This led to work being carried out, including public polling, in order to establish whether members of the public differentiated between solicitors and lawyers.  The result clearly indicated that the majority of the public did not make this distinction, and one of the issues now covered in the Society’s representations to the Legal Services Review is the need to treat the title “lawyer” as equivalent to that of “solicitor”.

During the course of the year the Rules, Waivers and Guidance Sub Committee continued its consideration of the “raising concerns” issue and conducted a review of the current Conflict of Interest rules and guidance.

During the latter part of the year a consultation was held in relation to the introduction of rules relating to raising concerns.  The consultation drew a number of responses with different views, and these are being considered by the Rules, Waivers and Guidance Sub Committee with a view to a formal report to the Regulatory Committee for consideration, in particular as to whether or not matters should move forward by way of rules or guidance.

That subcommittee has also undertaken a significant amount of work in reviewing the current conflict of interest rules and guidance.  In the course of the next year it is likely that a proposal will come forward in this area, which will be consulted on with members.

In January 2017 the Society was approved as a Regulator by the Scottish Government, but was not yet authorised.

Authorisation remains some way away as work has still to be done internally in relation to the building of various systems and guidance in respect of licensed providers, but discussions continue with Scottish Government about the need to lay certain regulations, in particular around complaints, both in relation to licensed providers and approved regulators.

The Scottish Government will delegate responsibility for dealing with complaints against approved regulators to the Scottish Legal Complaints Commission, but there remain challenges at this stage in understanding how the system will work and who will be responsible for payment for the system, including its set up costs.

The Regulatory Committee also had input in to the Budget and Levy Consultation by the Scottish Legal Complaints Commission, which the Council responded to in the early part of the year.

The Committee were concerned at the proposed level of the increase in the levy to be paid by the legal profession, particularly against a continuing background of complaints taking too long to be dealt with without a clear and adequate explanation as to why this was the case, given that numbers were increasing but  not at a significant rate.  The Committee continues to be concerned by the lack of meaningful oversight of the work of the Commission.

The annual report contains statistics for conduct complaints for the past year.  These figures are closely scrutinised by the Regulatory Committee and discussed with the relevant executive officers and subcommittee conveners.

The total number of complaints fluctuates slightly from year to year.  In the year 2016/17, as a result of the appeals to the Court of Session, a number of complaints had to be suspended for a significant period of time.  This has meant that the number of cases disposed of during the year was lower than it might otherwise have been given that the outcome of the Court case was not determined until June.

It is anticipated, as a result of additional resource added to the complaints team, that over the course of the next 12 months, subject to there not being a significant increase in the number of complaints received, that it will be possible to catch up and reduce the current live load.

Scottish Solicitors’ Guarantee Fund annual report

Annual report and financial statements for the year ended 31 October 2017.

The Guarantee Fund trades as the Client Protection Fund and reports a surplus for the financial year ended 31 October 2017 of £114,000 (2016 – deficit £1,010,000).

We continued to embed our equality and diversity standards during the year. Take-up across the profession has been relatively slow. If this continues to be the case, the Equality and Diversity Committee will need to look again at how best to embed these standards.

Early in 2017, alongside the GLASS Network, we hosted a digital campaign called #TheseAreOurPrinciples. Numerous leading lawyers – including the Rt Hon Nicola Sturgeon and Professor Hector MacQueen – took part in the campaign which gained widespread engagement and support from the profession. In the spring we re-issued an updated version of our ‘Preventing Bullying and Harassment’ guidance.

We hosted a well-attended Equality Means Business conference with the Lord Justice Clerk, Lady Dorrian, and Alan Masson, the then Chief Operating Officer of Anderson Strathern, providing keynotes as well as numerous informative panels.

We hosted the launch event of the Scottish Ethnic Minorities Lawyers Association with the President of the Society, the Dean of the Faculty of Advocates and the Lord Advocate all speaking. We have worked closely with SEMLA, GLASS and Women In Law Scotland over the course of the year.

We have an overarching objective of leading legal excellence and to be a world-class professional body, understanding and serving the needs of our members and the public.

We are pleased to set our gender pay report in accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Under these regulations we are not required to report, however, we believe it is important to our staff, our members and the wider public that we do so.

Pay and bonus gap – differences between males and females




Hourly Pay



Bonus Gap



The table shows the mean and median gender pay gap based on hourly rates of pay as of 5 April 2017. It also shows the mean and median differences paid to men and women in the 12 months prior to 5 April 2017.

We do not pay bonuses. We do have a system of performance related pay. This is part of our contractual pay awards.


Lower quartile

Lower middle quartile

Upper middle quartile

Top quartile















The above table illustrates the gender distribution at the Law Society of Scotland across four equally sized quartiles, each containing just over 30 staff.

Looking at the gender breakdown within quartiles:

  • 77% of roles in the lower and lower middle quartiles are held by female staff.
  • 55% of roles in the top quartile are held by female staff.

Looking at the distribution of male and female staff across the Society:

  • 54% of female staff at the Society work in the lower two quartiles whereas 37% of men work in those quartiles.

A large part of our pay gap can be attributed to the distribution of males and females within the organisation. Given our breakdown in males and female staff, males disproportionately feature in the top quartile whereas females disproportionately feature in the lower and lower middle quartile.

We use recruitment channels which are equally accessible to males and females. We also use a blind shortlisting process.

Understanding our gender pay gap

We have taken a close look at what lies behind our gender pay gap and have concluded that:

  • Under the regulations, only organisations who employ over 250 people are required to report. We recognise that due to the size of our organisation – 127 staff at time of reporting – a small number of changes in staff may lead to relatively large changes to the mean and median figures.
  • We are confident that men and women are paid as equally as possible for equivalent roles. The reason we say as equally as possible is that there will be a small difference between similar roles due to the impact of performance-related pay.
  • We use a job evaluation system to determine the value of our roles in relation to others in the organisation and position pay fairly in relation to benchmarking data supplied by our external job evaluation service provider. It is likely that there are some historical pay issues which will have an impact upon the pay gap but this is minor. For instance, there may be a small number of staff whose salaries were set prior to us implementing our job evaluation system.
  • Whilst we have some way to go, the gender balance in our top and upper middle quartiles is encouraging evidence that our efforts over recent years to attract and retain women in more senior roles is paying off.
  • We have a more significant gender imbalance within our lowest quartile and lower middle quartile. The roles that sit within these quartiles are predominantly administrative although a small number of managers that oversee service delivery are in this quartile. Whilst we believe these roles are fairly rewarded with reference to the market, the fact that so many of them are held by female staff has the effect of reducing the average pay of our female staff impacting our overall gender pay gap.

It was helpful to conduct this exercise as it has provided us with new impetus and ideas to add to our equality and diversity strategy.

What are we going to do next?

  • Gender equality is not solely a women’s issue. We understand that gender equality is everyone responsibility. In recognising this, we commit to:
    • Offer unconscious bias training to all staff. We understand that we all have unconscious biases and the first step to tackling them is recognising that.
    • Ask our colleague forum to consider how and where we can improve.
    • Exploring how we can use our leading mentoring programme for our members to benefit our own staff.
    • Our Senior Leadership Team championing gender equality across all of our activities.
  • Continue being agile in our approach to career paths: offering and encouraging all of our staff, male and female, the opportunity to work in a flexible way throughout their careers. We already offer to all staff flexible working, part-time working, and sector-leading parental leave.
  • Measuring and publishing internally the gender breakdown of applications at each stage of the recruitment process: We want to ensure that all our roles at all levels are attractive to males and females. Although our application process is blind we can export equality data without identifying individuals. We will publish information on applications, those selected for interview, and those subsequently appointed to understand if there are any challenges in the recruitment process.

Lorna Jack
Chief Executive Officer

Annual report 2017

Our annual report covers our performance against the objectives set out in our 2016/17 annual plan. This was the second year of activity under our Leading Legal Excellence strategy.