Outstanding issues regarding the Legal Services (Scotland) Bill can be resolved before it is passed

When the Legal Services (Scotland) Bill was introduced into the Scottish Parliament in September last year, it was viewed as a relatively uncontroversial piece of legislation. As is so often the case, reality proved to be a little more complicated.

For more than nine months now – although it may feel like a lot longer – the legal profession has grappled with issues surrounding the bill. The arguments put forward have been principled, and I appreciate the extent to which so many members of the profession have engaged. It is clear that there is some opposition to change, but I remember the cautious approach to allowing advertising and scrapping scale fees, and few would now argue that those changes were wrong.

With stage 3 not taking place until after the summer recess, we all now have a welcome opportunity to take stock of the past few months. While the compromise solution passed at stage 2 – whereby majority ownership and control will remain with solicitors or other regulated professionals – was not the Scottish Government’s preferred option, I believe that it will ultimately be acceptable to the vast majority of those affected by the bill. Furthermore, the mechanism for the Scottish Parliament to change this percentage in the future was unanimously supported by the Justice Committee. Other significant changes were also made at stage 2, including provisions to regulate non-lawyer will writers – a first in the UK.

With the final shape of the bill in sight, we must now examine the issues which remain unresolved. I have committed to having further discussions with the Law Society of Scotland and members of the Justice Committee over the summer. A number of issues relating to the operation of the Society and its current regulation of solicitors will be discussed.

However, the most important issue still to be resolved relates to the Guarantee Fund, a statutory fund for the protection of consumers of legal services. There is agreement among those I have consulted, including the Society, that a person who suffers loss as a result of fraud while receiving legal services from a licensed provider should have recourse to the same level of compensation arrangements as are provided for by the Guarantee Fund.

The Law Society of Scotland supported opposition amendments providing that only new licensed providers regulated by it should pay into, and be covered by, the existing Guarantee Fund, leaving entities regulated by, for example, ICAS, without cover. These amendments were not supported by the Justice Committee. However, following debate, I undertook to consider the matter further with the Society in advance of stage 3, given its concerns about other regulators.

I want to see all new licensed providers paying into, and being covered by, the Guarantee Fund. Clients utilising the legal services of a licensed provider, whether regulated by the Law Society of Scotland or ICAS, should be afforded protection against fraud in the same way as clients of traditional practices are, and licensed providers should pay their fair share into the fund. This should increase the Guarantee Fund, and may lead to a reduced levy for partners and incorporated practices.

I appreciate the concerns expressed by the Society and the Justice Committee, and will endeavour to establish an agreed approach to the use of the Guarantee Fund which will be acceptable to all.

In the heat of the debate around percentage ownership, and criminals in our midst, it is easy to forget the driving forces behind this bill. It will modernise the profession, dramatically expanding the opportunities available to solicitors, particularly young solicitors, and providing significant benefits to consumers, without the need for an expensive quango funded by the profession. Firms of all sizes will benefit from the flexibility to choose a business model which best suits the needs of their business and their clients. It is important that Government, in this difficult economic climate, removes unnecessary and outdated restrictions on raising capital and going into business with other professionals. It will also allow firms to compete furth of Scotland, and ensure that we are not left behind. Businesses should not fear these changes, but rather embrace them, and consider whether they might be able to take advantage of the new opportunities being offered.

In summary, while there are still some outstanding issues, I am confident that these can be resolved before stage 3, and I look forward to working with the profession to deliver a bill which will be good for businesses, good for consumers, and good for the wider Scottish economy.

  • Fergus Ewing is Minister for Community Safety in the Scottish Government
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