Last week the Scottish Government’s over complicated consultation on alternative business structures for the Scots legal services market closed, a consultation so complicated it resulted in responses mainly from the legal profession itself (that’s what MacAskill intended – Ed)
Anyway, Edinburgh legal firm Turcan Connell, never too far from controversy and a few headlines, have decided to get ahead of the game on abs .. (so we are told - Ed) …
The Scotsman reports :
Published Date: 06 April 2009
By Christopher Mackie
Turcan Connell is making changes even though the Scottish Government has only just begun its review.
ON FRIDAY, the consultation on the Scottish Government's proposals for alternative business structures (ABSs) for law firms closed. Backed overwhelmingly by the Law Society of Scotland, the plans – which could see third party ownership of firms as we as non-lawyers allowed to assume partner level positions – are still some way from being enacted, even if they are eventually agreed and passed by the Scottish Parliament.
However, that has not stopped one Edinburgh law firm restructuring its business in anticipation of the changes – Turcan Connell, formed in 1997 after a de-merger from Dundas & Wilson, which has been a vocal advocate of the new arrangements.
Notwithstanding the work that still needs to be done to ensure ABSs come to fruition, the firm recently announced three promotions that rejigged the firm's management in expectation that the multi-disciplinary ABS approach would indeed be adopted.
The changes see Haig Bathgate become a principal investment director and Bob Hair step up into a similar role in relation to financial planning. Although not full equity partners, both will now be involved in the management of the firm, alongside Alison MacKrill, who has been asked to head the firm's trust services in Guernsey.
The promotion of the non-lawyers seems a logical step to the firm's joint senior partner, Douglas Connell. "These are designed to place us in a good position for what we regard as a multi-national and multi-disciplinary future," he explains.
"The purpose of doing that is to make them what I would call 'quasi-partners'. We want to involve these individuals and in due course others in the partnership of Turcan Connell and fully involve them in the partnership as professionals who are not lawyers. "The plan is that, as and when we are permitted to do it, they would become full partners in the firm.
"If you want to provide multi-disciplinary and inter-disciplinary services, you have to have skilled people providing top-level advice in these areas.
"We have been campaigning for years to be allowed to promote non-lawyers to partner status and our preferred model is a solicitor-controlled firm, of which perhaps 25 per cent of the partners are client-facing non-lawyers."
By seeking to restrict his firm's non-lawyer quotient to a set figure, Mr Connell avoids questions over the independence of lawyers that have been aired during the ABS consultation. In fact, despite his backing for ABSs in general, the third party ownership proposals, that could, some believe, lead to so-called "Tesco law", do not form part of Turcan Connell business strategy.
"We've no particular interest in third party ownership," Mr Connell says. "I think it's going to happen, but we are not particularly interested in seeing law firms become what I would call tradeable commodities.
"That would provide a windfall for a few individuals but I am very sceptical about the kind of legacy that would leave behind for those remaining in the business."
And he adds: "I know there are other people that feel they need to get external finance. I'm afraid I'm a little sceptical about that, because I believe the external finance will come in one door and out the other.
"The present climate makes that less likely because of the downturn of legal services, so the capital value that could be put on some of these firms for the moment will have reduced significantly. The second point is that the appetite for that type of investment has significantly reduced."
Mr Connell is confident that the regulation of such a complex set of arrangements could be organised along a distinct dividing line.
"We have … said there is no need for what you might call an incremental approach to the ABS model," he says.
"We think there should simply be two parallel and equivalent systems of regulation, for what you might call the traditional firm and the ABS model.
"What would be a strange, paradoxical situation would be if this new framework allowed third parties to own a law firm or own a stake in one but did not allow senior client-facing advisers who just happen not to be lawyers to be able to own a stake and have a seat at the partnership table."
As the Scottish Government begins considering the consultation submissions, Mr Connell is keen to praise the justice secretary, Kenny MacAskill, for driving through the proposals.
"We absolutely applaud the strong leadership the justice secretary has shown in this area and we see this as an opportunity for law firms to be given the chance, if they wish to take it, to take a major leap forward and position themselves as multi-disciplinary services," he says.
The Turcan Connell submission was one of 30 reported by the Scottish Government on Friday. It confirmed receipt of entries from solicitors, individuals and professional organisations such as the Institute of Chartered Accountants in Scotland, as well as the expected answers from the Law Society, the Faculty of Advocates and consumer groups such as Consumer Focus Scotland.
The Law Society's entry carried a message to the Scottish Government urging it to change the legislation that currently forbids ABSs being adopted.
The organisation's president, Richard Henderson, said: "There is a real need to modernise legal services in Scotland and help ensure that those providing them can adapt and thrive in a highly competitive and increasingly international market. Scots lawyers are well respected around the globe and we want to ensure that they have the opportunity to develop their businesses both now and in the future.
"Equally important is creating a means to ensure that access to legal advice is available to all those who need it and that strong consumer protections remain in place. Effective regulation will be key to any plans for change."