Law Society’s ‘nobbled’ referendum match on legal services reform likely to end up in a scrum at Murrayfield

Law Society’s Ian Smart. MURRAYFIELD STADIUM, Thursday 25 March, 10am might be worth an attendance to see the Govan Law Centre’s Mike Dailly (wannabe scrumhalf ?) have a go at the Law Society President Ian Smart (well-placed, keen hooker ?) during the Special General Meeting on the future of legal services reform in Scotland. The SGM has been called by the Scottish Law Agents Society (SLAS), which wants the Society to change the current policy of supporting alternative business structures (ABS), which members voted for at its 2008 AGM, to one opposing their introduction so we dont get abs and clients dont get the chance to go anywhere other than a solicitor for legal services.

In addition to the SGM, and Mike Dailly calling yet again for the resignation of Ian Smart, there is a nobbled ‘secret ballot referendum’, being run independently by the Electoral Reform Service, to encourage as many solicitors as possible to vote on ABS, and on whether the Society should regulate new business models. The referendum, which runs from 23 March to 7 April will allow the Society's Council to determine its future policy on ABS.

Ian Smart, president of the Society, said: “The Council was conscious that the critics of the result of the 2008 AGM continued to claim that the vote was not representative of the profession. The Council decided that in anticipation of high numbers of proxies again, which is a feature of Law Society general meetings, the vote at this special general meeting could attract the same criticism and concluded by a vote that a referendum of all members, one solicitor-one vote where there can be no proxy voting, would reflect the clear majority view of the profession.

"This means we are asking our members to vote twice, both in the referendum and at Thursday's SGM. The Society’s Council will then decide on a future policy in light of both votes and the respective levels of participation.

“The Legal Services (Scotland) Bill proposes major change and it's vital that solicitors fully consider what the government’s proposals could mean for their businesses and whether they should choose to continue as a traditional solicitors’ practice. There will be no compulsion for solicitors to change how they do business but there are a number of Scottish firms, many of which operate on a UK-wide and international basis, who want to be able to adapt to continue to meet the requirements of their clients, and to operate on a level playing field with their competitors in England and Wales.

“We want solicitors in Scotland to have opportunities now and in the future, to be able to thrive in Scotland and further a field, but not at the expense of independence, core values and principles, the very things that have given the Scottish legal profession such an enviable reputation.

“We have pressed hard for changes to the Bill. As a result we have won concessions from Community Safety Minister, Fergus Ewing, to drop parts of section 92 and with it remove any or even potential, government intervention in the appointment of lay members to the Society’s Council, and from the Justice Committee, which in its stage 1 report has recommended amendments to ensure that any ABS must have a fidelity fund equivalent to the existing Guarantee Fund and the continuation of existing consumer protections.

Mr Smart added: “There are several types of new business models that do not seem to have met with any major resistance from solicitors but we know there are genuine fears about the impact of external ownership or funding of law firms, their regulation and whether the independence of solicitors working there could be compromised.

“That is an important discussion for the profession to have and the Society is asking for members’ views in the current consultation on the types of models that could be permitted and how they should be regulated. I hope for a good debate on Thursday and that there is opportunity to examine and address some of the concerns that some of our members continue to have about the Bill’s proposals."

For those of you who have forgotten what this meeting is all about, watch the following video once more :

Mike Dailly ‘gets Smart’ ? : The road to alternative business structures

Catering, for those of you who wish to stuff faces while listening to this nobbled debate, is in the Presidents Suite, while the actual meeting, which starts at 10am, is in the Thistle Suite. Do remember to post your expectations & experiences of said nobbled debate & said nobbled referendum in the comments section ! (where is Uma Thurman with a Hattori Hanzo when we need her so ? – Ed)

Today’s Times newspaper reports on the accusations flying between both camps, the ones who want alternative business structures (ABS) and the ones who dont (Govan, GBA (or should that be GBH – Ed) etc …) :

Accusations fly ahead of ‘Tesco Law’ referendum
Mike Wade

Bitter divisions in the Scottish legal profession over the so-called Tesco Law burst into the open last night as the Law Society of Scotland (LSS) was accused of acting undemocratically ahead of a Special General Meeting (SGM) to determine contentious reforms to the legal profession.

At issue are proposals to enable legal firms to raise capital from outside investors, while banks and supermarkets could offer a full range of solicitors’ services.

High Street solicitors fear the new rules will enable the big firms to cut prices and cherry-pick the best paying work, such as conveyancing, leaving them with diminishing returns.

This week they accused the society of using its financial resources effectively to rig the meeting against them. The Govan Law Centre, one of the most vocal opponents of the change, said the society’s officials had drawn on confidential databases and its extensive organisational facilities to ensure the vote went their way. Mike Dailly, the centre’s principal solicitor, said they had been able “to help themselves to resources, paid for by members, to run their own campaign in favour of Tesco Law”.

The society has also been accused of calling on solicitors employed by government departments and financial institutions to vote in favour of the reforms.

Yesterday, Mr Dailly repeated a call for the resignation of Mike Smart, the society president, who was “ultimately responsible for this undemocratic process”.

The development came ahead of tomorrow’s meeting, at Murrayfield Stadium, which the society hopes will ratify a decision to implement the reforms, known as Alternative Business Structures (ABS.) They were first adopted by the Society at its 2008 AGM, and now form an integral part of the Legal Services (Scotland) Bill.

As The Times revealed four weeks ago, the Scottish Law Agents Society — representing 1,500 solicitors — was confident it would overturn Law Society policy when it “requisitioned” an SGM last month. Now, it seems, it is not so confident.

Meanwhile the Law Society has met the objections head on by proposing a referendum, based on one member, one vote, to be overseen by the Electoral Reform Society, and to follow the SGM.

Explaining its position, a spokesman said: “There could be serious consequences from division. The society want one vote, one view. I can think of no more democratic process.” The spokesman added that it was quite proper for the LSS to promote policies that had been democratically endorsed two years ago. Last night, however, there were signs that the divisions were deepening. Critics insist that the Law Society rushed through its policy on ABS in 2008, and said it was now attempting to influence both the SGM and the referendum.

In particular, a letter from Janet Hood, the chairman of the society’s In House Lawyers Group, has caused apoplexy amongst its critics. It urged solicitors within government departments, financial institutions or charities, “to attend the SGM or to vote by proxy to support the society’s position”.

“This is twisting our motion,” said Ian Ferguson, a board member of the Scottish Law Agents Society. “Our motion has always been about the external ownership of legal firms. This is about getting the votes of other groups, because they know they won’t get the support of high street solicitors.”

Scottish Justice Secretary reluctantly, hesitantly starts the 'Tesco Law' ball rolling

Oh the pain of it all .. as Justice Secretary Kenny MacAskill finally announces he will bring forth legislation to establish a more opened legal services market in Scotland.

Its not all smiles & roses though, as campaigners point to the reluctance and dithering of Mr MacAskill, who himself has expressed varying views on the 'Tesco Law' issue.

Peter Cherbi on his blod “A Diary of Injustice in Scotland” reports on the story in the following manner : MacAskill struggles to hold back 'Tesco Law' as Law Society dithers on access to justice reforms

Hardly a vote of confidence in the Justice Secretary’s wavering intentions ?

More consistency and less dithering might win the day ?

The Herald reports :

MacAskill paves the way in parliament for ‘Tesco law’

JULIA HORTON

A shakeup of the legal system which could lead to supermarkets and banks offering legal services moved forward yesterday with the start of a debate in the Scottish Parliament.

Justice Secretary Kenny MacAskill said that legislation, dubbed Tesco Law, will be introduced in parliament to establish alternative business structures in the legal profession as soon as possible.

The move follows pressure from the Office of Fair Trading (OFT) amid concerns that restrictions on working practices, including barring partnerships with non-legal firms, did not benefit customers.

Scottish lawyers last month backed the changes which have long been called for by the Scottish Consumer Council.

There have been worries about regulation of legal services however, with politicians raising fears during an earlier discussion last year.

Speaking in parliament yesterday Mr MacAskill told MSPs: "I am fully aware that members expressed concerns during the November debate that effective regulation was key to safeguarding consumers and the profession alike.

"This is not about Tesco law', as some have defined it. It is about allowing the profession to grow and compete, while maintaining quality of service to the public and the core values of the profession."

Both the Law Society of Scotland and the Faculty of Advocates have consulted their members and produced policy papers outlining their vision for the future.

Mr MacAskill stressed that there was still work required to "iron out the detail" of many of the issues to devise solutions for the Scottish market place. "Although there are differences of approach between the law society and the faculty, I am delighted that we have taken the first steps towards reform," he added.

He said that Scottish firms will continue to serve local communities, but he added: "Some firms can compete internationally and, I think, globally. The success of our accounting and financial services sector demonstrates this is possible. There is no reason why law cannot do likewise."

The OFT called for a review following a so-called super-complaint by consumer group Which? that the current set-up hinders market innovation.

At present, lawyers cannot go into partnership with non-lawyers or be employed by non-legal firms to give advice direct to the public. The changes could lead to external ownership or capital for law firms, and partnerships between solicitors and non solicitors.

Welcoming the move, Sarah O'Neill, legal officer of the Scottish Consumer Council, said: "We have been arguing for this for a long time. We think it is in the interests of the consumer in terms of increasing choice and reducing prices."

Richard Henderson, president of the Law Society of Scotland, was more cautious. He said: "It's a very complex issue and there has been a great deal of thought and discussion surrounding alternative business structures. It's clear from the profession's response that there is appetite for change."

Similar legislation is being introduced in England and Wales.

Lawyers may regulate accountants in opened legal services markets

Accountants might or might not be too upset there is a prospect they will be regulated by the Law Society of Scotland in the opened legal services market post Clementi.

After all, the Law Society see to do as bad a job at regulating complaints against solicitors as ICAS does against it's member accountants, so surely there can't be much change ?

The Herald reports :

Solicitors should regulate accountants under ‘Tesco Law’

PAUL ROGERSON, City Editor

Scotland's chartered accountants should submit to regulation by solicitors if they want to join fully-fledged multi-disciplinary partnerships (MDPs), one of the nation's most respected lawyers has proposed.

Douglas Connell, co-founder of private client advisers Turcan Connell, wants the Law Society of Scotland to assume regulatory oversight of MDPs if practice restrictions are eased.

Connell was speaking at Friday's landmark conference in Edinburgh, "The Public Interest - Delivering Scottish Legal Services", staged by the society to consider the introduction of so-called "Tesco Law" north of the border.

The society has pledged to produce draft policy proposals by the end of February, under pressure from both Justice Secretary Kenny MacAskill and competition watchdog the Office of Fair Trading. It remains unclear how far the society will be prepared to go to embrace Tesco Law - it has not appeared enthusiastic so far. Connell has been almost a lone voice in urging the removal of restrictive practices and the warm applause which followed his contribution suggests his blueprint for alternative business structures may turn out to be a favoured option.

Connell wants to see MDPs in which only up to one-third of partners could be non-lawyers. The latter would be subject to an "approved person" regime limiting access to professionals such as accountants, chartered surveyors and investment managers. The Law Society would be responsible for licensing and regulating these individuals as members of the MDP.

The non-lawyer partners would also have to sign up to society obligations on accepting joint and several liability in respect of the Scottish Solicitors' Guarantee Fund. The fund, to which Scottish solicitors contribute, compensates clients who have lost money through the dishonesty of a solicitor.

Connell's prescription is certain to raise eyebrows at the Institute of Chartered Accountants of Scotland, the world's oldest accounting body. Icas is unlikely to welcome a model which effectively renders it a second-division regulator subservient to another professional body in respect of policing the professional services business vehicles of the future.

Former society president Ruthven Gemmell, who now sits as a public interest member on the Icas council, suggested that bodies such as Icas would demand the right of co-regulation. Connell agreed, but without spelling out how this would work. "There will be individual issues to be sorted out. Co-regulation is entirely possible," said Connell.

He added: "Whether you want to call these vehicles MDPs or not, they could revitalise the provision of advi- sory services in many parts of Scotland. If we are supposed to be fleet-footed, let's get in and do it."

Connell's well-publicised enthusiasm for alternative business structures does not stretch to enabling law firms to seek external capital or sell out "to Tesco, Capita or a private equity house".

He added: "External capital comes at a price. Investors want shareholder value, dividend yield and most importantly an exit. I find that incompatible with the profession's core values."