Legal services regulation reform: consultation analysis

Part 3(F) Economic Contribution of Legal Services

Introduction

The Roberton Report made two recommendations in relation to the economic contribution of legal services:

• The Scottish Government should commission or facilitate a baseline study to identify the current quantum of the sector's contribution to the economy and to identify those niches in the global market where the sector might target its efforts; and
• Government should then work with the sector to bring all the key players together to develop and implement a strategy to maximise the potential for growth and the contribution that would make to the economy.

The consultation sought feedback on the first of these recommendations.

Question 46

Q46. To what extent do you agree or disagree that the Scottish Government should commission or facilitate a baseline study to identify the current quantum of the sector's contribution to the economy and to identify those niches in the global market where we might target our efforts?

Base: 77

Of those who provided a rating, over half (59%, n=45) agreed that a baseline study should be undertaken to identify the current quantum of the sector's contribution to the economy and to identify those niches in the global market where efforts could be targeted. However, a sizable minority (41%, n=32) disagreed with this proposal.

Those who agreed that a baseline study should be commissioned, including the Law Society of Scotland and those who endorsed their response, generally felt that establishing a baseline would help with the development of plans for expansion within the global market:

"Auditing what is presently happening would surely give an indication of where we are currently, and put the sector in a better position to extend and expand." (Individual)

One organisation commented that such information could be used to measure performance and perhaps ensure accountability within regulation:

"A clear regulatory objective to support economic growth would assist the independent regulator to focus on this issue. A baseline study would be an effective way to hold it to account for its performance." (Organisation, Legal Services Provider)

A number of respondents commented on the need for extended regulation outside of Scottish jurisdiction:

"We [welcome] the clear indication to provide regulators with the power to seek authorisation to regulate outside of the Scottish jurisdiction. This will promote competition and further raise the profile of the Scottish legal sector." (Organisation, Professional Body, Law Society of Scotland)

Of those who disagreed, some respondents questioned the need for a new study, stating that data were already available and that commissioning a new study would be a costly undertaking with little tangible benefit.

Many respondents also questioned the need for government to be involved/funding research in the sector:

"We are not convinced such a baseline study is necessary. The legal profession should be perfectly capable of identifying for themselves whether they are competitive, or capable of being competitive, in the global market." (Organisation, Legal Service Provider)

This sentiment was not just found within those who disagreed with a study being commissioned, it was also echoed by some respondents who agreed that such data would be beneficial:

"I certainly think assessing in a meaningful way the contribution of the legal sector to the economy is overdue. I am not sure how the second part of the question fits because that is surely a matter for businesses to work out." (Individual)

Despite there being a greater amount of support for the commissioning of a baseline study, there were some respondents who urged caution:

• To ensure unbiased results;
• Not to let a new study take priority over other matters dealt with within the consultation document; and
• To perhaps fund it via a levy on law firms rather than public finance.

A few respondents highlighted the need for investigation into the value of services provided by those registered outside of Scotland:

"To a certain extent we know the value of the legal market in Scotland as every firm regulated in Scotland has to have prof[essional] indemnity insurance and tell the insurers their turnover. What we don't know is the values of the services provided in Scotland by English regulated or international firms with offices in Scotland." (Individual)

One organisation provided a particularly comprehensive response to this question, disagreeing that a new study should be commissioned, citing the increasing international adoption of English law and the need for Scottish law to remain within the physical boundaries of Scottish territory:

"For consumers of legal services, other than large scale commercial entities, a foreign choice of law is a luxury which may not be open. It is a fundamental principle of consumer law that remedies should be available close to where the consumer is resident. Family law matters depend on domicile or more recently habitual residence and forum shopping is not available. Property law disputes will be determined by the lex situs [law of the place where the property is situated]. There is no plan within Roberton for attracting international business. The Scottish Arbitration Centre which offers facilities for international arbitrations has been, at best, moderately successful in attracting business. Further tinkering with the regulatory system has no impact on such activities. We see no need to engage in any baseline study." (Organisation, Professional Body for the Legal Profession)