Legal services regulation reform: consultation

Summary consultation

Background

This Summary Consultation sets out a shorter and summarised version of this consultation paper. It is intended to be free of technical jargon and to ensure that all those who wish to respond to this consultation can do so easily. You can access the main consultation on page 20 of this paper. This consultation seeks views on the way legal services are regulated and how the legal complaints system works in Scotland.

The Report of the Independent Review of Legal Services Regulation in Scotland^[1], 'the Roberton report' considered what changes may be required to the statutory framework for the regulation of legal services to protect consumer interests and promote a flourishing legal sector. This included ensuring that consumers understand the options open to them when something goes wrong.

The Independent review took an open and consultative approach engaging with professional, representative and consumer bodies, and regulators of other professions to gather the views of those with an interest in the Scottish legal system. A two month public consultation, commissioned via a 'Call for Evidence' issued in January 2018 also provided input to the evidence gathering stage of the review.

The Roberton report recognised that Scotland is home to a well-educated, well respected legal profession with a high degree of public trust, of which the Chair believes we can be proud. The Roberton report found little evidence of significant wrong-doing in the current model, instead that complaints are increasing and the complaints system is in need of reform. The Chair raised concerns of the power imbalance between client and legal service provider. There is also concern that Scotland is losing its share of the UK and Global legal services market.

The Roberton report made 40 recommendations – a majority of which are focussed on applied areas – including entry to the profession, standards and monitoring, entity regulation and complaints procedures. However it is difficult to address many of these recommendations without first addressing the primary recommendation of the Review:

"There should be a single independent regulator for all providers of legal services in Scotland, independent of those whom it regulates and of Government, responsible for the whole system of regulation including entry, standards, monitoring, complaints and redress, which covers individuals, entities and activities. That independent regulator should be a body accountable to the Scottish Parliament and subject to scrutiny by Audit Scotland"

The Scottish Government response^[2] to the Roberton report recognised the differing views to the primary recommendation, and the implications this may have on the existing legal landscape in Scotland.

Our response set out that we would seek to find common ground and agreement on the Roberton report's recommendations where possible. As a result we formed a working group with key bodies who represent consumer interests, regulators and the legal profession to discuss the issues in advance of this consultation.

This consultation seeks views from everyone on the recommendations made in the Roberton report alongside other suggestions for change which came out of the working group discussions. It presents options intended to lead to improvements in the transparency and accountability of the way in which legal services are regulated and the operation of a complaints process.

What we would like to hear from you and how to respond.

We would like to hear your views and experiences of legal services regulation and the legal complaints process in Scotland. We would find it helpful to hear who you think should regulate legal professionals and who should deal with complaints about them in Scotland. We would also welcome your views on how to promote competitiveness in the legal sector to benefit consumers and others using legal services.

You can reply directly to the suggested models of regulation which we set out in this paper, or you can give us your own views on how the regulation system should work in Scotland.

You can:

(i) provide a written submission,
(ii) answer some, or all the questions in the consultation paper, or
(iii) you can do both (provide a written submission and answer the consultation questions).

You might find it helpful to read the 'Glossary of Terms' on page 4 and the 'The Current Regulatory Landscape' in the main consultation on page 28 before considering your submission.

Part A: Potential regulatory models that we have developed and are seeking views on

The Roberton report made 40 recommendations to improve the way in which legal services are regulated and complaints against legal service providers are handled. The primary recommendation was that there should be a single independent regulator for all providers of legal services, independent of those it regulates and Scottish Government. Most of the recommendations relate to the delivery of that primary recommendation. In seeking to build agreement, this paper contains alternative viable models of regulation in addition to the one proposed by the Roberton report. It would be helpful if you could:

• Answer question numbers 4 and 5 to indicate your preference on the models set out below.
• Alternatively in a written submission, indicate your preference on the models set out below, or your view on how the system should work.
• This is covered in more detail in Part 2 A of this consultation where you can also answer question numbers 1 to 3 and 6 to 12 to give more detail of your views.

Regulatory Models

The first regulatory model and main focus of this consultation is that proposed by the independent review in the Roberton report:

Key points of the Option 1 model

This model is the primary recommendation of the Roberton report.

All legal professionals would be regulated by a new independent body which would be accountable to the Scottish Parliament, and subject to scrutiny by Audit Scotland.

All complaints relating to legal professionals would be handled by that body, replacing the role of the SLCC and current regulators.

That new body would be funded through a levy on those it regulated, the legal profession. The cost to the profession would be intended to be no more than the current system.

Current regulators, The Law Society of Scotland, The Faculty of Advocates, and The Association of Commercial Attorneys, would no longer have regulatory roles. Instead they would be invited to work with the new independent regulator as professional organisations.

A similar model currently operates in England and Wales where the Legal Services Board is an oversight regulator which sits at the top of the regulatory framework. It provides regulatory oversight of the ''approved regulators''.

The role of a market regulator:

To monitor the supply of legal services – A market regulator would authorise the regulators of legal professionals. It would have the ability to act and make recommendations to help geographic or subject specific areas where services are reduced or in decline.

To monitor risks within the sector – A market regulator would have a broad regulatory tool-kit to help balance and reduce potential risks in respect of legal services.

Act as economic regulator – A market regulator would act impartially, and aim to align and balance the interests of the legal profession with the interests of those who use legal services such as consumers.

Key points of the Option 2 model

A new independent market regulator would be created which would have oversight of the current regulators. It would be accountable to the Scottish Parliament.

The current regulators would keep many of their current responsibilities, they would be required to host an independent statutory regulatory committee which would be accountable to the market regulator. The market regulator would then be responsible for authorising each committee's regulatory responsibilities. The SLCC would continue to handle complaints.

The extent of the market regulator's responsibilities, and the complaints process would be informed by the views expressed to this consultation.

The market regulator, approved regulators and SLCC would be funded through a levy on those regulated, the legal profession, with the cost intended to be no more than the current system.

Key Points of the Option 3 model

No new organisation would be created. Instead each of the current regulators would host an independent statutory regulatory committee which would be accountable to the Scottish Parliament or the Lord President.

The SLCC would continue to handle complaints.

The extent and form of accountability, and the complaints process would be informed by the views expressed to this consultation.

The regulators and SLCC would be funded through a levy on those regulated, the legal profession, with the cost intended to be no more than the current system.

Part B: Complaints and redress

The Roberton report's view was that the current complaints system for legal services in Scotland is not working due to its complexity. For example, in the current system, a complaint about a £200 transaction must go through all stages of the complaints process, including potentially up to two appeals to the Court of Session, in the same way as a complaint for £20,000 where there are public protection issues^[3]. The Roberton report recommended that a single independent body should deal with all complaints in proportion to the complexity of each case.

The shape of a future complaints system will be dependent on the wider framework but it would be helpful if you could:

• Answer question numbers 47 to 54
• Alternatively in a written submission, indicate who you think should deal with complaints. The following are some questions you may wish to consider and answer:
  • Should there be a single gateway or point of contact for all types of legal complaints?
  • Who should deal with complaints about service of legal professionals?
  • Who should deal with complaints about the conduct or discipline of legal professionals?
  • Should the complaints system be more flexible so that each complaint can be dealt proportionately based on its complexity, but with guiding principles, or be based on strict rules?

This is covered in more detail in Part 4 of this consultation.

Part C: Titles, Legal Services and Business Structures

Titles

The term lawyer is most readily thought of in terms of legal services. However, a lawyer is not always qualified in law or regulated for the services provided. The term solicitor is more accurate as most people who use legal services will interact with a solicitor. It is a criminal offence for any person to pretend, wilfully and falsely, to be a solicitor. There are no such restrictions around the use of the term lawyer. Other notable legal professionals in Scotland include advocates and commercial attorneys.

This consultation seeks views on if you think 'Lawyer' should become a protected title in the same way as 'Solicitor' already is:

It would be helpful if you could:

• Answer question numbers 38 to 41
• Alternatively in a written submission, indicate your view if the term 'Lawyer' should be a protected title.

This is covered in more detail in Part 3 C of this consultation.

Legal Services

Legal services can be classified as either reserved or unreserved. This has important implications for who can provide such services:

• 'Reserved Legal services' can be described in legislation as a set of legal activities that can only be provided by authorised legal professionals, such as solicitors and advocates. In general terms, court proceedings are included in these activities.
• 'Unreserved Legal services' are not specifically defined in legislation, and are not restricted to being provided by authorised legal professionals. For example, charities can provide general advice to their clients in relation to some aspects of legal matters.

It would be helpful if you could:

• Answer question numbers 34 to 37
• Alternatively in a written submission, indicate your view on whether and to what extent legal services should be defined and classified.

This is covered in more detail in Part 3 B of this consultation.

Business Structures

There are currently restrictions on who can own a legal firm in Scotland and how organisations can hire legal professionals to undertake 'Reserved Legal services'.

The Legal Services (Scotland) Act 2010 made provision to remove certain restrictions which previously prevented solicitors entering into business relationships with other regulated professionals i.e. non-solicitor professionals such as accountants. The 2010 Act therefore allowed investment in law firms by both solicitors and non-solicitors, with the aim of greater flexibility, more competition and reduced barriers to competition. Regulated professionals will require to hold at least a 51% majority stake in the business. The Scheme that would allow these alternative business structures is not yet in place. The Scottish Government is working closely with the Law Society to put the final steps in place that would allow the Law Society to regulate such legal providers.

This consultation seeks views on Alternative Business Structures and if you think ownership requirements should be opened up, to relax requirements which allow for:

• employee and community ownership of legal firms,
• outside investment into legal firms,
• and which could allow charities to directly employ legal professionals to undertake what is currently reserved activity, such as court proceedings.

It would be helpful if you could:

• Answer question number 42
• Alternatively in a written submission, indicate if you think legal services should be able to be provided through a wider variety of ways than are currently permitted.

This is covered in more detail in Part 3 D of this consultation.

Part D: Other Matters

This consultation also seeks views on a number of other matters relating to legal services and the legal profession in Scotland. The full content and discussion on these topics can be found set out in the Main Consultation pages. These are:

• The role of the Lord President and the Court of Session,
• Regulatory committees,
• Fitness to practice,
• Legal tech,
• Client Protection Fund (Guarantee Fund),
• Entry, standards and monitoring of legal professionals,
• Entity regulation,
• The economic contribution of legal services,
• The Competition and Markets Authority Legal Services in Scotland Research report.

It would be helpful if you could:

• Read any details in the Main Consultation on the other matters listed above which you are interested in,
• Answer any remaining question numbers 13 to 33 and 43 to 46 but only if you want to,
• Alternatively in a written submission, indicate your views on any of the other matters listed above but only if you want to.

These other matters are covered in more detail in Parts 2, 3 and 5 of this consultation.

Response

You may submit your contribution by post or submit a written submission by email. There is no restriction to the length of your statement. Please send your views and comments either by post to:

Access to Justice Unit
Scottish Government
Justice Directorate
St Andrew's House
Edinburgh
EH1 3DG

Or by email to: LegalServicesRegulationReform@gov.scot

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