Holyrood’s Justice Committee votes against majority non-lawyer ownership of law firms, saves investors from Scots legal world's organised crime gangs

Scottish Parliament’s Justice Committee voted against non-lawyer ownership of law firms. INVESTORS can breathe a sigh of relief at the result of a vote at the latest Justice Committee hearing of the Scottish Government’s beleaguered Legal Services Bill, where last Tuesday, MSPs voted through an amendment written by the Law Society Scottish Government to restrict non-lawyer ownership of Scottish law firms to 49%, throwing out the Scottish Government’s initial proposals that non-lawyers could end up owning 100% of law firms if the ‘alternative business structures’ as originally proposed in the Legal Services Bill had become law.

The problem with the original proposal, allowing non-lawyers to invest or even totally own a Scots law firm raised the question who would actually want to buy in to any Scottish law firm with the kind of poor regulatory & client treatment record which is so typical of providers of legal services in Scotland’s currently solicitor only dominated legal services market ?

Who for instance, would want to invest in a law firm with over thirty partners which is currently facing 21 separate complaints investigations (5 of those involving embezzlement of client funds), 20 negligence claims, 9 claims against the Guarantee Fund & 2 criminal investigations ?

Luckily for the law firm in the above typical example, and noting many others have similarly poor complaints records, they wouldn’t have to disclose such information to potential investors and of course, the Law Society of Scotland would never volunteer such detailed information which may slightly discourage any investors with an ounce of common sense from touching a Scottish law firm with a barge pole …

This is certainly one vote on the Legal Services Bill which may well end up saving outside investors a lot of money, as most Scots law firms are seen as poorly performing & untrustworthy, holding among the worst rates of client complaints & consumer dissatisfaction in the modern world, where it has become more the norm than the exception for clients to be ripped off after engaging the services of even the most famous law firms in Scotland’s legal services marketplace today.

The Justice Committee’s latest stage two debate on the Legal Services Bill, during which several amendments were debated as well as the non-lawyer ownership issue (Amendment 317), can be read in full here : Legal Services (Scotland) Bill: Stage 2

Robert Brown MSP (LibDem) voted in favour of restricting outside control of Scots law firms. Robert Brown, speaking in favour of Amendment 317, put forward by the Law Society to restrict outside ownership of law firms said : “Amendment 317 is designed to ensure that there is a majority holding in the hands of solicitors or other regulated professionals. It is the compromise position that was debated and supported by the Law Society of Scotland. I hope that it has the merit both of being reasonable and, as the convener indicated, of being common ground on which the profession can regroup, to some extent.”

Mr Brown continued : “I do not pretend that it is the perfect solution—there are issues with all the potential solutions—but it provides further protection against outside control, which is, rightly, of concern to many solicitors. Last week we debated issues relating to the rights of minority investors. It is certainly the case that influence is as relevant as control. Nevertheless, amendment 317 would put a brake on the extent to which law firms can be taken over by outside interests. The committee should apply that brake.”

I for one am certainly in agreement with Mr Brown on this issue. Unsuspecting members of the public & potential investors must be protected from pumping their money into some law firms whose business models border (or even surpass) that of organised crime. Perhaps an amendment should be raised prohibiting law firms from accepting any outside capital investment, thus saving a lot of people from a severely dodgy investment in very dodgy law firms …

Fergus Ewing, Minister for Community Safety argued in favour of external ownership of law firms. The Scottish Government’s Community Safety Minister Fergus Ewing, once again apparently standing in for the Justice Secretary Kenny MacAskill who has all but disappeared from the Legal Services Bill debate put forward the Scottish Government’s view, claiming the Legal Services Bill would usher in effective regulation : “I emphasise that the bill contains a particularly Scottish solution. It is important that we have a robust regulatory regime. I can recall having been involved in debating no more robust regulatory regime as a member of the Parliament for the past decade. That regime will also be obtained at virtually no expense to the taxpayer. That contrasts with the position down south, where the Legal Services Board's implementation costs to 31 December 2009 were £4.58 million and its budget for running costs in its first full year, which began in April 2010, is £4.74 million. Similar costs here would not be as high as that, but would be comparable.”

Mr Ewing, you must be kidding. Regulation without expense to the taxpayer ? Even the Scottish Legal Complaints Commission received a whopping £2million from the taxpayer, effectively a public gift to the legal profession which your Ministerial colleagues now refuse to talk about or demand returned to help protect public services now on the verge of being slashed due to the UK’s budget deficit.

Law Society of Scotland & Scottish Legal Complaints Commission are anti-client when regulating complaints against lawyers. Robust regulation of the legal profession in Scotland is simply not possible, as all reforms to regulation to the present date have been compromised by the Law Society and so willingly voted through by politicians in the Scottish Parliament. The new broom of the Scottish Legal Complaints Commission (SLCC) has become little more than the anti-client front organisation for the Law Society of Scotland and rogue lawyers the Law Society always wanted it to be, leaving the reforms of the LPLA (Scotland) Act 2007 firmly in the rubbish bin. The same is already happening with the Scottish Government’s plans for a ‘robust regulatory regime’ for the Legal Services Bill which has been steadily re-written by the legal profession itself.

Without much surprise, the Law Society of Scotland welcomed the Justice Committee’s vote to retain Law Society member majority ownership of law firms, thus ensuring the society’s continued influence & control over consumers choice of legal services in Scotland.

Jamie Millar, President of the Law Society of Scotland, said: “A number of key amendments were debated today and I am very pleased that the committee has agreed that there should be a majority ownership of new legal services providers by solicitors and other regulated professionals. It’s clear that MSPs on the committee have listened carefully to the issues and concerns raised by the profession and others, particularly those about external ownership, and what has been agreed today is very much in accordance with the Society’s own policy on ABS ownership.”

The Lord President Lord Hamilton is once again ‘a buffer’ between the Government & legal profession to maintain lawyers independence (from independent accountability). Mr Millar also said that the Society was pleased that the role Lord President of the Court of Session was to be enhanced and that his consent would be required in the appointment of approved regulators. He echoed the comments of Robert Brown MSP who said the role of the Lord President was an important ‘constitutional buffer’ (in other words, a well practiced drain-blocker, immovable by any means in existence) between the government and the legal profession and necessary to preserve the independence of the profession.

With the dreaded inclusion of the Lord President in all of this, at the behest of the Law Society of course, lets hope the Lord President doesn’t take 40 years to come to a decision (as he did with McKenzie Friends) on whether approved regulators (the Law Society of Scotland being the only ones applying) are functioning properly or not – and since the Law Society hasn’t managed to regulate the legal profession properly in the past 60 years, we doubtless can expect a continuance of the Law Society of Scotland’s style of crooked self-regulation when or if the Legal Services Bill manages to pass into law.

So, obviously the Law Society is pleased with it’s re-write of the Legal Services Bill after all that fuss & pantomime between so-called ‘factions’ of the Scots legal profession wanting to break away if they didn’t get their way … and then getting themselves elected to the Law Society’s ruling council after things went their way ….

My advice to consumers ?

The Legal Services Bill as it is being re-written by the Law Society of Scotland, will not benefit consumers of legal services in Scotland one bit, so much that now, some of the consumer organisations which are responsible for the Legal Services Bill’s very existence, now choose not to issue comment on the bill's progress nor have those same consumer organisations chose to campaign against any of the Law Society sponsored re-writes of the Legal Services Bill, which was initially claimed would bring free choice of legal services to consumers in Scotland.

Clearly, for honest, dependable legal services, consumers are going to have to look elsewhere, as the Scottish legal profession under the regulation of the Law Society of Scotland & SLCC couldn’t be trusted with an exploded oil well, which I’m sure they would argue was nothing to do with them as similarly appears to be the case in each of the 5000 complaints & grievances filed or expressed by clients against solicitors & advocates each year in Scotland.

My advice to investors looking at putting their money into Scottish law firms ?

Take your investments elsewhere ! There are billions more opportunities and safer havens around the world for your money than investing in Scots law firms with poor regulator records who would much rather dance the tune of the Law Society of Scotland than give you a good, stable, dependable return on your investment. You would be well advised to avoid investing in what many corporate & private clients of Scots law firms, through their own bitter experiences of using solicitors in Scotland dub ‘the organised crime of the Scottish legal services market’.

You can read my own coverage of the Legal Services Bill here : Legal Services Bill for Scotland - The story so far