Scottish solicitors to vote on ditching support for ABSs

Scotland: AGM votes tomorrow

Solicitors in Scotland will tomorrow vote on whether to oppose government plans to push ahead with alternative business structures (ABSs).

However, a motion put by some members of the Law Society of Scotland at its annual general meeting has been countered by one from the society’s council, which seeks a mandate instead to amend the proposed ABS regulatory regime.

A law passed in 2010 allowed ABSs in Scotland where they operate for profit and have majority lawyer ownership but has never been brought into force.

The Regulation of Legal Services (Scotland) Bill, currently going through the Scottish parliament, relaxes the restrictions, reducing the requirement for lawyer ownership to 10%.

In announcing the move last year, the Scottish government said liberalisation should allow for employee and community ownership of ABSs, “greater potential for outside investment into ABS”, and third-sector organisations directly employing lawyers to undertake what was currently reserved activity, such as court proceedings.

The resolution before the AGM, proposed by Glasgow-based Michael Sheridan, calls on the society to lobby the government to repeal the 2010 provisions and drop the ABS clauses in the bill.

It argues that the profession opposes ABSs, that “investment companies should not have control over solicitors’ practices” and that they create “irreconcilable” conflicts of interest.

Mr Sheridan contends that the monopoly rights to deliver reserved legal services “are held by solicitors as trustees for the public and is contrary to the principles of trustee ownership that these rights be sold by said trustees to non trustees for [profit]”.

Mr Sheridan says also that ABSs could drive up costs to consumers because ABSs would have to pay shareholder dividends, and that they have “failed to benefit England and Wales”.

He is former secretary of the Scottish Law Agents Society, which describes itself as the profession’s “solely representative national body” (the Law Society of Scotland has both representative and regulatory functions) and last week backed a resolution in the same terms at its own AGM.

The law society’s council has proposed a resolution to replace Mr Sheridan’s that notes “the strong cross-party support” for ABSs.

It says “the best protection against any risks associated with [ABSs] is for an effective and robust system of regulation of these new entities” and that the council should “continue to press for amendments” to the bill “in order to address deficiencies in the 2010 Act and ensure that the proper regulation of [ABSs] can commence”.

The society has previously complained that the regime set out in 2010 was unwieldy.

Writing on his blog, Brian Inkster, a solicitor well known as a leading innovator in Scotland, urged colleagues to support the law society’s amendment.

“Thirteen years of liberalisation of legal services in England & Wales has demonstrated that there is nothing to fear from us adopting the same approach north of the border,” he wrote.

“Indeed, there is, on the contrary, everything to be gained by so doing.”

Saying he and “many others” would prefer no minimum ownership percentage for solicitors – “to give Scotland parity with England & Wales”, he added: “If Mr Sheridan’s motion is approved on Thursday, it will undoubtedly reflect badly on the legal profession as a whole and demonstrate we are inward and backward thinking.”

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