Inkster: Law Society of Scotland embarrassed by ABS failure
The Law Society of Scotland has declined to confirm when it will introduce alternative business structures (ABSs) now that all ownership restrictions on them have been removed.
The Regulation of Legal Services (Scotland) Bill is awaiting Royal Asset after passing through the Scottish parliament last month.
Though ABSs – formally called licensed legal services providers (LLSPs) in Scotland – have been allowed since the Legal Services (Scotland) Act 2010, they have never actually been implemented by the Law Society of Scotland (LSS).
The new legislation completely removes the 2010 requirement that ABSs have majority lawyer ownership, having originally reduced it to 10%.
ABSs also no longer have to offer legal services for “fee, gain or reward”, opening the door to charities, and the ban on law centres becoming ABSs has been removed.
As the Scottish government decided not to introduce an independent regulator for legal services – against the recommendation of the 2018 Roberton review that led to the new law – it remains the LSS’s responsibility to introduce ABSs.
In its press release welcoming the bill’s passage, the LSS made no mention of ABSs and well-known Scottish solicitor Brian Inkster – a champion of innovation in the law – suggested that this may be “due to embarrassment” on the society’s part.
The chief executive of 12-office firm Inksters explained: “Embarrassment that, almost 15 years after the Legal Services (Scotland) Act 2010 was enacted, we still do not have any licensed legal services providers in Scotland.
“This is because they, as regulator, have yet to start the admission process. Whilst we keep hearing it will launch with tentative dates being given for it to do so, from at least 2019 onwards, there always appears to be a reason to put it on hold.”
Describing the removal of the majority ownership rule as “hugely significant for the development of legal services provision in Scotland”, Mr Inkster went on: “Hopefully, when the Regulation of Legal Services (Scotland) Bill is enacted, the Law Society of Scotland will have run out of excuses and will start accepting applications for licensed legal services providers without further ado.”
An LSS spokeswoman told Legal Futures that the society had “pushed strongly” for the 2010 Act and for LLSPs, but had been concerned about “the practicality of many of the regulatory provisions”, which it thought risked deterring many would-be new entrants and make it difficult for them to thrive.
The Law Society was not granted full authorised regulator status for LLSPs until December 2021, she said, and a regulatory scheme was submitted to Scottish ministers and the Lord President for approval in November 2022.
This was approved in August 2023 but the LSS decided to pause their introduction given the bill by then going through Parliament and the chance to make changes to the regime.
She said: “Now that the bill has been passed, we will carry out a full assessment of the impact of amendments to the Legal Services (Scotland) Act 2010 in addition to reviewing the society’s regulatory scheme, policies and processes for licensed legal services providers, and identifying any changes that may be required.”
The new legislation more broadly increases the LSS’s regulatory powers and also introduces a criminal offence of pretending to be a lawyer, in addition to the existing offence of holding out to be a solicitor.
LSS president Susan Murray said: “This legislative development is progressive, both for the profession and for consumers of legal services…
“The new legislation will assure a regulatory system that is fit for the 21st century, delivering tangible benefits for our clients and creating new opportunities for our members to thrive.
“We look forward to working with government colleagues and other stakeholders, to ensure that these significant regulatory changes are successfully implemented.”
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