No progress on freeing up the Scottish legal market means no chance for Scottish firms to innovate
Ever since ABS became a discussion point in the UK jurisdictions the Scottish debate has lacked the drive to meet all indicative timelines for introducing regulatory change, despite the Scottish legal profession overcoming an industry-wide argument on the subject back in 2010.
At the time, those setting out arguments in favour of ABS in Scotland focused on the potential trading disadvantage that firms would face by not being on a level playing field with competitors across the UK. And now, three years on, we find ourselves in an industry worth a reputed £1.1bn to the economy, with no advance in terms of a regulatory framework that would allow Scottish firms to compete.
Yet in that time a significant number of competitors that are structured as ABSs in an England and Wales context have entered our market. Scottish Development International – the inward investment and trade promotion agency of the Scottish Government – is promoting globally the virtues of the Scottish legal profession as a platform from which to build legal process outsourcing operations. It is ironic that we are portraying Scotland as a location to do business yet simultaneously exhibiting a lack of urgency in providing the self-same industry with the framework from which its indigenous businesses can develop in this market.
Earlier this year the Law Society of Scotland indicated there had only been around 40 expressions of interest from those who may register under ABS law and that none resembled a radical business model that would shake up the market. But what would be the point of a Scottish firm bringing forward its business ideas without the framework in place to take them forward?
The innovation and thought leadership being sought – or assumed not to be occurring – is actually taking place in boardrooms and conference calls. Unfortunately for some of us, at present we have to say to potential joint venture partners: “We have the vision, the culture and the business processes to meet your ambitions and ours, but regulations prevent us from achieving those ambitions. Could you call back in a year or so?”
Law firms are businesses like any other – recent failures in Scotland and beyond have made that clearer than ever. Many clients are looking for alternative approaches to the work we do, different structures and even joint ventures. They are increasingly looking for one solution, and have no regard for the fact that Scotland is a separate legal jurisdiction.
So long as these solutions are not even an option there will be challenges for those who want to become part of UK-wide service provision, particularly in sectors that have fully aligned themselves with the ABS idea in England and Wales.
Scottish law firms have always been good at adapting, whether they have seen change coming or not. I believe they will continue to adapt, but to have a fighting chance they must have regulatory parity with the rest of the UK.
The 2013 Law in Scotland Conference was themed ‘Evolution or Extinction’. As a profession we need drive and determination to finalise the ABS environment in Scotland if we want to avoid that theme becoming a self-fulfilling prophecy.