Top firms’ ultimatum escalates regulatory crisis north of the border
The Scottish legal market is facing crisis, with an industry-wide argument over the introduction of alternative business structures (ABSs) having the potential to drive the big four firms south of the border for good.
Dundas & Wilson, Maclay Murray & Spens, McGrigors and Shepherd & Wedderburn (S&W) are considering having their lawyers register with the Solicitors Regulation Authority (SRA) rather than the Scottish Law Society in reaction to the Scottish Law Agents Society’s (SLAS) attempt to ban the introduction of ABSs.
While the firms would not physically leave their Scottish headquarters, they would shift to a model whereby the bulk of their lawyers would be regulated by the SRA, with those in Scotland practising as registered foreign lawyers. This would mean the Law Society of Scotland (LSS) would have a vastly reduced revenue, with practising certificate fees going to the English Law Society, while the master insurance policy used by the entire profession in Scotland may be rendered unviable.
Dundas managing partner Alan Campbell said: “If we feel that we’re trading at a disadvantage to our competitors and they’re pan-UK, then we’d need to look at every option to make sure we’re on a level playing field. If that involves being regulated by the SRA, that’s something we’d do.”
His counterparts at the other big four firms agree. McGrigors managing partner Richard Masters said: “It’s unpalatable and not a position we’d want to find ourselves in, but if [ABSs] take off and we’re in a non-competitive position we’d have to consider it.”
The LSS has been successful in lobbying the Scottish government to alter some parts of the draft Legal Services Bill, but there are concerns that it would lose its negotiating position if it was forced to oppose ABSs, which is what the SLAS wants. As it is a government bill that has been some years in the making, it is likely that the Scottish government would press ahead with enacting it without the support of the sector.
“The big commercial firms are a big part of the Scottish economy and the government doesn’t want to hamper them,” said LSS president Ian Smart.
S&W chief executive Patrick Andrews added: “The profession is in a perilous position because it’s difficult to see how it can maintain credibility in its dialogue with the politicians. The risk is that [the politicians] will steam on and do what they want and the profession is left watching.”