Michael Sheridan: Separation of powers at risk under solicitor regulation proposals



Michael Sheridan

The Roberton Review into the Regulation of Legal Services in Scotland commissioned by the Scottish government was published 10 months ago. The Competition and Markets Authority and the Scottish government have now responded.

This latest document identifies the drivers of reform as proportionality, consistency, accountability, transparency, targeted, independence, prevention and improvement, cost and efficiency. There is no mention here of the rule of law and we are somewhat apprehensive as to what might emerge from the consequent departure from legal principle identified below.

It seems the Scottish government will now put matters out for public consultation. The main issue is likely to be whether solicitors should continue to be regulated by the Law Society of Scotland, subject to the oversight of the Lord President of the Court of Session, or by a new independent regulator, created by and answerable to Parliament.

The removal of the Lord President of the Court of Session from the head of the regulatory process implies a departure from the well-established legal principle that judicial authority should be separate from the executive and legislative branches. The reason for the operation of that principle is to preserve the independence of the legal process of which the solicitors’ profession forms an essential part. The above reports appear to call for a regulatory process answerable to Parliament and independent of government and the legal professions.

Some of the major flaws in this proposal are that government very often has control or at least virtual control of Parliament, that parliament is a legislative body with no supervisory function and parliament has no continuing identity but may change character at each general election.

The Lord President’s office, on the other hand, has centuries of standing as head of the judiciary and of legal representation and all the continuity and expertise which that implies. The Lord President is the very paradigm of independence and his removal from the regulatory process would create a vacuum with no control over what powers might move into it.

Again, there is a proposal to authorise the ownership of solicitors firms by non-solicitors. This is the even thicker end of the wedge which we observed in 2010 when solicitors acquired authority to sell their practices to foreign solicitors, though not yet to non-solicitors.

This change to public law happened to provide enormous private benefit to a number of Scottish solicitors who

were the owners of failing practices from which those solicitors were unlikely to recover their capital interests unless purchasers could be found.

Even more solicitors stand to acquire private benefit if these rules are extended to enable the sale of their practices to non-solicitors such as banks and other commercial entities. The position of the Scottish Law Agents Society has always been that the obligations and privileges of the legal profession do not belong to individual solicitors but are a public institution which is not for sale and that the change of the public law in order to effect private benefit is anathema to the rule of law.

Secondly, the existing system has benefits which don’t appear to have been valued in the Review. One is the issue of professional indemnity insurance against losses incurred by clients which operates to protect the legal profession and, more importantly, the public which it serves. The Law Society requires all solicitors in Scotland providing services to the public to insure through a single master policy which, though expensive, is generally affordable.

What insight I have to professional indemnity in England and Wales tells me that there is no central policy and that law firms require to negotiate their own insurance cover and are often at the mercy of insurers and professional indemnity insurance frequently presents existential threats to law firms in that jurisdiction.

There is no suggestion that an independent regulator would undertake such a provision, or explanation of what would replace the master policy in the absence of the Law Society in Scotland. On this issue alone, the Law Society of Scotland may be regarded as an essential feature of the landscape and no proposal to abolish that institution should be considered without the certainty of the continuation of affordable insurance cover for the protection of the public and of the profession. 

Michael Sheridan is secretary of the Scottish Law Agents Society. This article first appeared in The Scotsman.