Lack of ABSs puts Scotland at ‘disadvantage’, says Turcan Connell chairman

The lack of alternative business structures in Scotland leaves its law firms less competitive than those south of the border, according to one expert.

Simon Mackintosh, chairman of Turcan Connell, told The Herald that the absence of ABSs in Scotland puts “the Scottish profession at a disadvantage”.

He added: “When you look at the number of English firms coming into Scotland then it must make some firms more vulnerable if they can’t diversify in that way.”

ABSs have been available in England and Wales for the past five years and while a form of ABS has been approved in Scotland, the legislation has yet to be written.

A report published in July this year by TheCityUK found continued financial growth for UK-based legal services firms as well as significant structural reform which has seen alternative business structures (ABS) make gains in the market.

And in January this year, John Campbell QC said the regulatory system this side of the border “remains based on a 19th century construct, which has the advocate in an ivory tower, legally unconnected to his client”, adding that the entire market requires review.

He said: “Advocates cannot form an ABS, nor can they sue for the recovery of unpaid fees. They cannot incorporate, like any other small business, nor can they team up with other professionals (or indeed anyone) to offer a better service. The bar resolutely insists that the preservation of intellectual and professional independence can only be maintained by requiring its members to practise only as sole practitioners.

“There are those who disagree. Aside from the tax disadvantages of such a business model, the cost to the client-consumer is increased, since he must necessarily pay two people – a solicitor and an advocate – to secure the services of skilled counsel. The impression of remoteness and distance from the client is enhanced.”

Mr Mackintosh said his firm was “very keen on alternative business structures” in order to integrate its investment arm, Turcan Connell Asset Management (TCAM) with the law firm.

He explained: “For various reasons TCAM was set up as a separate company and outside capital came in – it’s still associated with us but it’s not a subsidiary.

“We wanted those investment professionals in the partnership. That won’t happen but ABSs are still on the table and we want non-lawyers in the partnership.

“A lot of what we do is tax advice so it could be appropriate to have a chartered accountant in the partnership. That’s the sort of ABS I could see us developing.”