What law firms need to know about the reform of legal regulation in Scotland

Neil Stevenson, chief executive at the Scottish Legal Complaints Commission, reviews three years on from suggested reforms to the Scottish legal industry and key points to consider along the way.

In 2018 an independent review, established by the Scottish Government, recommended widespread reform of legal regulation in Scotland. What has happened since?

The recommendations suggested radical reform: a single independent regulator that would register all legal professionals, set standards, have a proactive quality improvement approach, and would deal with complaints (replacing the current complaints ‘maze’).  It drew on many lessons from reform in England and Wales, both what had worked and what had not, since the Clementi review in 2004 and the Legal Services Act 2007 which followed.

The review also noted that Scotland had passed legislation in 2010 to allow alternative business structures, but that no regulator was yet fully authorised to permit these businesses. This meant the options open to Scottish legal businesses and consumers already significantly lagged what was available elsewhere.

The report was met with what was, to many, a predictable response. The debate was dominated by divided opinion on the concept of a regulator independent from the profession (which other detailed proposals ignored, despite being less contentious).  Opposition came in particular from the professional bodies that would lose their regulatory role, while many others strongly supported the model, including the Scottish Legal Complaints Commission.
The Scottish Government response followed eight months later, noting the polarised opinion and indicating they would “seek to build consensus, where possible, on the way forward prior to deciding on a course of action.”

To achieve this a working party was formed by the Scottish Government, with different interests represented. The aim was that this would inform a public consultation, which was due prior to the Scottish elections in May 2021, and which it is now hoped will be published later this year. However, it remains to be seen if any organisation will change its public position on the key recommendation of a single independent regulator. And if a compromise is found, is that a compromise in the best interests of the profession and the public, or a compromise between organisations with understandable vested interests?

There are perhaps lessons about compromise models from the reform that took place around legal complaints in 2007 in Scotland.  More independence was introduced, but at the cost of an additional statutory body which the profession and client fees must fund. A role for the existing professional bodies in complaints was retained, but at the cost of a system which is slower and more expensive, and which may see the same complaint dealt with by multiple statutory bodies. In an environment where there were essentially two conflicting views of what reform should look like, a huge amount of detail was codified in legislation as ‘protection’ for one side or the other, but the long-term cost has been an inflexible and cumbersome system which on occasion has perverse outcomes.

A further pause for thought was offered by Stephen Mayson, who reported on his review of legal regulation in England and Wales in June 2020. He specifically warned policy makers and government to “stand clear of the echo chambers, and approach the prospect of reform with an open mind.”

He was concerned that the strong professional voice dominated debates with a set and longstanding narrative, to the detriment of the public.  He suggested: “The regulatory framework should better reflect the legitimate needs and expectations of the more than 90% of the population for whom it is not currently designed.”

Building consensus can be a powerful platform for change, but as a former prime minister said it can also be an abandonment which leads to a model that no one objects to, but which no one believes in.

With the three-year anniversary of the proposals for reform fast approaching, it’s hoped that the debate can at least progress later this year with a full public consultation and efforts to ensure that the public voice is heard.