Scottish solicitors to get ‘Tesco law’ referendum

The Law Society of Scotland is to ballot its 10,000 members on Clementi-style liberalisation of the nation’s legal services market, as efforts to derail the reforms gather momentum.

The move was announced in response to the scheduling of a special general meeting on 25 March requisitioned by lobby group the Scottish Law Agents Society (SLAS), which opposes the introduction of so-called ‘Tesco law’ north of the border.

The outcome of the SGM could force the Law Society to reverse its policy of supporting external ownership of law firms and alternative business structures. However, the SGM result would be superseded by a positive referendum result, backing the Law Society’s stance on Scotland’s equivalent of the Legal Services Bill already implemented in England and Wales. The Bill is due for stage one debate in the Scottish Parliament in mid-April.

The Law Society has asked SLAS for permission to postpone the SGM until the outcome of the referendum is known.

The appropriateness of ‘Tesco law’ for Scotland has divided the nation’s legal profession ever since external ownership and ABSs were first mooted for England and Wales. The Law Society of Scotland now backs the move to open up the ownership and business structures of law firms after, earlier this decade, it had initially opposed it.

That support was confirmed at the Society’s annual meeting in May 2008, but opponents of the reforms have continually questioned the legitimacy of that vote, pointing to the allegedly disproportionate influence of the biggest, cross-border Scots firms wielded through proxy votes.

The SLAS has expressed fears that Scottish firms will register in England or be taken over by English firms if external ownership is allowed. The Law Society claims the opposite – arguing that encroachment upon the nation’s £1bn legal services market from south of the border is more likely if the reforms are not introduced in Scotland.

Should the Law Society be obliged to change its policy to one of outright opposition, this would not necessarily torpedo some or all of the reforms, since they will be enshrined in Holyrood legislation. However, their introduction would be greatly complicated at the very least.

Law Society of Scotland president Ian Smart said: ‘The council of the Society met on Friday, 5 March, to discuss its response to the requisition for a special general meeting. The motion before the SGM proposes overturning the Society’s existing policy, which supports alternative business structures, as decided by the solicitors’ profession at the 2008 AGM.

‘The council was conscious that the critics of that decision continued to claim that the vote was not representative of the profession. The council decided that another general meeting would not resolve the issue and concluded that a referendum of all members will confirm that the 2008 vote reflected the clear majority view of the profession.

‘Discussions will take place with the Scottish Law Agents Society about the referendum and the consequences for the SGM. We will now work on the arrangements for the referendum, including the wording of any questions. It is expected that the process will be completed within a month. We will keep members informed of developments.

‘In the meantime, the Society will continue to promote amendments to the Legal Services (Scotland) Bill to ensure the independence of the legal profession and maintain the high standards which have historically served both the client and the profession so well.’