‘15 years of inertia’ on ABS: Scottish firms unite to lobby for non-lawyer ownership

Lawyers in Scotland have formed a campaign group to lobby for an end to 15 years of official stalling over the introduction of alternative business structures north of the border.

Led by three managing partners, Rob Aberdein of Simpson & Marwick, Marie Macdonald of Miller Samuel Hill Brown and Brian Inkster of Inksters, the ABS Scotland Group aims to ‘unlock long-blocked reforms that would allow law firms to offer equity to non-lawyers, access investment, and tackle a looming succession crisis across the sector’.

The Scottish Parliament formally approved the introduction of ABSs back in 2010, but the Law Society of Scotland has since periodically moved to stave off implementation of the necessary rule changes. The Edinburgh-based Society recently announced that it was further deferring work on ABSs till 2027.

‘Progress has been repeatedly stalled by regulatory inertia, with the Law Society of Scotland imposing multiple delays – most recently a two-year pause justified by a claimed “lack of interest”, despite mounting evidence to the contrary,’ said the group. Back in 2012, the Society’s then executive director of regulation reported that increasing numbers of Scottish firms had been contacting the Society to ask about becoming a so-called ‘licensed provider’. He went on to warn, however, that new regulations enabling them to convert remained ‘some way off’. 

Aberdein said today: ‘Scotland is now completely out of step with the rest of Great Britain. Non-lawyer ownership has been delivering clear benefits in England and Wales for more than a decade, from investment to innovation. Yet here, we’re still being told to wait. To claim there is no interest is simply untrue. We’ve seen nearly 20 firms step forward to join this group before it even launched. That should send a clear message: the profession is ready, the market is ready. The only thing missing is Law Society regulation, support and acceptance.’

Other Scottish firms backing the initiative include Harper Macleod, MacDonald Henderson, Jones Whyte and ’several independent and high street firms from Kirkwall to Kirkcudbright’, the group said.

Macdonald added: ‘More than 40% of Scottish law firms are sole practitioners. If they retire without a successor, the business dies with them. While the demographics of Scotland’s legal workforce have transformed in recent decades, the model of ownership remains largely unchanged, still rooted in traditions that have gone unchallenged for centuries.’

Supporters of the group argue that the lack of implementation in Scotland has also left the profession at a competitive disadvantage to counterparts south of the border. Several de facto ABS models are already operating in Scotland, either through workaround structures or via the Scottish offices of English and Welsh firms.

ABS Scotland wants the Law Society to reconsider its most recent two-year pause on progressing ABS regulation, claiming it could further delay reforms for as long as five years. It is calling on the Society to accept applications immediately and take up the group’s offer of forming a subcommittee to assist with delivery.

Inkster said: ’When ABS was first introduced in England and Wales, there were loud warnings about so-called “Tesco Law” – fears that large corporates would erode professional standards or push out traditional firms. But those concerns simply haven’t materialised. In fact, what we’ve seen is a more diverse, innovative legal sector that’s still underpinned by strong regulation and ethical practice.’

Ben Kemp, chief executive of the Law Society of Scotland, said: 'We understand the importance of law firms being able to innovate and adopt different business models. We also well understand the sense of frustration that we have not been able, for a range of reasons, to implement ABS before now. That's why it's good to see this new group as a collective voice for many of those considering non-solicitor ownership. I'm looking forward to discussions with the group in the next few weeks. 

'As the regulator, we are committed to bringing ABS to Scotland's legal sector and have confirmed our commitment to return to this work just as soon as possible. At the same time our immediate priority must also be to deliver the major systemic reforms agreed by Parliament just six months ago. This includes creating a wholly new system of business level regulation for over 1,200 existing law firms and delivering the improvements to the legal complaints system which everyone accepts is too slow and too complex.'