As the 4 June deadline for responses to sir David Clementi's consultation approaches, leading figures from the UK and European legal jurisdictions set out their hopes and fears on the future regulation of services

Janet Paraskeva argues that whatever the outcome of the Clementi review, lawyers' independence must come first

The Law Society Council was far-sighted back in 1999 when it decided its policy on multi-disciplinary partnerships (MDPs).

The decision was to allow multi-disciplinary practice subject to securing the right kind of safeguards that would protect the interests of consumers and commercial clients.

Although its negotiations with government ran into the sand in that there was no legislative time available to make the changes that would have been necessary for the Law Society to regulate MDPs, the Society developed the idea of 'legal practice plus' as a possible, workable first step.

In legal practice plus, lawyers would join with other professionals as partners in delivering legal services, provided that legal services are the prime objective of the firm.

Does this sound familiar? If you think you have read that recently, you probably have.

It is very similar to the concept of a legal disciplinary practice (LDP) mooted in Sir David Clementi's consultation paper on the future framework for the regulation of legal services in England and Wales.

An idea before its time, it is now being heralded around the country as a potentially important way forward for the development of legal services.

The Law Society was first out of the gates in relation to the provision of external finance.

The council has recently taken the decision to allow fee-sharing in certain defined circumstances.

This will allow firms to access external investment and capital for their development.

Again, Sir David moots the idea of LDPs and MDPs that could be owner-managed but also non-owner managed.

And the decision the Law Society Council took on practice rule 4 - to allow employed solicitors to work directly for the public, provided, of course, that the public protections could be put in place - again paved the way for questions asked by Sir David in the final chapters of his consultation document.

So, the only issues that really remain are how to move forward and how to design a regulatory structure through which the Law Society could regulate these new types of practices.

The Society has already said that it would be happy to regulate LDPs.

We already have experience, as multi-national partnerships are already regulated by us (and regulated effectively), as are solicitors' firms employing barristers.

Is there any real difference between that role and the regulation of Sir David's LDPs? LDPs could include as partners those same barristers as well as other professionals who would also be subject individually to their own regulatory bodies.

After all, regulation could follow the economic unit as it does now in the financial sector.

For example, many accountants, although regulated by their own professional bodies, work in the financial services sector in entities whose prime regulator is the Financial Services Authority.

What is important is that the first-tier regulator is in close touch with the services it is regulating and that the overall regulatory burden is kept to a minimum.

For these reasons, we will argue that the professional bodies should continue in their work as first-tier regulators.

What may not be immediately obvious to everyone is why a new structure would be necessary and why the Law Society should provide that structure within the regulatory framework of the future.

The structure could build on the high quality of systems already in place in the Society.

We are committed to modernise further those systems, which ensure proper compliance with standards.

To achieve this, the Law Society would probably need to demonstrate its willingness for a much clearer separation of its regulatory functions from its role as a representative body for solicitors.

The terms of reference of Sir David's review are to consider what regulatory framework would best 'promote competition innovation and the public and consumer interest in an efficient, effective and independent legal sector [and] to recommend a framework which would be independent in representing the public and consumer interest, accountable, consistent, flexible, transparent and no more restrictive or burdensome than is clearly justified'.

The Law Society believes that greater competition and innovation are likely to be achieved best through changes in legislation to underpin effective regulation of both multi-disciplinary practices and LDPs.

We also believe that any developments must guarantee the independence of lawyers and their duty to put the interests of the client first - especially where lawyers are working within a legal practice and are not the owners of the practice.

As well as the guarantee of independent, disinterested advice to consumers.

The independence of the legal profession itself in any future regulatory framework is essential for the well-being of society.

The profession must be fearless in its defence of individuals against the state and to do this the profession must remain independent of the executive, a fact recognised internationally by both the EU and the UN.

Janet Paraskeva is the Law Society chief executive

The stark differences in size of the professions north and south of the border must be considered in the review, says Douglas Mill

While it is freely acknowledged in Sir David Clementi's consultation paper that his review relates to the legal profession of England and Wales, the implications for lawyers in Scotland are profound and immediate.

I have often said that it is impossible to seal hermetically any Clementi outcomes at Hadrian's Wall, such is the globalised nature of legal practice and the amount of cross-border traffic in this day and age.

In one way, the profession in Scotland is a couple of years ahead of its English and Welsh counterparts.

We have undergone an examination of the nature of co-regulation of solicitors in Scotland by the Justice 1 Committee of the Scottish Parliament two years ago.

This resulted in several outcomes - and much ongoing work - including the Council of the Law Society of Scotland Act facilitating our ability to delegate work to committees and increase the velocity of our complaints process.

However, Clementi is much more broad-ranging, touching as it does on other regulatory models and business vehicles.

Historically, the legal system has been one of the distinct features of Scotland.

And it is ironic that in an era where a Scottish legislature has been established for the first time in 300 years the independence of the solicitor and advocate branches of the profession in Scotland may be under threat.

The size and nature of the legal profession in Scotland is different to its larger English neighbour.

It is not simply a matter of scale.

The Law Society of Scotland employs approximately 120 people, turns over between 4 million to 5 million annually and regulates approximately 10,000 solicitors.

The Faculty of Advocates is responsible for Scotland's 450 independent advocates.

The difference is not simply one of arithmetic but nature.

The largest firms in Scotland have approximately 200 practising certificates, which makes them a fraction of the size of their large English counterparts.

There is not the same international outreach in Scotland and indeed the profession may be characterised as leaning more towards the high street end of practice than towards the City of London.

It is for these reasons we are concerned that the Clementi recommendations are as appropriate to the two-partner firm in the high street of, say, Airdrie as they are to, for example, Clifford Chance.

The Clementi consultation has been a massive opportunity for us in Scotland.

We have been to see Sir David.

We have carried out an extensive consultation process through Faculty visits.

We have consulted with other significant Scottish stakeholders.

We have been contributing monthly articles in the Journal of the Law Society of Scotland.

Our council has been developing policy and the matter was given a detailed airing at our recent annual general meeting.

The next stage of the process is for the council at the end of May to approve our draft response in time for Sir David's 4 June deadline.

While Sir David has said that in England and Wales the status quo is not an option, I am uncertain whether that needs to be the case in Scotland.

There are certain fundamental differences that apply, including the questions of proportionality and viability.

The response coming from the Law Society of Scotland may be seen by some as being conservative.

If it is, it is not simply a knee-jerk unconsidered reaction - it is based on stripping down in its entirety the regulatory and public protection aspects of the society's work and subjecting it to rigorous analysis.

The conclusion is likely to be that the current system - bearing all other matters in a small jurisdiction in mind - is in the best interests of all concerned.

In Scotland, 4 June is simply another stage in the process.

The Scottish Executive Justice Department has correctly identified 'read-across' and has properly established a working group representing legal and consumer interests to look at an evidence base for possible implementation in Scotland.

Arguably then the process in Scotland is longer.

We will be suggesting to the Scottish Executive that, among other things, it should critically assess how any Clementi proposals bed down in England and Wales before deciding how to legislate for the Scottish legal profession.

The fascinating thing about Clementi is that it has given us an opportunity to question the principles of why we are lawyers.

What are the core values? What does make legal practice different? There is a lot of concentration on transactional matters but the importance of an independent legal profession in any modern democratic society cannot be under-emphasised.

As a profession both north and south of the border we are often very self-critical and lacking the confidence to emphasise to the public and to politicians that the legal profession in the UK is something of which we can all be proud.

Indeed, we can take much heart from the conclusions of the Monti Report for the European Commission.

I am sure that at times our English counterparts find it difficult to reconcile the esteem in which the Scottish and English legal professions are held internationally with current tabloid image.

Clementi is our opportunity.

Douglas Mill is chief executive of the Law Society of Scotland

Jonathan Goldsmith sets out the stance of the Council of the Bars and Law Societies of the European Union on the Clementi consultation

Henry Kissinger discovered, and George Bush recently learnt, that there is no one you can ring up to find out what Europe thinks on a particular topic.

Sir David Clementi has also asked Europe for responses to his consultation paper.

The Council of Bars and Law Societies of the European Union (CCBE) is trying to help.

The CCBE would like to give its views for a number of reasons.

First, developments such as the Clementi review usually spread quickly around Europe.

The national competition authorities meet regularly under the auspices of DG Competition.

They discuss the liberal professions.

And we are sure that the model for regulation of lawyers adopted by the UK government will be studied closely in other member states.

So, it is in our interests to give our views early.

Second, the consultation paper raises fundamental questions about the regulation of legal services.

This is the bread-and-butter work of the CCBE.

We like to think that we know more about it across Europe than anyone else.

So, of course, we would like to offer our expertise when there is a radical review in one of the member states.

There are some issues that are UK-specific, and on which we will not offer views.

These are not only the expected issues about the differences between solicitors and barristers, say, but also on ways of doing things that are deeply embedded in the UK psyche.

Take lay representation in regulation.

The UK is utterly used to lay people involved at various levels of the administration of justice - lay magistrates, juries, citizens advice bureaux, lay chairmen of tribunals.

This is not the case in many other member states, and so the question of lay involvement is more difficult for them to understand.

But the CCBE will put forward views on other major issues.

For instance, on the models for regulation, we have conducted quick research on what models work where.

There appears to be no 'model A' anywhere.

This is not surprising, because self-regulation is an important element in the make-up of the European legal professions.

On the other hand, no jurisdiction has, to our knowledge, pure self-regulation.

A number of jurisdictions have models close to 'model B' or 'B+', none exactly so, and an even greater number tell us that they have models which are neither A nor B.

If the Clementi review eventually opts for model A, it would appear that England and Wales will be the only jurisdiction where there is not a strong element of self-regulation.

The CCBE as a whole, as seen in the discussion of the Clementi review at its plenary session in the middle of May, plumps very strongly for a large element of self-regulation.

This is for clear reasons.

First and foremost, because lawyers need to be independent both of government and of clients, and self-regulation is seen as the best guarantee of that.

Second, because lawyers, as lead participators in the justice system, are considered to have the best knowledge of what kind of regulation is needed to ensure independence and integrity of their behaviour.

And third, because peer pressure is seen as an effective form of discipline and regulation, on the grounds that it is in the interests of members of a group to raise their reputation as high as possible, as recognised in the liberal professions around the world.

The other area where the CCBE plans to contribute relates to the corpus of specifically European law in relation to the regulation of the legal professions, some of whose principles are not mentioned in the Clementi review.

For instance, the recent Wouters decision of the European Court of Justice (ECJ) - C-309/99, Wouters, Savelbergh, Price Waterhouse Belastingadviseurs v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577 - made two findings.

First, it said that the bars and law societies are subject to competition law.

But it went on to say that, when bars are regulating to protect the core values of the profession (listed in the judgment as independence, confidentiality and the avoidance of conflicts of interest), then any anti-competitive effects may be justified.

The particular rule on which the case was based was a ban on certain multi-disciplinary partnerships drawn up by the Dutch Bar.

The CCBE believes that the same principles should apply if the regulation is to protect access to justice.

The ECJ further held that the bars, when regulating to protect the core values, enjoy a certain margin of discretion.

In the CCBE's view, there could have been no stronger endorsement for its own view of the importance of self-regulation by the professions.

The core values and the importance of self-regulation are once again recognised in the recently proposed directive on services in the internal market published in January of this year, which the UK government strongly supports.

The CCBE will be following the Clementi process closely.

The outcome will radically affect one of its important member delegations, and will doubtless set a template for future regulation of the legal professions across Europe.

Jonathan Goldsmith is the secretary general of the Council of the Bars and Law Societies of the European Union