The Scottish government has published proposals to overhaul the nation’s £1.2bn legal market that partly mirror the Clementi reforms introduced south of the border. They include the introduction of alternative business structures, allowing other professionals to set up in business with solicitors and permitting external ownership of law firms.

Justice Secretary Kenny MacAskill hailed the plans as a ‘once-in-a-generation opportunity’ to create a more flexible and modern regulatory framework for Scotland’s legal services. ‘I believe [these] proposals will help the profession to remain successful and innovative in the face of increased competition.’

The move follows an investigation by the Office of Fair Trading last year which placed the Scottish government on notice to come up with concrete proposals after upholding calls by consumer watchdog Which? for reform.

A ‘super complaint’ lodged with the OFT by Which? had recommended the watchdog address fears that the current regulation of Scottish legal firms is hindering competition in the market, restricting choice and pushing up prices.

The question of whether Scotland should follow England and Wales and introduce Clementi-style reforms has divided Scottish solicitors. Firms such as Dundas & Wilson and McGrigors have demanded a level playing field, claiming that they will be at a disadvantage when competing with firms in England and Wales if they are not allowed to raise external capital or appoint non-lawyer partners.

The Law Society of Scotland has expressed reservations, however, amid fears that ABSs could wipe out small Scots firms and reduce access to justice. During a Scottish government-sponsored consultation on legal services three years ago, the Society said it ‘could see no circumstances in which the ownership and control of law firms by non-lawyers could be permitted, without surrendering the prime objectives of maintaining independence and public protection’.

It has since altered its stance. President Richard Henderson last week described the consultation as ‘an important step along the road to further liberalisation in Scotland’s legal profession.’See opinion, p10