Hansard

I congratulate the Cabinet Secretary for Justice on the motion and Pauline McNeill on her amendment. The Scottish Government is clearly attempting to develop a realistic approach to the Scottish legal services market. I certainly welcome this debate, as some people might be under the impression that this issue has raised its head only in the past couple of months, especially if the letters pages of some of our older newspaper titles are to be believed. That is not the case. The issue, in fact, goes back to the first session of Parliament, when the Justice 1 Committee held an inquiry into regulation of the legal profession.

Sir David Clementi's report on business structures and legal services in England and Wales advances the prospect of legal organisations raising external capital in order to expand. Although Sir David has in certain quarters been demonised for stating that it is perfectly acceptable for Tesco, for example, to gain entry into the legal services market, the fact is that his report, which was published in December 2004, argued that the fit to own test should be applied to any company that seeks to move into the legal profession.

Although I do not hail from a professional legal background, I have some knowledge of legal issues with regard to the modern workplace—in particular, employment law—and to housing law.

There is an issue about the provision of legal services, and I would argue that, in certain cases, people who are not professionals can deliver legal advice.

On the main issues identified with regard to competition in and regulation of Scottish legal services, some hold the view that any change in the current structures will lead to a dumbing down and dilution of services, which will strike at the heart of the unique Scottish legal system. Others might say that there are vested interests and restrictive practices at work in modern Scotland.

Part of the reason for today's debate is the fact that the OFT received a super-complaint from the Consumers Association—more commonly known as Which?—on 8 May 2007. The super-complaint arose from the commencement of the Enterprise Act 2002, section 11 of which allows a designated consumer body to raise a matter that it thinks harms significantly the interests of the consumer. In its role as super-complainer, Which? asked the OFT to consider whether certain restrictions were preventing consumers from getting the legal services that they needed.

"Consumer" is not an abstract term; it means all of us in the chamber and people in wider society in Scotland who are provided with legal services by the two professional bodies, the Law Society of Scotland and the Faculty of Advocates, which regulate the legal profession. I confess that one of my oldest friends is an advocate, although I did not seek counsel from him on this debate—nor did he offer any. At least my bank balance is higher than it would have been if I had asked for his opinion.

As other members have said, the Law Society does not allow non-lawyers to own or be a partner in a legal firm. It prevents solicitors from forming a legal partnership with non-lawyers, such as accountants or engineers, with a view to offering professional services.

The Faculty of Advocates compels its members to practise as sole traders; it prevents them from working in partnership with other advocates, solicitors or others to provide legal services. Rules of the faculty mean that individuals cannot instruct an advocate without first instructing a solicitor. Some might argue—perhaps validly—that consumer rights are therefore limited. As a consumer, I cannot instruct an advocate directly and have to go through a solicitor acting as a middleman.

Which? stated clearly that it felt that the interests of the consumer were being harmed. It thought that the present arrangements prevent lawyers from introducing innovations to meet the needs and aspirations of their customers. More to the point, service providers are unable to use new business structures to become more efficient, which could lead to lower prices in the legal services market.

Restrictions can be removed without the need for new legislation, although Which? acknowledges that allowing non-lawyers to get involved in Scottish legal services would require new legal frameworks to be introduced.

Which?, in its role as the consumer champion, has said that a new Scottish legal services board, which is independent of the legal profession and Government and which has responsibility for regulating the legal services market, should be established.

The OFT, in its response of 31 July 2007 to the super-complaint, made recommendations to the present Government broadly supporting the complaint that restrictions are a feature of the legal marketplace in Scotland and that action is needed to remove them. Furthermore, the response indicated that efficiency gains and more innovation are required in the provision of legal services in Scotland. Kyla Brand, the OFT representative in Scotland, said that individuals and businesses are hugely important to growth prospects because "they underpin economic success".

There are practical examples of how the present system is failing the consumer. For instance, people are sometimes loth to get legal representation if they are working because the benefits taper kicks in and they are unable to get legal aid, so they have to pay for services. Some say that they are not getting value for money.

Alistair Morris, chief executive of Pagan Osborne, has criticised the Scottish Government's approach as "protectionism" in the desire to buck the market over Tesco law. Others have said that we should set our face against choice and change, such as allowing third-party entries into the market place, as that would lead to cherry picking of the best customers.

There is a growing demand for change from within the legal profession, as Richard Henderson, president of the Law Society of Scotland, acknowledges.

Change is inevitable. The alternative is that in future the market will be introspective, with the usual suspects dictating to the consumer.

As Bill Aitken said, in 2004 the bill for Scottish legal services was almost £1 billion and it has now increased to £1.2 billion. Modernisation should be welcomed. The commodification of legal services is already a factor in the marketplace structure. If anyone goes for a mortgage or a remortgage these days, the banks and building societies usually include a legal panel for conveyancing purposes.

I welcome the motion and the amendment. I look forward to the additional opportunities for the legal profession to raise finance to ensure that our existing legal firms have the capacity to grow.

The global environment is tough and business structures within the legal marketplace are changing, whether by design or stealth. That is typified by the recent example of Australian law firm Slater & Gordon, a class action specialist, which was floated on the Australian stock exchange in May 2007 and which is now valued at 150 million Australian dollars, which is £62 million.

The motion is about the delivery of Scottish solutions for Scottish problems.

In no debate on the legal services market in Scotland could we fail to mention legal aid. Under the Legal Profession and Legal Aid (Scotland) Act 2007, the Scottish Legal Aid Board's work will include registering advisers and agencies other than lawyers and ensuring that they meet the code of practice.

There were 119,293 grants of civil legal assistance in 2006-07—a reduction of 7 per cent—although within that total, the number of civil aid grants rose by 3 per cent, reversing the trend in the past three years.

We should introduce innovation and access to new finance to assist existing legal structures to expand, but that must not be at the expense of the provision of legal advice at the point of need for the majority of the population. All concerned must see this is an opportunity, not a threat.