Chamber and committees

Thank you for the opportunity to appear before the committee today to discuss the Regulation of Legal Services (Scotland) Bill.

The bill presents a modern regulatory framework that is designed to promote competition and innovation while improving the transparency and accountability of legal regulation and the legal complaints system in Scotland, thereby placing the public and consumer interests at its heart.

The bill is intended to bring benefits to the legal sector and to consumers of legal services. It will make a number of significant changes, including streamlining the legal complaints system and introducing a new regulatory framework, entity regulation and legal protection of the title “lawyer”. The bill will remove restrictions on third sector organisations that directly employ solicitors, which will benefit vulnerable citizens, and it will ease ownership requirements for alternative business structures, which will benefit the legal sector.

There is a great deal of support for the general principles of the improvements that the bill will make to legal sector regulation. As I said last week in my letter to the committee outlining the amendments that we intend to lodge, throughout development of the bill the Scottish Government has been committed to working collaboratively with all interested parties, including the legal sector and those who represent consumer interests. We will continue to do that during the bill’s passage through Parliament. The parties often have differing views on regulation of legal services, which is why we want to ensure that the bill strikes the right balance between the various interests.

Following the introduction of the bill, and having carefully considered the responses to the committee’s call for views, which were published on 24 August, we acknowledged the concerns that were raised in respect of the role that will be placed on Scottish ministers by the bill. Although the relevant provisions are, of course, only one part of the bill, we wanted to address the concerns, so we publicly stated that we would lodge amendments at stage 2 and work with stakeholders, including the senior judiciary.

As members will be aware, having taken evidence from stakeholders, the current legislative framework underpinning the regulation of legal services and the complaints handling process in Scotland is complex and dated. Not unexpectedly, this is a highly technical and complex bill that will amend previous legislation from 1980, 2007 and 2010. It builds on existing legislative provisions, which is why it is vital that amendments are carefully considered and discussed with all stakeholders.

My officials have been working closely and collaboratively with stakeholders—in particular, the Lord President’s office and the Law Society of Scotland. As I said in my letter, we have already come to a firm position on several areas of the bill to amend, and we are close to agreement on other areas.

In the new year, we will update the committee on the areas that will be addressed. I appreciate that the committee has requested sight of the amendments; however, although we are coming close to agreement on positions on most of the amendments, the actual amendments will not be written until we are closer to stage 2. Again, they will be developed through discussion with the Lord President’s office and other stakeholders. I recognise the importance of the stage 1 parliamentary process in drawing out stakeholder views as well as those of the committee. Those views will inform our final position and amendments.

Although I intend to lodge amendments to address specific concerns that have been raised, I highlight that they will not detract from the general principles of the bill. On 21 November, Roddy Dunlop KC said to the committee:

“the bill seems to strike the right balance between ensuring and improving the proper regulation of the legal profession on one hand and maintaining the profession’s independence on the other.”—[Official Report, Equalities, Human Rights and Civil Justice Committee, 21 November 2023; c 3.]

Many of the bill’s provisions have been welcomed and are designed to benefit both legal professionals and consumers of legal services, which I hope is what we all want. I am happy to take questions.

My understanding is that savings will diminish in time and that a limited number are going through at the moment, but I will bring in Simon Stockwell on that question.

As members know, the Scottish Government opposed both Brexit and the Retained EU Law (Revocation and Reform) Act 2023. However, we recognise that we need to take technical action to ensure that things work as smoothly as possible. In some cases that involves working with our colleagues at Westminster.

The purpose of the Westminster statutory instrument is to continue the savings that were made at European Union exit to ensure that the 2007 Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters can continue to apply in certain legacy cases. The 2007 Lugano convention contains rules governing jurisdiction in civil and commercial matters when a case has connections to more than one country, and it contains rules that provide for recognition and enforcement of judgments in such matters.

The convention is a treaty between EU member states, Norway, Iceland and Switzerland, and was entered into by the EU on behalf of member states while the UK was itself a member state. At EU exit, the convention was revoked for the UK because the UK’s convention membership was dependent on its status as a member state and because its operation relied on reciprocal application, which would no longer occur.

However, the convention was saved for transitional cases—that is, to save the jurisdiction rules for cases that were commenced before the end of the transition period and to save the recognition and enforcement rules for judgments that were issued in cases that were commenced before then.

The savings provision relied in part on section 4 of the European Union (Withdrawal) Act 2018; section 2 of the Retained EU Law (Revocation and Reform) Act 2023 will repeal section 4 of the European Union (Withdrawal) Act 2018 at the end of the year, which creates a risk that the savings that have been put in place will fall away. The proposed SI will use transitional powers under the 2023 act in order to continue the savings provision. Given that the original savings for transitional cases extended UK-wide, the UK Government proposes to extend the SI UK-wide.

As I said, the Scottish ministers remain opposed to Brexit. However, in order to minimise the damage that EU exit brings, this technical SI is necessary to ensure continuity in respect of relevant judgments and those that were issued before the end of the transition period. It will also save the recognition and enforcement rules for judgments that have been issued in cases that were commenced before the end of the transition period.

The relatively small number of statutory instruments that have been proposed under the 2023 act that are notified to committees—seven so far, including this one—reflects the fact that the Government will never consent to proposals that threaten the vital safeguards and high standards that Scotland benefited from when the UK was part of the European Union. The programme for government commits the Scottish Government to maintaining alignment, where that is possible and meaningful, with EU law, and this SI has implications for devolved responsibilities. I invite the committee to agree that the Scottish ministers should consent to the SI being made.

My understanding is that the lawyers will draft them for stage 2, but we will have agreement on the way forward for the different sections with stakeholders and the Lord President’s Office. We will be able to provide the committee with detail on that—probably not the exact wording, but the agreed principles for the amendments.

The Law Society has 12,000 members, one third of whom work in-house while the other two thirds predominantly serve the public and handle client money. On the other hand, there are 450 advocates in Scotland, and advocates are members of an independent referral bar. That means that, as a general rule, advocates do not provide their services directly to the public but are available to be instructed by solicitors and other designated professionals and bodies. Similarly, construction attorneys operate in a specialist area of law, and there are 10 practising members of the Association of Construction Attorneys.

It was viewed as a proportionate response to put greater regulatory requirements on the Law Society, as it has substantially more members, at 12,000, than on the Association of Construction Attorneys, which has 10 members. In an evidence session with the committee, the Association of Construction Attorneys said that it would struggle to be a category 1 regulator.

The bill significantly increases the transparency of all three branches of the legal profession and future proofs the framework to provide a risk-based and proportionate approach to any new entrant into the Scottish legal sector.

Public polling by the Government and the Law Society has shown support for the title of lawyer being given the same protection as solicitor. That was considered important in order to protect the consumer, who might not understand the distinction between the two terms when they are seeking legal services from a regulated professional.

I know that the committee heard anecdotal evidence of solicitors being struck off and subsequently providing unregulated legal services to the public using the title of lawyer. Our view is that because of such cases there is a public protection concern involved in protecting the title of lawyer.

We have to strike a balance. If we end up with no bill, we will have no legal reform, which is required for the legal sector and consumers. The positive aspects of the bill will still bring progress to reform of the legal sector, even though there might be some opposing views along the way.

I will bring in Leanna MacLarty to answer that.

Yes. The McClure situation shows the necessity for justice reform to ensure that situations such as that at McClure’s do not happen again. I am aware of the number of families who are facing issues as a result of McClure’s going into administration. As MSPs, we will all have been contacted by constituents on that.

I cannot comment on individual cases, but the Scottish Government has taken proactive steps to help to mitigate such situations. Such cases show the need for legal regulation that centres on the public interest and protection of the consumer. The bill will introduce the authorisation of legal businesses. That will bring benefits such as consistency in the way in which legal firms are regulated, with all entities having to meet the same high standards; and greater collation of data, which would enable the regulator and the legal profession to identify and address deficiencies early and take the necessary preventative action.

I know that this is a different bill but, as part of the process for my Trusts and Succession (Scotland) Bill, which is currently going through the Parliament—we have just had stage 2—I heard of the significant practical difficulties that co-trustees may have in administering trusts when a trustee who was appointed in their professional capacity is no longer a member of the profession. I therefore lodged amendments at stage 2 of that bill to ensure that that would not happen in future. With the justice reform bills that are going through, we can address situations such as that at McClure’s and prevent them from happening in future.

I do not believe that it is too complex; I believe that we are improving the system. Regulatory complaints already exist in respect of licensed legal services providers and the bill will extend that type of complaint to authorised legal businesses by the introduction of entity regulation. I do not believe that that is making the system more complex; I believe that it is simplifying the system for consumers to access legal advice.