Scottish solicitors reject Government's '100% Tesco Law' model

Scottish solicitors have backed a compromise motion on Alternative Business Structures (ABS) by 1,550 to 1404 votes at their Annual General Meeting; with the compromise motion securing the highest number of votes in support of any ABS motion at the Law Society of Scotland's AGM on Thursday 27 May 2010.  The compromise motion would permit ownership of law firms by non-legal professionals to a maximum of 25% of the business.

The motion was proposed by GLC's Mike Dailly, seconded by Govanhill Law Centre's Lorraine Barrie, and backed by the Scottish Law Agents Society among others. ABS has been dubbed 'Tesco Law' because it would enable supermarkets, banks, corporate investors, fund managers - and potentially even organised criminals - to own and control 100% of a law firm as an 'external investor': the Scottish Government's Legal Services (Scotland) Bill, as introduced, makes provision for a 100% external ownership model of ABS. 

The Council of the Law Society of Scotland's motion called for a reduced version of the Scottish Government's own ABS model, with no more than 49% of a firm being owned by external investors. The Council's motion was narrowly passed by 21 votes: 1486 to 1465.  At the meeting of Council following the AGM, GLC's Mike Dailly argued that the Society's policy on ABS now had no moral mandate standing the AGM, and that the will of the legal profession was clearly divided, and incapable of being said to be in favour of 49% external ownership.  Council accepted that there was now no clear consensus on ABS.   The Society's official AGM report is here (opens as PDF).

Mike's main speech proposing the compromise motion is here; for arguments explaining why 100% external ownership of Scottish law firms could result in significant consumer detriment and be contrary to the public interest in Scotland see here (2010) and also see here (2008).

Justice for Scotland coalition launched

A coalition of Scottish solicitors including Thompsons Solicitors, the Glasgow Bar Association, Govan Law Centre and others, have come together under the principle of 'Justice for Scotland' to reject 'Tesco Law' and call for better legal services for Scotland's citizens and communities.

Solicitor Advocate and Senior Partner at Thompsons, Frank Maguire said:
"We need to refocus our legal services on Scotland’s communities and citizens. They deserve better. We need to send a message to the Scottish Government to think again. We must reform our Law Society as it has shown itself incapable of representing all of those trying to render a legal service in Scotland now and in the future".

"We must seek to re-affirm, through any such reform, the principles crucial to the administration of justice. We must also ensure that the legal service is preserved and improved across the whole range of needs of the Scottish people and their communities. Scottish solicitors can join us to begin to make this happen and ensure you vote NO; NO by noon, 7 April 2010".

The coalition's campaign website is here: Justice for Scotland, and all Scottish solicitors are invited to join, add their voice, and ensure that they vote, 'NO; NO' by noon, 7 April 2010.

‘Tesco law’ open to abuse by gangsters

The Herald reports that plans to allow Scottish law firms to use outside investors would increase the risk of money-laundering and allow drug barons to expand their empires, according to one of the country’s most senior lawyers.

Frank Maguire, senior partner at Thompsons Solicitors, one of the Glasgow’s largest firms, fears the so-called “Tesco law” will undermine his profession’s integrity and independence by allowing firms to be able to raise capital from outside investors, while banks and supermarkets could offer a full range of legal services.

The proposed changes, contained in a Bill currently going through the Scottish Parliament, have divided Scotland’s 10,500 solicitors, and the arguments are becoming increasingly heated. Mr Maguire believes that by allowing non-lawyers to open legal services will be a blessing only for organised crime as it would be impossible to monitor whether those running the new firms had criminal records.

Mr Maguire told The Herald: "If you had a legal firm, or someone wanted to set up a legal services-provider, that could in future be done by a drug baron who could use it as a legitimate front to launder money. If we opened up legal services then sophisticated organised criminal networks would be able to run them or put their own people in place".

"The financial memorandum says there is £1,300 to monitor whether those opening new firms have criminal records. Even £100,000 would not cover it. It means putting in jeopardy the independence and integrity of the legal profession. Those working in such businesses would not even have to be lawyers under the Bill. They could be legal service-providers with just one lawyer".

Complaint to Electoral Reform Society

GLC has lodged a complaint with the Electoral Reform Society (ERS) in relation to the wording of the two questions in the forthcoming Law Society of Scotland referendum on ABS or 'Tesco Law'. The letter to the ERS is reproduced below.

Mr Andrew Burns
The Chairman
The Electoral Reform Society
6 Chancel Street
London
SE1 0UU

Dear Mr Burns

Law Society of Scotland (LSS) referendum on ‘Alternative Business Structures’ – internet-based voting system operated by the Electoral Reform Society (ERS) on behalf of the LSS

I am a Scottish solicitor, and a member of the Law Society of Scotland. I note that my Law Society has instructed the ERS to undertake an electronic referendum of all solicitors in Scotland on two questions concerning the proposed introduction of ‘Alternative Business Structures’ to Scotland.

I am aware of the first class reputation of the ERS and am therefore puzzled as to why you would put your good name and reputation to a referendum whereby the questions posed are biased, conditional and heavily weighted in favour of one particular outcome, namely ABS? This is the favoured policy of the governing body of the LSS, notwithstanding that it is now clearly opposed by many within the Scottish legal profession. For example, the first question posed is thus:

"Do you support in principle the introduction of Alternative Business Structures ("ABSs") to Scotland as long as there are appropriate safeguards to protect the core values of the legal profession and there is an equivalence of regulation between ABSs and traditional firms?"

This question predetermines the answer by making a value judgement that there will be ‘appropriate safeguards’ to protect the independence of solicitors' legal services to the public. But that is the very issue which is being debated amongst solicitors in Scotland. Separately, the question as framed is tautological (‘a statement that is true of necessity or by its logical form’).

Can you please advise whether the ERS had any involvement in the framing of the referendum questions? Can you please advise whether it is you policy as a UK body which promotes fair and democratic elections to take part in a voting procedure which is patently undemocratic by reason of the use of ‘loaded’ or ‘leading questions’?

Finally, can you please advise on your formal complaints process (and please treat this letter as a formal complaint) as I am concerned that the LSS will use the good reputation of the ERS to give credibility and respect to its flawed referendum on this occasion.

Yours faithfully

Mike Dailly
Principal Solicitor

Democracy shamed and silenced

More than 3,200 Scottish solicitors were disenfranchised and silenced today when the President of the Law Society of Scotland, Ian Smart, used a technicality to deny them a vote on whether to embrace or reject ‘Tesco Law’ (Alternative Business Structures or ‘ABS’).

Despite Mr Smart having previously challenged opponents of Tesco Law to ‘bring it on’, he faced a humiliating defeat today which he, Council members, and a small number of multi-millionaire big firm partners refused to face for fear of certain defeat.

Approximately, 2,300 solicitors had granted proxy votes against Tesco Law, with only around 921 in favour of the Law Society’s position. As the prospect of defeat presented itself to the Law Society’s minority elite they tried desperately to nobble the democratic will of the majority opposition.

They called for a comfort break, and asked opponents if they would agree to a restriction on external ownership whereby ABS providers would be required to have a majority of solicitors. The opposition agreed to enter into dialogue after the SGM but refused to compromise their motion, and pressed for a vote.

Facing certain defeat, Scotland’s Law Society President called for the meeting to be adjourned and seized upon a technical rule whereby only those present in the room could vote, resulting in over 3,000 proxy member votes being discounted. The net result was that 70 members of the profession – including around 50 Council members and a handful of multi-millionaires – voted to disenfranchise the democratic will of over 3,200 members.

GLC’s Principal Solicitor raised two points of order at the meeting. The first noted that given over 3,200 members had cast their vote by proxy, it would be undemocratic to deny them a voice in the future of our profession, and that the spirit of the debate required their voice to be heard and respected. This concern was rejected by Vice President, Jamie Millar of Brodies Solicitors, who chaired the SGM.

Secondly, Mike called for a vote of 'no confidence' in the Society’s President, Ian Smart, who had presided over the most undemocratic period in the Law Society of Scotland’s history, and by denying 3,200 members a voice in this debate had brought the legal profession into disrepute. This call was rejected by Mr Millar as incompetent.

GLC’s Principal Solicitor said:
“This is a dark day for Scotland’s legal profession. Democracy has been shamed, denied and abused by a small elite of 70 members, against the clear will and voice of of 2,300 members who had voted against Tesco Law. The Council of our Society has lost all credibility today. You can deny a democratic vote by filibuster or technicality, but the only loser is the reputation of our profession which now lies in tatters after this affront to democracy”.

A report on proceedings at the SGM is in The Times (Friday, 26 March 2010) here, and in The Scotsman here.

Law Society rigs referendum question

As Scottish solicitors cast their votes in the 'Tesco Law' referendum (whether to embrace or reject the external ownership of law firms by non-solicitors) the Law Society has chosen to use a ‘loaded’ question, heavily weighted in its favour.

The referendum question chosen by the Society predetermines the answer by making a value judgement that there will be ‘appropriate safeguards’ to protect the independence of solicitors' legal services to the public. But that is the very issue which is hotly contested in the Legal Services (Scotland) Bill. Also, the question as framed is tautological (‘a statement that is true of necessity or by its logical form’). The question asked is:

"Do you support in principle the introduction of Alternative Business Structures ("ABSs") to Scotland as long as there are appropriate safeguards to protect the core values of the legal profession and there is an equivalence of regulation between ABSs and traditional firms?"

Govan Law Centre’s Principal Solicitor, Mike Dailly, said:

"At the heart of the Tesco Law debate is the concern there would be inappropriate safeguards to prevent solicitors being influenced by a vested corporate agenda to the detriment of the public. For the Law Society to phrase its question to assume there would be safeguards is nothing more than a shameless attempt to procure a yes vote."

"The international and UK established practice in referenda is for questions to be framed as neutral, simple and unconditional, and for both sides of the argument to have a fair and level playing field when it comes to campaigning. That hasn’t happened as the Society has deployed all its staff and resources to campaign for a Tesco Law 'yes' vote. But now the referendum itself has been rigged by a loaded question".

"The Law Society’s President Ian Smart should hang his head in shame. The question should be reset in neutral terms, and Mr Smart should resign forthwith for presiding over the most unfair and undemocratic process in the history of the Law Society of Scotland".

GLC suggests the question should be framed in simple, neutral and unbiased terms:

Question: Do you support the introduction of Alternative Business Structures to Scotland?"

YES

NO

Go, and go quickly

Call for the President of the Law Society of Scotland to resign, from GLC's Principal Solicitor.

Referenda are a powerful means to provide certainty on important issues. But the democratic authority of any vote depends upon whether it has been conducted fairly and transparently.

The UK Parliament recognised this in enacting the Political Parties, Elections and Referendums Act 2000. Part VII of that Act ensures that any UK referendum is conducted fairly, with both sides of an issue having equivalent financial resources, and equal routes of access to influence the plebiscite with their literature or voting message.

The current Scottish debate on Alternative Business Structures or ‘Tesco Law’ is subject to two forthcoming votes: a Special General Meeting on 25 March, and a referendum thereafter. The body responsible for conducting these votes is the Law Society of Scotland.

The Law Society of Scotland is the Returning Officer, charged with operating and conducting the ballot of its members, and counting the votes cast at the SGM and referendum on Tesco Law. The electorate are 10,500 Scottish solicitors, who are members of the Law Society of Scotland.

Yet, have you ever heard of a Returning Officer deploying all of their financial resources and staff to influence a vote? Actually, not just influencing a vote, but aggressively and overtly campaigning for a particular outcome in that vote?

No? Well, incredibly this is what the Law Society of Scotland is doing. It even has a Scottish Government Minister speaking on its platform today to tell us why we must support the Law Society’s and the Scottish Government’s desire to allow external ownership of Scots legal firms by financial institutions and other non-solicitor bodies.

Now, I have no problem with Ian Smart travelling around Scotland to preach the false virtues of Tesco Law to Scottish solicitors. That’s his personal right as a solicitor, but not as President of the body which is conducting the poll of its members on this issue. On his own time and expense only.

Likewise, why is Lorna Jack, the chief executive of our Society, travelling around Scotland to encourage solicitors to vote for Tesco Law? Ms Jack is a paid official, she is not a Scottish solicitor. She has no vote. Why should she use her official position to influence the outcome of a democratic vote?

The Law Society’s view on Tesco Law is what its members tell it; not what the President, Council, or the chief executive think. Otherwise, what’s the point of holding of a democratic plebiscite?

Likewise, I have no problem with Janet Hood promulgating the benefits of Tesco Law to in-house solicitors. But not as Chairman of the Law Society of Scotland’s In-House Lawyers Group, using the Law Society’s resources and confidential membership data to influence the vote of members. Data which is not available to those solicitors who disagree with Tesco Law.

The Law Society of Scotland is presiding over a polling exercise whereby it is also the chief campaigner and PR agent for ‘Tesco Law’. It’s the judge, jury and executioner of the independence of our profession.

Our Office Bearers and officials should be neutral in this debate: they should permit their members to advocate for, or against, Tesco Law. They have failed to do so. Worst still, they have taken it upon themselves to dictate to members how they should vote. This democratic deficit can only be described as Mugabesque. It’s thoroughly unfair and brings our profession into serious disrepute here at home, and internationally.

When I was on a recent Human Rights mission in West Central Africa, the British High Commissioner explained to me how certain vested interests paid for votes by slapping a 5000 CFA note on a voter’s forehead. Such undemocratic practices were utterly deplorable and repugnant, but how different are they to some people who should be impartial using their positions as Office Bearers and officers to sway the vote on the future of Scotland’s legal profession?

Scotland’s solicitors have been placed in a deplorable position. Cometh the hour, cometh the man or woman. Leadership is vital in critical moments. I sincerely believe that our President has sold the purse; he has failed to provide leadership; he has failed to promote and safeguard the interests of our profession. He has been responsible for an undemocratic and unfair voting process. I believe that our President, Ian Smart should go, and go quickly.

Royal Faculty debates the Legal Services (Scotland) Bill

Tonight, Glasgow's Royal Faculty of Procurators hosted an informative and passionate debate on the future of Scotland's legal profession in relation to the Legal Services (Scotland) Bill.

Chaired by the Dean of the Faculty, Paul Carnan, the audience of experienced practitioners heard from Alan Campbell, Managing Partner, Dundas & Wilson LLP; Mike Dailly, Principal Solicitor, GLC; John McGovern, Solicitor-Advocate and President of the Glasgow Bar Association; and Ian Smart, President of the Law Society of Scotland. A wide ranging debate took place with excellent contributions from the audience.

Representatives from the Scottish Law Agents Society advised participants that the Parliament's Justice Committee had announced the Stage 1 report on the Bill would be delayed to allow the SGM on the ABS (Tesco Law) aspects of the Bill to take place.

The contribution from GLC's Mike Dailly is available here.

Referendum: time to protect the independence of Scotland's solicitors

The President of the Law Society of Scotland, Ian Smart, confirmed to BBC 1's Politics Show yesterday that an urgent secret ballot of every solicitor would take place, to determine whether the Society should continue to support the 'Tesco Law' provisions of the Legal Services (Scotland) Bill. The Bill would enable non-solicitors to own and control firms of solicitors, and give the Scottish Government the ability to set the number of non-solicitors, and criteria for appointment, on the Society's ruling Council.

GLC's Principal Solicitor challenged the case for Tesco law with Mr Smart on the Politics Show, and argued that the Bill would effectively end over 500 years of solicitor and legal profession independence. Mr Smart's dismissed fears upon the basis that 27% of all solicitors were already employed by banks, companies, and local authorities, and insisted that 'no one would suggest these solicitors were not independent'.

However, GLC's position is that the 27% of solicitors who are already employed by businesses or councils, do not provide advice to the public. They are in-house lawyers providing a specialist service to one client only, the entity that employs them, and therefore, this defence misses the point. The concern is that if the Bill is passed vested corporate interests would be able to provide solicitor services direcly to the public, and those services would not be independent. You cannot have 99% independence, and allowing businesses with track records in unethical and immoral practices to control access to justice is a receipe for moral hazard and disaster.

The debate on the BBC Politics Show can be watched here (105 mins in)

Today's The Scotsman article on this issue is available online here.

Solicitors call for split in Law Society roles

The Herald reports that the regulatory body for Scotland’s 10,500 solicitors faces a damaging schism following news that three major law firms want to break away. The Govan Law Centre, MacRoberts and Thomsons claim the Law Society of Scotland’s independence has been compromised.

They have now allied themselves with the Glasgow Bar Association (GBA), and have warned that the society’s backing of so-called “Tesco law” threatens to undermine ­centuries of independent legal representation in Scotland. The GBA has called for a ­referendum of the country’s solicitors, questioning whether the Law Society should continue to represent them.

The row is about two different parts of the Legal Services Bill which is currently going through the Scottish Parliament. In addition to the ability of banks and large vested corporate interests to control solicitors, concern is focused on section 92 of the Legal Services Bill which provides for direct Government control over Scotland's legal profession. In relation to membership of the legal profession's governing body, section 92 provides that:

"The Scottish Ministers may by regulations— (a) specify—
(i) such additional criteria as they consider appropriate for
appointability as non-solicitor members,
(ii) the number of non-solicitor members, or proportion of the nonsolicitor
part of the membership, in relation to whom the criteria are to apply,
(b) prescribe a minimum—
(i) number of non-solicitor members, or
(ii) proportion of the membership that is to comprise non-solicitor
members, if they believe that such prescription is necessary for ensuring that the
number or proportion of non-solicitor members is adequate".

John McGovern, the president of the Glasgow Bar Association, said: “The public and profession expect solicitors to be ­independent – and that should be non-negotiable. Unfortunately the Law Society seems to have negotiated a bill which gives the government certain control over the profession.”

There will be a “special ­general meeting” of the society later this month at which the GBA and others want to overturn the ­decision to support “Tesco law”. Mike Dailly, head of Govan Law Centre, said: “People are starting to realise the bill will be a disaster because it will end the independence of legal firms.

“The key problem is that ­ministers will be able to affect the membership of the council and could have direct control of the number of non-lawyers. It is peculiar for a progressive nation to be introducing ­measures you are more likely to find in a developing country where you have complete ­government interference and political bias in all walks of life".

“It is completely regressive and strikes at the heart of what the profession stands for. The cases we take are often ­unpopular and may also be against the government.”

Scottish 'Tesco law' Bill published

The Scottish Government has published its Legal Services (Scotland) Bill, which aims to pave the way for supermarkets, banks and large corporate interests to own and operate Scottish legal firms.

The selling point of this law reform is to create more consumer choice for legal services in Scotland, however, it is equally possible that opening up ownership of previously independent Scottish legal firms, will do exactly the opposite and ultimately restrict choice and legal independence in the longer term.

GLC's Principal Solicitor said: "Access to justice is a constitutional right, not a tin of beans to be bought and sold".

"This Bill promises a future of Scottish 'Tesco law' where multinational supermarkets and banks can own, control and trade shares in solicitors, advocates and the gateways to justice".

"It's a scary thought. Particularly, as the predatory and anti-competitive nature of some multinationals is likely to result in small and medium sized Scottish legal firms being artificially undercut and forced out of business in mainstream areas of legal practice."

"The most curious aspect of the rush to embrace 'Tesco law' in Scotland is the startling fact that neither the OFT nor Which? provided an empirical Scottish case which showed the legal market in Scotland was failing consumers in terms of choice and competitiveness".

Further discussion of this story is on the Scottish Television site, and at Mike's The Firm online blog.

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