WORKING GROUP FOR RESEARCH INTO THE LEGAL SERVICES
MARKETS IN SCOTLAND
NOTE OF FOURTH MEETING ON 27 SEPTEMBER 2004
Present :
Andrew Dickson, Scottish Executive Justice Department,
Head of Access to Justice Division
Professor Robert Baldwin, London School of Economics and
Political Science
Professor Alan Paterson, Director of the Centre for
Professional Legal Studies, University of Strathclyde
Professor Frank Stephen, Professor of Economics,
University of Strathclyde
Elaine Samuel, University of Edinburgh, School of Social
and Political Studies
Martyn Evans, Scottish Consumer Council
Sarah O'Neill, Scottish Consumer Council
Chloe Clemmons, Citizens Advice Scotland
Grahame Horgan, Office of Fair Trading
Lindsay Montgomery, Chief Executive, Scottish Legal Aid
Board Douglas Mill, Chief Executive, Law Society of
Scotland
Michael Clancy, Law Society of Scotland
Neil Ross, Grigor & Young, Elgin
Michael Walker, Maclay, Murray & Spens
Roy Martin QC, Vice Dean of the Faculty of Advocates
James Wolffe, Advocate
Dr Anita Morrison, Head of Legal Studies Research
Unit
Mike West, Scottish Executive Justice Department, Legal
Services Policy Team
Alison Dewar, Scottish Executive Justice Department,
Legal Services Policy Team
Apologies
1. An apology had been received from Debbie Headrick,
Scottish Executive Legal Studies Research Unit.
Introductions
2. Andrew Dickson introduced himself as the new Head of
the Access to Justice Division and welcomed Martyn Evans
from the Scottish Consumer Council and Chloe Clemmons from
Citizens Advice Scotland.
Minutes of the Last Meeting
3. The Group discussed the draft minutes which were
agreed subject to minor amendment and the addition of a
reference to agricultural law at paragraph 28.
Matters Arising : Role of the Auditor of Court
4. In relation to paragraph 6, the
Scottish Legal Aid Board (SLAB) advised
that they were working on the production of information on
the function and history of the auditor of court and would
make it available as soon as possible.
Matters Arising : Letters of Engagement
5. The
Law Society would circulate the draft
practice rule when it was available.
Matters Arising : Lawyers of the Future - consultation
by the Law Society of Scotland
6. The Law Society had sent a further copy to the
Scottish Consumer Council who had replied that they were
not in a position to respond to the consultation because of
competing pressures.
Matters Arising : Rights of Audience and Rights to
Conduct Litigation
7. Dr Morrison provided an update as the paper would not
be ready until the next meeting. The Council of EU Bars and
Law Societies (CCBE) had produced a comparative paper in
1998 covering the position in EU member states on these
rights, so the research team was seeking to produce updated
information from Bars and Societies across Europe. The
Nordic countries tended to be unregulated whereas countries
such as France and Germany were tightly regulated. It was
suggested that Australia, Canada and Ireland should also be
examined as their legal systems were akin to that of
Scotland. Dr Morrison advised that they would include these
jurisdictions, though the main focus would be on Europe
given that the initiative had originated in the European
Commission. The
Group was asked to consider if any
particular jurisdictions should be considered.
Matters Arising : Office of Fair Trading role on the
Working Group
8. The Group discussed the role of OFT in relation to
the professional rules under consideration. The OFT
representative noted that the Group was not considering the
Master Policy which was the subject of a current OFT
investigation. Beyond that, he could not give any absolute
guarantee that issues discussed by the Group would never
come under investigation. OFT had no firm current plans
however to take any further formal action
[1]. The Law Society said that the matter would be
considered further by their Council on 5 November.
Matters Arising : Revised draft paper RWG 2004/2/2
Professional Rules etc
9. The discussion of the paper at this meeting would
include how the comments of the members of the Group would
be included in the paper.
RWG 2004/3/2 Professional Rules etc : advertising
10. In relation to paragraph 26 the
Executive would provide an update at the
next meeting. The
Faculty would also provide information on
its advertising rules in time for the Executive to consider
this before the next meeting of the Group.
RWG 2004/3/4 Multi-disciplinary Practices (MDPs)
11. The amendments to the paper were in hand.
RWG 2004/4/1 Research Proposal : Auditor of Court
12. Professor Paterson advised that the purpose of the
research exercise was to provide a descriptive account of
the role of the auditor of court and of the way in which
the system of taxation operated in practice. As it was a
factual exercise, no recommendations would be made. The
Faculty asked if the research would be looking at party and
party accounts and protecting the losing party from having
to pay too much. As it would be, it was agreed that the
Faculty would provide a form of words for
inclusion. Professor Paterson would add law accountants to
the list of those to be interviewed.
13. Professor Paterson thanked the Society for their
paper which was an annex to RWG 2004/4/1. The inclusion of
feeing arrangements for auditors was discussed; it was
agreed that this could not be excluded, but that it would
not appear in detail in the paper.
14. The Group discussed the possibility of contacting
individuals who had used the auditor of court. The Society
and the Scottish Consumer Council thought that the consumer
interest was an important issue and that it would be useful
to know if individuals were aware of the option of taxation
and how often they actually used it. They considered that
it would be a significant loss to the research if the Group
was unable to research how well the system was working to
protect the consumer. SLAB agreed that the consumer element
was vital and suggested a two stage approach, the first
looking at how the system operated and the second
considering the client side and the impact on the market of
the decisions made by auditors. Professor Paterson said he
would ask auditors how often they carried out taxations for
individual clients. The Faculty agreed with SLAB's
suggestion, noting that consumers of other services had
access to mechanisms for regulating costs and suggesting
that these might be looked at as part of the research.
15. The Scottish Consumer Council was concerned that if
the Group waited until Professor Paterson's paper was
available it would be too late to take account of the
consumer dimension. It was agreed that the
researchers would meet with the
Scottish Consumer Council to discuss how
they might identify a sample of consumers in practice.
Professor Stephen reminded the Group that there was a
limited budget for research, though the Group could of
course identify areas for future research.
16. The Law Society commented that the auditor of court
should be a failsafe system for consumer protection, but it
had no data on often it was used. They would be happy to
offer their experience to the Group as part of the parallel
work with the Scottish Consumer Council.
Revised draft paper RWG 2004/2/1 : Regulatory Framework
for Legal Services in Scotland
17. The five additional areas identified for inclusion
in this paper at the July meeting had now been
incorporated. The Faculty suggested that the passage on
rights of audience should include a reference to Tribunal
proceedings. SLAB passed the Executive written comments on
the paper.
18. There was some discussion about the regulatory role
of the Court described at paragraph 6. It was pointed out
that everyone in court was subject to the regulation of the
court, including the contempt of court powers, and not just
lawyers. The Faculty considered that in practical terms the
Court did not exercise formal regulatory powers but rather
strong influence. The Faculty said the issue was not so
much the formal regulatory powers of the Court but rather
that those providing advocacy services did so in front of
someone who had the power to influence their conduct, a
position other professionals would not find themselves in.
Professor Paterson noted on paragraph 32 that following a
case in 1943 the Court of Session did not exercise powers
in relation to misconduct unless there had been a decision
by a disciplinary tribunal.
19. The Scottish Consumer Council asked if paragraph 44
could be expanded to make it more specific in terms of the
level of regulation across the non-lawyer providers of
legal services and to break down the advice service
market.
20. The
Group was asked to send text on the above
comments and on any additional comments on the paper to the
Executive in writing by the end of October.
Revised draft paper RWG 2004/2/2 : Professional Rules
etc with potential implications for competition in the
Scottish Legal Services Markets
21. The Executive thanked Professor Stephen for his
initial work on adding economic argument to the paper,
which would be completed for the next meeting, and the
Society for its paper on the three year rule.
22. SLAB repeated their suggestion that the paper should
include rules of court in its coverage as certain rules of
court had a great deal of control over practitioners. It
was also suggested that a list be included of those who
could appear in court, including for example curators. It
was noted that rules of court were a factor in the taxation
process and that there was a wider consumer interest to be
considered as what the courts did had a bearing on the
market.
23. The Faculty agreed that rules of court should be
included as there was also an "interests of justice" issue.
The actions of the court impacted on and regulated the
profession. The Faculty highlighted the impact of the court
by giving the example of an individual whose case could not
be heard and dealt with on a single day and which lasted a
number of days either because of delays or the judge
requiring more information. Such an experience could add
greatly to the individual's legal costs.
24. The Society saw the purpose of the professional
rules paper to be to identify restrictions and of the
Regulatory Framework paper to list the interfaces where the
restrictions might originate from. As well as the courts
this could include SLAB's codes of practice and quality
assurance measures.
25.
The Group agreed to write to the Executive to
identify which particular rules of court should be included
in the paper's coverage.
26. The Executive advised the Group that it had written
to the Lord President of the Court of Session to discuss
the rules of court and was awaiting a reply.
27. The Group discussed the recording of members'
comments in the paper and agreed that it was important that
these should be clearly attributed as this would be
relevant to the subsequent policy formulation process.
It was also agreed that it would be very important
for contributors to update their comments as the paper
developed.
28. Professor Stephen explained the comments which he
had added to the paper to date.
Law Society of Scotland
Restrictions on entry
29. Professor Stephen had provided cautionary notes on
how the market might function. Potential entrants to the
market might be influenced by what could be gained by
entering it. The question was whether or not the market
should be regulated in some way or left to its own devices.
He considered that the last sentence of paragraph 6 "….some
within the profession are thought to believe that there are
now too many law graduates." had to be followed up.
Potential entrants could be better informed of their likely
prospects.
30. The Scottish Consumer Council considered the absence
of workforce planning in the legal profession to be a
significant factor in this area. Professor Stephen noted
that there were some constraints such as the number of
training contracts available and places on the diploma
courses so it was not a completely open market.
31. On the question of degree classification, Professor
Paterson noted that although ordinary degrees were
sufficient for entry to the profession, honours degrees
tended to be favoured by students for their higher level of
intrinsic interest and greater depth of study, but that
there was no uniform view across the profession on the
respective merits of ordinary and honours degrees and some
firms might ask for an honours degree. The Society
commented that 25 years ago most people had ordinary
degrees on entry to the profession and asked whether or not
the seven years it took to qualify as a solicitor (and even
longer as an advocate) was a barrier to entry.
32. Professor Stephen noted that where a market had an
excess supply, degree classification could be used as a
filtering tool. In the field of accountancy, classification
of degree was not important. Students might wish to keep
their options open by acquiring an honours degree and the
higher level of intrinsic interest from studying for an
Honours rather than an ordinary degree was a further
motivation.
33. Professor Paterson noted under "restriction on
practice as a principal" that an earlier attempt to get the
three year rule passed by Council had failed as there was a
feeling that married women would be disadvantaged. When it
was put through again, this issue was not raised again.
Scale and recommended fees
34. The
Society and
OFT agreed to supplement their commentary
in this section.
Multi-disciplinary practices
35. Professor Stephen advised the Group that the
economic arguments were largely conceptual and theoretical
because of the short supply of jurisdictions where
multi-disciplinary practices (MDPs) existed. MDPs could
vary in type between large commercial MDPs and smaller high
street MDPs and it was the latter that he had concentrated
on. Setting aside any regulatory issues, large commercial
MDPs could deliver economies of scale and scope as they
would benefit from sharing costs.
36. The Group discussed how much effort should be put
into a paper on a subject that was largely theoretical. The
Society noted that Clementi was interested in legal
disciplinary practices (LDPs) rather then MDPs so that the
argument on MDPs was perhaps a philosophical one from the
research perspective. The Faculty suggested that there was
no difference between the two cases as the independence of
the legal profession was the key issue in relation to both
LDPs and MDPs.
Non lawyer ownership
37. Professor Stephen explained that he wanted to draw
to the Group's attention the argument in certain economic
literature that the market itself could provide regulation
and that this could be another way of guaranteeing
performance. Some authors argued that the market itself
always provided sufficient guarantees.
38. The Society stated that Clementi had said that
ownership was not an issue and thought this might be a
pointer to their eventual recommendation. The Clementi team
had asked to see the Society's Master Policy. The Society
had requested that the review team's recommendations should
include a definition of legal services.
39. Jurisdictional size was noted as an issue here.
Professor Stephen agreed to consider
matters further.
Advertising
40.
Professor Stephen would provide a
discussion paper for the next meeting.
Restrictions on receiving a payment for referring a
client
41. The Executive noted the different positions taken on
this issue by the Law Society and the OFT.
Legal professional privilege
42. Professor Paterson advised the Group that the Home
Office was consulting on whether legal professional
privilege should be extended to accountants in the context
of the Proceeds of Crime Act, a UK Act applying in
Scotland. The deadline for responses to the consultation
was 30 September. The
Society would provide the Group with a
copy of its response.
43. It was agreed that the
Executive would include a section on mixed
doubles in the Law Society section of the paper as well as
the Faculty section. Mixed doubles involved solicitors as
well as advocates and it would be strange for discussion of
the issue to appear solely in the Faculty section.
44. Professor Stephen said he would find it helpful if
the Faculty could provide information on the role of
Faculty Services, which was of particular relevance to the
argument about sole practitioners versus partnerships. The
Faculty agreed to send what information it
had, but noted that there was no single source.
Faculty of Advocates
Rule against partnerships
45. The Faculty reserved its position, commenting that
the issue necessarily involved the role of Faculty
Services.
Mixed doubles
46. The
Faculty would reply to the letter from the
Society of Solicitor Advocates and the
Executive would circulate the Faculty's
response. The
OFT would respond to the comments by the
Faculty when they were available. Professor Paterson
suggested that the Faculty's response should also deal with
the position in England and Wales.
Cab rank rule
47. SLAB asked the Faculty how often the Dean had
actually instructed an advocate to take a case. The Faculty
agreed to check their records.
The Faculty explained that the cab rank
rule was subject to a reasonable fee being tendered, though
nowadays the fee was not usually tendered up front, the
assumption being that a reasonable fee would be paid in due
course. If the fee was not regarded as reasonable, it would
be subject to taxation. The cab rank principle was about
professional obligation and the issue of the fee was not
foremost in an advocate accepting instructions.
48. The Scottish Consumer Council asked who made the
decision about what constituted special circumstances in
which an advocate could refuse to take a case. The Faculty
noted that the Faculty's Guide to Professional Conduct of
Advocates gave examples of such circumstances, where for
example the advocate may have represented the opponent in a
previous case. The judgement was for the advocate, though
advice could be sought from the Dean or Vice Dean. There
was no formal mechanism for the client to appeal against
the decision, but there was no reason why the solicitor
could not write to the Dean. The
Faculty was asked to check with the Dean
how often he had received a complaint about the failure of
the cab rank rule to operate, but confirmed that there had
never been any such complaints. The Scottish Consumer
Council noted that this could become more of an issue if
the prohibition on direct access to advocates was
removed.
Degree of specialisation
49. The
Faculty reserved its position and would
offer written comment.
Restrictions on entry
50. The Faculty was examining its entry rules and aimed
to have new rules in place for the intake in autumn 2006.
The
Faculty had no subsequent filter or
quality control in place after qualification and would
refer to this in their examination of the system.
51. The
OFT stated that their statement of
principles also applied to the Law Society and would
provide wording for this.
Title of QC
52. The Scottish Consumer Council suggested that this
was a competition issue which should be considered by the
Group.
The Executive explained that the Justice
Department's Courts Group had lead responsibility for
consideration of the QC system, but agreed to contact
Courts Group and to consider what if any involvement the
Group should have in consideration of the QC system.
RWG 2004/4/3 Characterising Legal Markets : update on
research
53. Dr Morrison advised the Group that the only
remaining interviews were with SCOLAG and the Society of
Solicitor Advocates. The Scottish Federation of Small
Businesses had declined to be interviewed. Elaine Samuel
and Professor Rob Baldwin had conducted the interviews.
They advised that there were a series of areas worth
investigation but detailed research would not be possible
in all identified areas given the timescales. The current
research could perhaps lead to other research at a later
date. There was good reason for doing intensive
investigation in all of the markets identified. The
interviews were conducted confidentially and a summary of
them would be provided for the Group once agreement on the
text had been received from the interviewees.
54. SLAB asked how the markets had been selected and
also how this research would fit in with other research
being done, for example for the Tripartite Group of which
SLAB was a member of along with the Society and Executive
and which considered legal aid issues. Professor Baldwin
advised that further consideration of the second phase was
the next step. The researchers would consider what research
was available off the shelf and what new research would be
required.
RWG 2004/4/2 Legal Education and Legal Careers in
Scotland
55. Dr Morrison thanked the Society for its contribution
to this paper. This research was also relevant to the
Tripartite Group as there were concerns about the future
supply of practitioners for legal aid work.
56. There was some discussion on the tables provided.
The Society commented that the paper was a good starting
point. They suggested that there should be a table which
set out the practitioners in firms where the biggest growth
has been.
57. The question was raised as to where local
authorities were represented in the report. It was not just
private practitioners who had trainees. The point was made
that there was a difference between the numbers of trainees
registered (410) and the 366 figure, the number of trainees
in firms. It was also interesting that the number of legal
firms with 10 plus partners had gone down while the number
of solicitors they had, had increased. It was pointed out
that all the students from the Strathclyde/Glasgow joint
diploma had been attributed to Strathclyde. There was some
double counting in Tables 1 and 7.
58. There was some discussion on legal careers. It was
suggested that a discussion could not be held on how
careers were going to develop without information on what
prospective salaries would be throughout a career. The
Society could provide information on
traineeship salaries but there was no salary rate in the
profession. Some firms published this information and SLAB
published all earnings from legal aid. The Society
suggested that their Cost of Time Survey could provide
broad brush averages, but salaries varied throughout the
market including geographically. Professor Stephen noted
that the absence of information could be having an impact
on the market and that it would be interesting to scale
entry qualifications against salaries. There was discussion
on whether or not remuneration was the driver or whether
some just liked the idea of practising law, and on how much
students knew about salaries and whether or not it would be
worth asking some of them. The Hamilton Study had
identified that most students wanted to do criminal legal
aid work, though they probably did not know the salaries
for that field of work.
59.
Dr Morrison would circulate the worked up
proposal for the Tripartite Group for information at the
next meeting of the Research Working Group.
Date of next meeting
60. The next meeting of the Working Group would be on 25
November.
Any comments on the note should be sent to :
Legal Services Policy Team
Access to Justice Division
The Scottish Executive Justice Department
Second Floor West
St Andrew's House
Regent Road
Edinburgh
EH1 3DG
[1] This sentence was not agreed at the Working Group's
meeting on 25 November. A record of the discussion of this
point will be included in the minutes of that meeting.