WORKING GROUP FOR RESEARCH INTO THE LEGAL SERVICES MARKETS IN SCOTLAND

NOTE OF NINTH MEETING ON 22 AUGUST 2005

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Present:

Andrew Dickson, Scottish Executive Justice Department, Head of Access to Justice Division
Professor Alan Paterson, Director of the Centre for Professional Legal Studies, University of Strathclyde
Elaine Samuel, University of Edinburgh, School of Social and Political Studies
Lindsay Montgomery, Chief Executive, Scottish Legal Aid Board
Martyn Evans, Scottish Consumer Council
Sarah O'Neill, Scottish Consumer Council
Alan Williams, Office of Fair Trading
Douglas Mill, Chief Executive, Law Society of Scotland
Michael P Clancy OBE, Director, Law Reform, Law Society of Scotland
James Wolffe, Faculty of Advocates
Neil Ross, Grigor & Young, Elgin
Debbie Headrick, Senior Researcher, Legal Studies Research Team
Mike West, Scottish Executive Justice Department, Legal Services Policy Team
Carole Johnston, Scottish Executive Justice Department, Legal Services Policy Team

Apologies

1. Apologies had been received from Roy Martin QC, Dean of the Faculty of Advocates; Professor Frank Stephen, Professor of Economics, University of Strathclyde; Michael Walker, Maclay, Murray & Spens; Professor Robert Baldwin, London School of Economics and Political Science; Chloe Clemmons, Citizens Advice Scotland and Dr Anita Morrison, Senior Researcher, Legal Studies Research Team.

Welcome

2. Andrew Dickson thanked the Group for the extensive and helpful comments supplied on the fourth draft of the final report, especially as they had been provided over the holiday period. It was clear that the Group had fulfilled its remit in providing an assessment of the evidence to inform policy making on the issues covered. It would be for the Group to decide whether any further discussion should be carried out by correspondence or whether a final meeting was required.

Minutes of the Last Meeting

3. The minutes of the last meeting were agreed.

Matters arising

4. All points had been covered.

Paper on Auditor of Court research (paper RWG 2005/9/1)

5. Andrew Dickson invited comments on this paper, the preparation of which had been discussed at the Group's May meeting. Debbie Headrick described the interviews which had been carried out and explained that the key issues to emerge had concerned the lack of transparency of the appointment process, the lack of consistency in decision making, and the variety of inconsistent discretionary practices across the system. Elaine Samuel also noted that the research had identified the potential for auditors to experience conflicts of interest between their private and their judicial work.

6. Lindsay Montgomery thought the paper set out the issues coherently, but was concerned about the relative lack of input from auditors themselves and suggested the Society of Sheriff Court Auditors should be given the opportunity to comment on the paper. The Group agreed with this approach and acknowledged that the paper had otherwise fulfilled the Group's remit as far as practicable. The Executive noted that the paper had already been copied to the Scottish Court Service (SCS) who would be consulted further about the issues it raised. Professor Paterson advised that the paper had been completed to a tight deadline and the researchers would therefore appreciate more time to develop it further and to incorporate more information from the series of interviews.

7. It was agreed that an introductory paragraph should be added to explain the respective roles of sheriff clerk auditors, independent auditors, the Auditor of the Court of Session and law accountants and how they fitted into the legal system; and some of the commonly used terms such as taxation (judicial and extra-judicial) and assessment.

8. As regards responsibility for the appointment of auditors, Professor Paterson explained that though the Scottish Court Service appointed Sheriff Clerks, it did not do so with the specific function of auditor of court in mind. Ultimately responsibility lay with Sheriffs Principal who relied on the Scottish Court Service in practice to appoint Sheriff Clerks.

9. The Society suggested that the reference at paragraph 6 to 'some solicitors' should be quantified, and noted that paragraph 10 made use of anecdotal evidence in relation to alleged 'shopping around' by solicitors for lenient auditors. The Society suggested the paper should explain the methodology used and make clear who had been interviewed. Debbie Headrick advised that the researchers had considered this but it was felt that an explanation of methodology might have been out of kilter with the tone of the body of the report. It was agreed that the researchers' methodology might more appropriately be explained in an annex to the report.

10. Professor Paterson and the research team were invited to consider the views put forward by the Group when revising the paper. It was agreed that it would be within the Group's remit for its report to recommend to Scottish Ministers that the auditor of court system should be modernised and reformed in the light of the research findings. The Executive agreed to draft on that basis.

Paper on the payment of fees and outlays (paper RWG 2005/9/2)

11. Andrew Dickson explained that the Society, the Faculty of Advocates and the Scottish Legal Aid Board had produced contributions for a paper covering respectively (a) fees charged for non-contentious business (b) the funding of litigation and (c) the structure and source of the payment of fees and outlays in legal aid cases. The three separate papers needed to be harmonised with text on fees already in chapters 9 and 10 of the report and an assessment made of whether issues arose which might be relevant to competition in the legal services market.

12. OFT sought clarification of references to tables of fees and suggested the paper explain who produced the tables and how they were set. SLAB had begun work on bringing the three papers together and would consult the Society and the Faculty on the resulting text. It was agreed that the three parties should meet with the Executive in the following week or so to discuss the work. It would not be necessary at that stage to involve others, such as the SCS, but any questions raised could be taken forward thereafter with the relevant bodies. A final paper should be produced within 4 to 6 weeks. Members of the Group were invited to let the Executive have their thoughts on the competition implications of the fees material in the next week to 10 days.

Discussion of chapters 9 (rules of court) and 10 (legal fees and the taxation of costs)

13. The Executive stated that the drafting notes in both chapters would be addressed by the paper produced by SLAB, the Society and Faculty.

Chapter 9

14. OFT thought the suggestion in the drafting note at paragraph 9.1 that paragraphs 9.1 to 9.18 be transferred to the end of chapter 10 was sensible. The Faculty suggested that paragraphs 9.4 to 9.18 on fees be incorporated into the fees paper being compiled by SLAB, the Society and the Faculty.

15. At paragraph 9.8 it was suggested that a table might be compiled to illustrate the increase in outlays in recent years.

16. OFT pointed out that if it turned out that there were, after all, statutory scales for lawyers' fees, the deleted text at paragraph 9.9 might need to be reinstated as it raised the issue of whether such fee scales were compatible with certain EC Articles: this was currently before the European Court of Justice in the case of Cipolla. Much would depend however on the outcome of the case, which might not have been decided by the time the final draft of the fees paper was available or when the report was ready for publication.

17. Referring to paragraph 9.28, on the costs of reports carried out by curators and reporters, the Society suggested that a table was needed which would show what the increase looked like and would slot into the paper on fees.

18. OFT noted that paragraph 9.33 about the importance of ensuring that any reservation of work to solicitors was necessary in the public interest was an important point of principle; and though it appeared rather out of context at paragraph 9.33 should certainly be retained in the report.

19. The other categories of rules which the chapter addressed were discussed:

• Paragraphs 9.19 to 9.28 dealt with the appointment of individuals such as curators and reporters for particular functions. SLAB saw value in retaining this text as the lack of common process for such appointments and the variation in charges for the reports which were produced raised matters of public and consumer interest and fairness.
• Paragraphs 9.29 to 9.33 on representation by solicitors might be moved to chapter 12 on rights of audience to avoid duplication.
• It was agreed that paragraphs 9.34 to 9.39 relating to procedural rules (on citation of witnesses for proof, proof to be run continuously and abandonment of appeals) did not raise competition issues and should be dropped.

Chapter 10

20. This chapter would be expanded significantly by the addition of text from the fees paper being produced by SLAB, the Society and the Faculty.

21. OFT and the Society had some difficulty in understanding paragraphs 10.11 and 10.12 on the Cost of Time survey and thought these paragraphs needed to be more comprehensible. The Executive understood paragraph 10.12 to refer to the circular process which Professor Stephen had identified in his discussion with the actuary responsible for analysis of the Cost of Time Survey. SLAB thought it was important to examine how effective the Cost of Time survey would be in relation to its future functions of providing information for consumers and a necessary benchmark for auditors, and of informing the process of setting judicial fees. More thought was needed on these considerations as they were not addressed by the draft report.

22. SLAB suggested that the fees paper should bring out fully the powerful impact which negotiation of counsel's fees between clients and solicitors had on the market.

Fourth draft of the final report (paper RWG 2005/9/4)

23. The Group discussed the fourth draft of the report which incorporated further comments from the Group. The Faculty might have further drafting points to offer as the Dean was on leave and had not seen this draft; SLAB would also have further comments.

Executive Summary

24. The Executive saw the Executive Summary as a key document designed to give readers a concise general overview of the issues identified by the report, though neither the Executive Summary nor the report would make policy recommendations.

25. James Wolffe thought that it was not clear who was making the recommendation in the last sentence of paragraph 13 and suggested that the words "somewhat artificial" be deleted. The Executive agreed to address these points.

26. The Faculty thought it was incorrect for paragraph 21 to state that there was no evidence on how the cab rank rule was applied in practice or on circumstances in which advocates might refuse to take on a case. The Guide to the Professional Conduct of Advocates set out circumstances in which advocates might refuse to take on a case. It was agreed that the issue was that there was no evidence on how the rule was applied in practice and that the words "or on the circumstances in which advocates might refuse to take on a case" be deleted. The Executive asked the Faculty to consider the question of how the rules were applied and the Scottish Consumer Council suggested the rules in question should be expressly referred to.

27. The Group discussed the impact of the cab rank rule on specialisation by advocates. Elaine Samuel noted that paragraph 3.39 of the main report argued that the dominant impact of the cab rank rule was to drive advocates towards greater specialisation, whereas paragraph 21 of the Executive Summary attributed the view to some of the Group that the rule might inhibit the development of specialist expertise. Advocates had told researchers that if they did not have the necessary specialism for a case they would notify the instructing solicitor; the Faculty confirmed that rule 4.3.15(c) of the Guide to the Professional Conduct of Advocates permitted advocates to suggest another advocate be instructed in such circumstances. There was less specialisation compared to the English Bar who also had a cab rank rule. Professor Paterson suggested the researchers should elaborate on the claims made to them, following which the Executive would seek to resolve the apparent inconsistency between paragraph 21 of the Executive Summary and paragraph 3.39 of the main report.

28. The Faculty proposed that the deleted sentence in paragraph 23 might be retained but amended to read "As the need for clients to engage the services of both a solicitor and an advocate might in some circumstances result in additional costs for clients,…". OFT and the Society agreed that "would" was preferable to "might".

29. The Faculty sought clarification of the reference in the last sentence in paragraph 29 to the erosion of the client's right to insist on the taxation of solicitors' fees. Professor Paterson explained that there two Acts of Sederunt in 1993 had had the effect of altering the right to taxation. Sheriffs were no longer required to send a case to be taxed, as this was made discretionary. This paragraph would be made more explicit; the issue was not at present addressed in the main report and should be covered by a paragraph in the chapter on legal fees and taxation.

30. The Society asked whether it was accurate for paragraph 32 to state that there were a "few" bodies lobbying for commencement of sections 25 to 29 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. It was agreed to revise the reference to make clear that two UK bodies and one Scottish body had expressed an interest in obtaining rights for their members under these provisions.

31. The Faculty noted that the Group had not reached conclusions on the impact of extending these rights on either the interests of clients or on the impact on Court business. As the efficiency of the courts relied heavily on the competence of those representing clients, the Faculty recognised that there were reasons for not commencing these provisions; to consider such aspects would require consultation with the judiciary and other Court interests.

32. The Executive noted that the provisions of the 1990 Act set out detailed requirements for training, discipline and client protection and provided for Ministers and the Lord President to scrutinise draft schemes to ensure such requirements were met. The Scottish Consumer Council, the Office of Fair Trading and the Scottish Legal Aid Board favoured commencement (recognising that this would not necessarily lead to actual extension of rights of audience), and the Society had no objection in principle. The Faculty could not commit to a view without further internal discussion; and the Executive agreed to seek the Faculty's formal position in September. The Executive agreed to review the congruence of paragraph 32 and chapter 12 and extend paragraph 32 to recognise the need to protect the interests of the client and the efficiency of court processes.

Chapter 1: Introduction

33. The Society agreed to provide a sentence on their proportionality review for paragraph 1.5.

Chapter 2: Setting the Scene

34. The Executive would draft a paragraph to introduce the subjects covered by sections (a), (b) and (c) of this chapter.

35. The Executive agreed to remove the brackets round the last sentence of paragraph 2.32.

36. The Society thought that paragraphs 2.21 to 2.28 covered some of the subject matter of chapter 12, and not all the text was necessary in chapter 2. It might be sufficient to say that paragraphs 2.27 and 2.28 were covered more fully in chapter 12. The Society agreed to provide text to outline instances when individuals could not represent themselves in court. The Executive agreed to consider whether these paragraphs might be condensed any further.

37. With regard to the first bullet point of paragraph 2.52, the Society did not agree with the OFT claim that there was no indication that any attempt had been made to separate their representative and regulatory functions. The Society wished the report to recognise that the delegation of responsibilities from the full Council to individual committees following the 2003 legislation had resulted in appreciable separation of these functions and that regulatory decisions were now made by committees. The Executive would redraft the paragraph to give some recognition to this argument, but clear the revised version with both the Society and the Office of Fair Trading.

38. On the second bullet point of this paragraph the Society added that there were very few areas of its regulatory activity that were not scrutinised externally, co-regulation being the rule rather than the exception. The OFT did not agree that the second bullet point did not accurately reflect reality and would consider examples which it would put to the Society.

Chapter 3: Characterising the legal services markets in Scotland

39. At paragraph 3.38 it was agreed that the reference to a monopoly should be removed, the relevant text being revised to read "…with senior counsel commonly handling cases involving alleged murder, rape and other serious crimes."

40. Returning to paragraph 3.39, SLAB wondered if there was any evidence on the effect of the cab rank rule on specialisation. Elaine Samuel agreed to consider and expand the existing text.

41. At paragraph 3.61 the Society thought the phrase "legal socialism" was perhaps used slightly out of context and agreed to revise. A revised paragraph was received by the Executive following the meeting.

42. With regard to the table at the end of the chapter evaluating the characteristics of the legal services markets, SLAB (a) questioned the reference under the heading "Number of Providers" to the existence of few providers within the area of family law; (b) challenged the claim that the degree of competition associated with criminal law was "medium" as they were aware of high levels of competition, except in rural areas; and (c) noted that the chapter did not reflect the rural dimension, which was regrettable given the level of concern about rural practice.

43. The robustness of the information in the table was discussed and there was some support for entering some caveats on this score. The Society thought the table made the strong point that there were many markets for legal services and suggested this might be an area for future research. They agreed the use of more footnotes and caveats to guide the reader; it was also noted that the 3 asterisks denoting reservation to the provider in question were not in fact followed through in the table. The Scottish Consumer Council and Neil Ross agreed with the Society that the table should be retained as it clearly illustrated the complexity of the legal services market in Scotland. The Executive asked the researchers to review the table in the light of this discussion.

Chapter 4: Legal education and legal careers in Scotland

44. It was agreed that the reference to a conference in paragraph 4.2 should be removed as the conference had not taken place. A legal education chat room was planned.

45. In response to the drafting note at the end of paragraph 4.11 the Society confirmed that they visited a mix of schools to provide information on the legal education process. There was a geographical spread with visits to schools from both the private and state sector.

46. The Faculty confirmed that there was no rule which actually prohibited the payment of pupils.

47. In relation to paragraph 4.27 the Society noted that there was a third category of solicitor whose names were held on the Roll, but whose practice was classified as "in abeyance" such as those for example who were out of the country or working in industry. There were about 3,000 members in this category and the Society agreed to provide text.

Chapter 5 : Professional Rules

48. OFT thought that the text on the Master Policy at paragraph 5.22 should remain as drafted and that the reference to professional indemnity insurance arrangements being less restrictive in England and Wales should not be deleted, as suggested by the Society. The Society noted that the Master Policy arrangements in Scotland served the public interest better in their view than those in England and Wales. As the OFT's investigation of the Master Policy had completed, the Society believed that it was inconsistent with the findings of that investigation for this paragraph to conclude that the Master Policy "might be an unnecessary restriction". The text had however been drafted before the investigation had ended. The Executive agreed to clear with the Group an abbreviated version of paragraphs 5.21 to 5.34, with only one conclusion section.

49. With regard to paragraphs 5.62 to 5.64, the Faculty agreed to set out the qualifications for the cab rank rule contained in the Guide to Professional Conduct. The Faculty thought the second sentence of paragraph 5.64 should be adjusted to reflect the research findings and agreed an alternative wording suggested by the Executive "By and large advocates were generalists who had traditionally been regarded as…".

50. The Faculty explained that no formal policies were applied in relation to the operation of the rule, and subject to the provisions in the Guide to Professional Conduct, advocates made their own decisions and advised solicitors of the alternative steps clients could take. SLAB and the Scottish Consumer Council argued that the application of the cab rank rule should be more transparent in the interests of consumer protection, that information should be available of the incidence of advocates refusing to accept clients, and that the Faculty as part of its regulatory responsibilities should take steps to monitor and keep data on how the rule operated in practice.

Chapter 6: Restrictions on advertising

51. The Scottish Consumer Council noted that rule 10.6 of the Faculty's Guide to the Professional Conduct of Advocates suggested that the inappropriate use of the titles "Advocate" and/or "Queen's Counsel" might be interpreted as a form of "touting" for professional work. The Faculty explained that rules about the terms advocates might use in their letterheads were designed to protect the public, that it provided a directory of members on its website and that paragraph 6.4 of the draft report set out the rules which the Faculty followed. The rules were subject to review and the Faculty agreed to consider this issue with the review group: it seemed unlikely however that the issue would be significant enough to be addressed in the report.

Chapter 7: Restriction on direct access to advocates

52. In the light of paragraph 7.8 of the report and discussion at the meeting of 23 May (paragraph 38 of minutes), the Faculty confirmed that there was a rule that advocates could not sue for fees and agreed to provide a specific reference for the report.

53. The Faculty thought that paragraphs 7.4 to 7.11 could be more logically structured and had sent a draft to the Executive to consider.

Chapter 8: Restrictions on business structures

54. The Society agreed to consider paragraphs 8.31 to 8.35 (economic analysis) and would gave their views to the Executive. The Society agreed that the suggested text in the drafting note at paragraph 8.31 should be included in the report.

55. The Society's views recorded at the end of paragraph 8.35 should be recorded elsewhere, perhaps under a separate heading for the views of the Law Society of Scotland. The suggested text in the drafting note at paragraph 8.77 was agreed to be a factual statement and a suitable conclusion for the passage on MDPs.

Chapter 11: Title of Queen's Counsel

56. SLAB suggested the chapter should include something on the work the Society were doing on solicitor advocate accreditation. At present solicitor advocates could be regarded as either junior or senior counsel. The Society encourages suitably qualified solicitor/advocates to seek the rank of Queen's Counsel.

Chapter 12: Rights of audience and rights to conduct litigation

57. There were no further comments.

Annexes

58. The inclusion of all annexes was agreed.

Arrangements for printing and publication of the final report (paper RWG 2005/9/4)

59. The Executive pointed out the publication arrangements were set out in the paper and that it would be for Ministers to make relevant decisions.

60. SLAB enquired about timescales for publication. It was envisaged that drafting suggestions would be put forward fairly quickly and the meeting to discuss the paper on feeing arrangements would take place in the following fortnight. SLAB advised that it was likely to take between 4 and 6 weeks to consolidate this paper following the meeting. The Executive hoped the paper would be ready by the end of September. In the meantime a further draft of the report would be circulated to the Group before the end of September. It was hoped that the report could be concluded via correspondence, but a date for a further meeting would be set for early October in case it was deemed necessary.

SUMMARY OF ACTION POINTS

1. The Researchers to develop the auditor of court paper further; and invite the Society of Sheriff Court Auditors to comment.

2. The Executive to discuss the completed paper and the Group's recommendation that the auditor of court system be reformed with the Scottish Court Service.

3. The Group to provide comments on the competition implications of chapters 9 and 10 by 2 September.

4. The Executive, SLAB, the Society and Faculty to meet (within 2 weeks) to discuss consolidated version of the papers on fees and any competition issues arising. The Executive to consult Professor Stephen on paragraphs 10.11 to 10.12 regarding the cost of time survey.

5. The Faculty to redraft text on the cab rank rule at paragraph 21 of the Executive Summary.

6. The Executive to resolve the inconsistency in the text on the cab rank rule in paragraph 21 of the Executive Summary and paragraph 3.39.

7. Paragraph 29 of the Executive Summary on the client's right to taxation to be redrafted in the light of clarification from Professor Paterson; and related paragraph to be inserted in chapter on legal fees and taxation.

8. The Executive to revise paragraph 32, Executive Summary.

9. The Executive to discuss extended rights of audience with the Dean. Paragraph 32, Executive Summary, and chapter 12 would be considered for redrafting.

10. The Society to provide text on their proportionality review (for paragraph 1.5).

11. The Society to provide examples of circumstances where individuals cannot represent themselves in court (chapter 2).

12. The Executive to consider whether paragraphs 2.21 to 2.28 need to be condensed.

13. The Executive to revise paragraph 2.52 (first bullet point on regulatory functions). The second bullet point to be discussed by the Society and OFT.

14. Elaine Samuel to expand text at paragraph 3.39.

15. The Society to provide a revised version of paragraph 3.61.

16. Researchers to give further consideration to points raised on the tables in chapter 3.

17. The Society to provide details of memberships in abeyance (paragraph 4.27).

18. The Executive to clear an abbreviated version of paragraphs 5.21 to 5.34 with the Society, OFT and the Scottish Consumer Council.

19. The Faculty to consider paragraph 6.4 further in light of the issue of "touting".

20. The Society to provide text for chapter 11 on its solicitor advocate accreditation.

21. The Faculty to consider its formal position on the extension of rights of audience and rights to conduct litigation and advise the Executive; and the Executive to review the congruence of paragraph 32 and chapter 12.

22. The Executive to circulate fifth draft of report by the end of September.

23. The Executive to arrange a date in early October for the Group to meet in the event that report needs further discussion before publication.

Any comments on the note should be sent to:

Carole Johnston
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