Intercambio de corazones

The Law Society of Scotland has a statutory duty at present to promote both the interests of the solicitors’ profession in Scotland and the interests of the public in relation to that

profession.28 The Faculty of Advocates has a similar, but non-statutory, dual role. Potential tensions exist between these dual functions and the consultation paper invited views on whether the Law Society of Scotland should keep its regulatory and representative functions undivided as at present or whether these functions should be split and made the subject of separate governance arrangements. Of those who expressed a clear view in response, over 84% were in favour of these functions being split.29

Competition issues

2.53 With regard to the existing regulatory arrangements of the Law Society of Scotland and the Faculty of Advocates, the Office of Fair Trading (the OFT) noted that

• under current arrangements both bodies were engaged in functions that were both representative and regulatory and there was little evidence of significant attempts having been made to separate these functions;

• while some areas of the regulatory activity carried on by the Law Society of Scotland and the Faculty of Advocates were subject to adequate oversight by external bodies, there were in the OFT’s view significant areas where there was either no oversight or oversight arrangements did not appear to be adequate or in line with best practice.

The Law Society of Scotland disagreed with the OFT view that significant attempts had not been made to separate representative and regulatory functions, noting that the Council of the Law Society of Scotland Act 2003 had permitted its Council to delegate responsibilities to individual committees, resulting in appreciable separation of these functions and in regulatory decisions being made by committees.

2.54 The OFT believed that separation of the representative and regulatory functions of the main professional bodies had an important role to play in both consumer protection and in competition. An important public interest objective of the regulatory task (one of a number of such objectives) was to ensure that rules did not unnecessarily restrict competition. Meeting these might conflict with the task of representing members’ interests in the OFT’s view. The OFT saw a danger that where one and the same body was charged with making rules and representing members’ interests, the resulting rules would not strike an appropriate balance between public interest objectives, such as competition, and the interests of members. 2.55 Separating regulatory and representative functions helped to avoid this danger but was unlikely to be a sufficient safeguard, given the ongoing need to strike an appropriate balance between what would often be competing objectives. This suggested to the OFT that, in order to help ensure that professional rules serve the public interest, it was desirable that any significant regulatory activity by the professional bodies should be subject to external oversight by an independent body charged with ensuring that such rules were in the public interest. The Scottish Consumer Council believed that complete separation of the professional bodies’ regulatory and representative functions would help to achieve higher priority for the public interest in their work.

28 _{Under section 1 of the Solicitors (Scotland) Act 1980.}

29 _{“Reforming complaints handling, Building consumer confidence” Analysis of written consultation responses} (available at http://www.scotland.gov.uk/Resource/Doc/77843/0018721.pdf)

Clementi

2.56 In the report of his review30 (see chapter one), Sir David Clementi recognised the difficulty inherent in a professional body both regulating and representing a profession in the following terms :

• In a regulatory body the public interest should have primacy. Issues such as changes in practice rules should be examined, not against the wishes of the membership, but against the test of the public interest;

• In a representative body the interests of the membership should have primacy;

• Even where a body did place the public interest ahead of that of its members, there remained an issue of perception. Though restrictive practices to be found in the practice rules of professional bodies might have operated in the public interest, there was a perception that the issues had not historically been addressed with the vigour and independence to be expected of a regulatory body.

• Just as there had been criticism that professional bodies gave insufficient weight to the public interest, so there could be criticism from members of professional bodies that their respective bodies gave insufficient attention to representative needs.

• The function of representing the interests of its members to raise remuneration levels funded by the state sat uneasily with the regulatory responsibility of a professional body to act in the public interest.

• It was particularly difficult for professional bodies who combined both regulatory and representative roles to deal with competition issues.

2.57 From his review of experience in England and Wales Clementi concluded that the current combination of regulatory and representative powers within professional bodies had not resulted in the public interest being consistently placed first. A key recommendation of his review was that the regulatory and representative functions of professional bodies in England and Wales should be clearly split. The White Paper “The Future of Legal Services : Putting Consumers First” published by the Department for Constitutional Affairs in October 2005 accepted Sir David’s recommendation that front line legal professional bodies should be required to separate their regulatory and representative functions.

Conclusion

2.58 The Scottish Executive is considering the way forward on this issue in the light of the views expressed in the responses made to its consultation.

30 _{Report of the Review of the Regulatory Framework for Legal Services in England and Wales, published on 15} December 2004 and available at http://www.legal-services-review.org.uk/content/report/index.htm.

(c) Legal aid reform, community legal services and the Public Defence Solicitors’ Office

2.59 Among the specific issues for examination by the Group were the implications of Scottish policy developments such as legal aid reform, community legal services and the Public Defence Solicitors’ Office. These had largely been the subject of continuing policy consideration over the period of the Group’s work and in significant areas there was as yet no final policy outcome. It would not therefore have been possible or appropriate for them to be the subject of formal research. It was agreed that the proposals which had been or were being brought forward should be described, and a general preliminary assessment made of their impact on competition.

Proposals for Reform

2.60 Proposals for reform in the main policy areas had been under consideration for some considerable time. The then Justice 1 Committee of the Scottish Parliament published a report on legal aid in November 2001. The findings of a Working Group established by Ministers to consider how a community legal service might be developed for Scotland were also published in November 2001, under the title of “Review of Legal Information and Advice Provision in Scotland”. This was followed by the Strategic Review of the Delivery of Legal Aid, Advice and Information, undertaken jointly by officials of the Executive and the Scottish Legal Aid Board (SLAB). Their report to the Board and Ministers was published in October 2004. Finally, in June 2005 the Executive published a consultation paper entitled “Advice for All: Publicly Funded Legal Assistance in Scotland – The Way Forward”, setting out a number of proposals for change in the medium and longer term. Comments on the proposals in that paper were sought by 9 September 2005.

2.61 The general thrust of the various reviews which had been undertaken was broadly consistent. The Strategic Review found that the current arrangements for publicly funded legal assistance provided valued services to a wide range of people in Scotland, but were in need of considerable reform and development. The Executive’s June 2005 consultation paper set out a range of proposals for change in legal assistance paid for from the public purse (advice provided by the legal profession as well as advice on such matters as housing or debt from a wide range of other providers such as local authorities and the voluntary sector). 2.62 The consultation proposed measures to address long term strategic issues, including better coordination and planning of services and service providers, better matching of supply to demand, better value for money and continued, quality advice provision for the future. It envisaged compatible systems of quality assurance covering all types of advice. In order to ensure the availability of appropriate services, it proposed that SLAB should be able to respond to gaps in supply more flexibly, using a range of mechanisms. On the criminal side, flexibility might be achieved through the use of contracts or via expansion of the work of the Public Defence Solicitors' Office (PDSO). On the civil side, it might also involve the direct employment of solicitors alongside the use of contracts or grant funding arrangements with a range of advice providers, including both lawyers and others, in the private and not-for-profit sectors. For the longer term it envisaged the possible establishment of a national coordinating body which would subsume the current role of SLAB and would also have powers to co-ordinate the delivery of other forms of advice provision. It sought views on the roles to be played in such a co-ordinated mechanism by the legal profession, SLAB, local authorities, other advice providers including the voluntary sector, and the Scottish Executive.

2.63 The proposals sought to balance access to advice with the need to ensure better value for money. They included the introduction of clearer and fixed financial eligibility criteria and more extensive and flexible powers for SLAB to provide greater control over how public funds were spent. They were aimed at ensuring that those who could pay towards their legal costs did so, and at minimising any form of exploitation of the current system. On the criminal side, one specific proposal was that responsibility for granting legal aid in solemn criminal cases should be transferred from the Courts to SLAB, in order to improve the assessment of applicants’ financial eligibility. For the longer term the paper floated the idea of a system of contributions in legally-aided criminal cases for those who could afford them, as was already the case in civil legal aid. Proposals to improve planning and coordination would also ensure that public funds were spent more effectively.

2.64 In terms of civil legal advice, the proposals set out a number of improvements in access. In response to concerns that many people on modest but not very low incomes were not getting the access to advice they needed, the paper proposed more flexible ways of paying contributions towards legal costs. For the longer term the paper sought views on the principle of a system of tapering whereby eligibility for civil legal aid would be open to people on considerably higher incomes than at present, subject to concomitant higher contributions being payable: in many cases that would result in people paying the full cost of their case, but would provide a safety net where the costs of the case were genuinely higher than the legally- aided person could afford.

2.65 Separately from the consultation on strategic policy matters, much work had been and was being undertaken on detailed changes to the legal aid system. In some cases these sought to ensure that the legal aid system properly underpinned and supported changes being brought forward in other parts of the justice system, such as High Court reform and the forthcoming proposed reform of summary criminal justice. In other cases the changes sought to streamline the system and improve efficiency and value for money. A review of civil legal aid had already been put in place, as had a new system of fees for Counsel in solemn criminal cases which would be reviewed and refined in autumn 2005. Further proposals for the review of fees for solicitors in solemn criminal cases, and for the modernisation of summary criminal legal aid generally, were under consideration.

Competition issues

2.66 The full implications for competition in the legal services market of those varied and sometimes complex proposals for changes in the legal aid and advice systems could not be clearly assessed until decisions had been taken by Ministers, and where appropriate by Parliament. The timescale for the full range of decisions to be made would extend over a number of years, and certainly well beyond the timescale of the Group’s work programme. In broad general terms, however, it could be anticipated that the provision of a wider and better co-ordinated range of advice and related services should encourage the development of competition where that was clearly desirable, while reducing the potential for wasteful duplication where that would best serve quality, efficiency and effectiveness.

CHAPTER 3 CHARACTERISING THE LEGAL SERVICES MARKETS IN