Rules on firm ownership leave Scotland ‘out of step’, prominent lawyers argue

Changes must be made to allow non-lawyers the ability to invest or own equity in Scottish law firms, a group of prominent figures in the profession has said.

The coalition of 18 law firms said the current rules on ownership are outdated and efforts for reform have been blocked, leaving Scotland out of step with the rest of Great Britain.

The Alternative Business Structures (ABS) Scotland Group said there is a “looming succession crisis” in the sector, warning that some firms could disappear as senior partners retire without a qualified successor.

It has accused the Law Society of Scotland, which regulates the profession, of delaying the changes through inertia.

ABS Scotland is led by three managing partners – Rob Aberdein of Simpson & Marwick, Marie Macdonald of Miller Samuel Hill Brown, and Brian Inkster of Inksters.

Mr Aberdein said he disputed claims from the Law Society that there is only “limited interest” in having lay people owning law firms.

He said: “Scotland is now completely out of step with the rest of Great Britain.

“Non-lawyer ownership has been delivering clear benefits in England and Wales for more than a decade, from investment to innovation. Yet here, we’re still being told to wait.

“To claim there is no interest is simply untrue. We’ve seen nearly 20 firms step forward to join this group before it even launched.

“That should send a clear message: the profession is ready, the market is ready.

“The only thing missing is Law Society regulation, support and acceptance.”

Ms Macdonald said: “ABS is about attracting investment, retaining talent, and offering more choice for consumers.

“Critically, it’s also about succession. More than 40% of Scottish law firms are sole practitioners. If they retire without a successor, the business dies with them.

“While the demographics of Scotland’s legal workforce have transformed in recent decades, the model of ownership remains largely unchanged, still rooted in traditions that have gone unchallenged for centuries.”

The ABS Scotland Group formally launches on Monday and is inviting other law firms to join its campaign.

The Legal Services (Scotland) Act 2010 gave a statutory basis for non-solicitors to own law firms.

However the system for authorising and regulating these new legal businesses is not yet up and running.

In September, the Law Society’s Regulatory Committee said it would defer work on this until 2027.

The regulatory body said there had been only “limited interest” in the reforms and that implementing more recent legislation is a higher priority.

In September David Gordon, convener of the Law Society’s Regulatory Committee, said it is “vital” to implement the 2025 Regulation of Legal Services (Scotland) Act.

He said: “With such a significant new Act to work with, we clearly had to make difficult decisions around priorities in the early years of the implementation of the Act.

“That is why the committee agreed to defer work on regulating new non-solicitor owned legal businesses for the next two years.

“While we remain committed to getting that system of regulation up and running in the medium term, the limited number of firms expressing an interest makes it right for us to focus our resources initially on where we know we can make the biggest difference.”

Ben Kemp, chief executive of the Law Society of Scotland, said: “We understand the importance of law firms being able to innovate and adopt different business models. We also well understand the sense of frustration that we have not been able, for a range of reasons, to implement ABS before now.

That’s why it’s good to see this new group as a collective voice for many of those considering non-solicitor ownership. I’m looking forward to discussions with the group in the next few weeks.

“As the regulator, we are committed to bringing ABS to Scotland’s legal sector and have confirmed our commitment to return to this work just as soon as possible.

At the same time our immediate priority must also be to deliver the major systemic reforms agreed by Parliament just six months ago. This includes creating a wholly new system of business level regulation for over 1,200 existing law firms and delivering the improvements to the legal complaints system which everyone accepts is too slow and too complex.”