Part 1 – Regulatory Framework
18.This Part sets out the new regulatory framework for the regulation of legal services. In doing so, the framework brings together several existing pieces of legal regulation, categorises regulators and imposes a set of requirements that will apply to those regulators according to the category into which they are assigned.
19.Part 1 of schedule 1 of the Act contains a range of amendments to the 1980 Act to adjust the constitution and functions of the Law Society to reflect that it is assigned as a category 1 regulator. However, it is necessary to read both the Act and the 1980 Act to get the full picture as to the Law Society’s obligations.
Chapter 1 – Objectives, principles and key expressions
20.This Chapter sets out the objectives of legal services regulation and the professional principles to which persons providing legal services should adhere. It also deals with how these can be amended. It also defines legal services and other key expressions used in the Part.
Overview of Part
Section 1 – Overview of the regulatory framework
21.This section gives an overview of the provisions in Part 1 to help readers navigate them and understand the framework more readily.
Regulatory objectives
Sections 2 and 3 – The regulatory objectives and their application
22.Section 2 sets out the objectives of the regulation of legal services. These are referred to as “
23.The regulatory objectives are a high-level statement of both what the regulation of legal services is to achieve and how it is to be achieved. While section 2 sets out the objectives, section 3 sets out how they are to be applied. The two sections must be read together as section 3 elaborates on several of the concepts that are contained in section 2.
24.While some of the regulatory objectives are the same as those that were originally set in section 1 of the 2010 Act, they have been added to and now incorporate key aspects of the Better Regulation Principles,(1) the Consumer Principles(2) and Human Rights (PANEL) Principles.(3) These can be found in section 2(1)(b) to (d) (as read with section 3(2) to (4)).
25.In general terms, a regulatory authority must exercise its regulatory functions in a way that is compatible with the regulatory objectives and in a way that it considers most appropriate to meet those objectives. Later provisions in the Act deal with what happens where a regulator does not exercise its regulatory functions in such a way.
26.The regulatory authorities to which these objectives apply are set out in section 3(5). These are the Court of Session, the Lord President, the Commission, the Scottish Solicitors’ Discipline Tribunal, and category 1 and category 2 regulators (which include those bodies, such as the Law Society and the Faculty that directly regulate legal services providers). It also includes approved regulators of licensed providers under Part 2 of the 2010 Act.
Professional principles
Section 4 – Professional principles
27.This section sets out high-level principles for any person who is providing legal services.
28.The practice rules of authorised legal businesses (see Part 2) must include a rule requiring these entities to adhere to them and section 50 of the 2010 Act requires licensed providers to do so. In addition, the Law Society and the Faculty, as the main regulators of individual legal services providers, will need to promote and maintain adherence by those they regulate with these principles as part of their own regulatory schemes (as this forms part of the regulatory objectives). In each case, non-compliance could have consequences for the legal services provider’s continued authorisation to provide legal services.
Meaning of key expressions
Section 5 – Meaning of “legal services” and “legal services provider”
29.This section defines, for the purposes of the Act, what is meant by the expressions “legal services” and “legal services providers”.
30.The definition of legal services is intended to be broad and describes a range of legal activities, many of which are capable of being provided by people or bodies who are not qualified as solicitors or advocates (section 32 of the 1980 Act limits the drawing or preparation of certain documents to solicitors and other legal professionals). The definition is the same as that used in the 2010 Act.
31.For the purposes of the Act, a legal services provider is defined as being a person or body that provides legal services (whether or not directly to the public and whether or not those services are regulated). This therefore includes solicitors and advocates as well as in-house lawyers, paralegals, conveyancing practitioners etc. It also includes bodies providing legal services such as traditional legal partnerships, other forms of legal business and licensed legal services providers.
32.People who provide legal services but are not regulated are also covered by this definition. This therefore extends the scope of legal regulation beyond the traditional practitioners. This is particularly relevant in the context of services complaints, but it is also important for the changes made in respect of new regulators of legal services where it provides a route for people other than solicitors and advocates to provide regulated legal services.
Section 6 – Meaning of regulatory functions
33.This section defines, for the purposes of the Act, what is meant by a reference to the regulatory functions of a regulatory authority. This definition is used in several places in the Act and is of particular importance in situations where an organisation, such as the Law Society, has both regulatory and representative functions. In those circumstances, the Act requires the organisation to discharge its regulatory functions independently of its representative ones and put in place appropriate structures to support that.
Chapter 2 – Regulators
34.This Chapter provides for two new categories of regulator for the regulation of legal services providers and assigns the existing regulators to those categories. The use of the categories allows for the creation of an overarching regulatory framework into which the existing (and future) regulators may be allocated and therefore become subject to the same requirements. Category 1 regulators are intended to be those with a significant membership or whose members provide largely consumer-facing services. Category 2 regulators are intended to be those whose membership is more specialist in nature in terms of the legal work undertaken and whose membership is comparably smaller in number.
35.Thereafter the Chapter sets out the requirements that must be met by each category of regulator. It is worth noting though, that the regime for licensed legal services providers is separate and governed by the 2010 Act.(4) This is due to the extra considerations arising from non-legally qualified investors being involved in those businesses (for example, a licensed provider may be a company owned by a solicitor and an investor who is a member of another regulated profession, such as an accountant). This is made clear in section 7 (discussed further below).
36.However, a category 1 or category 2 regulator may also be an approved regulator of licensed providers. The Law Society has been approved to regulate licensed providers and will be subject to both the provisions of the Act as a category 1 regulator in relation to solicitors and their firms etc. and an approved regulator under Part 2 of the 2010 Act in relation to licensed providers.
Regulatory categories
Section 7 – Regulatory categories
37.This section provides for—
two categories of regulator (category 1 and category 2) for the regulation of legal services providers (the requirements imposed on category 1 regulators are more onerous and reflect that they are responsible for legal services providers that typically provide a broad range of legal services directly to the public),
the regulation of licensed providers to continue under the 2010 Act,
each of the three existing regulators of legal services to be assigned to a category (and power for them to be reassigned to a different regulatory category in certain circumstances), and
a power to be conferred on the Scottish Ministers to change the category to which a regulator is assigned and to specify the category to which a new regulator is assigned.
38.The three existing regulators of legal services in Scotland are assigned as follows—
the Law Society is assigned to category 1,
the Faculty is assigned to category 2,
the Association of Construction Attorneys is assigned to category 2.
39.Any new regulator that has an application for accreditation approved under Chapter 3 of Part 1 of the Act will be assigned to either category 1 or category 2. The Scottish Ministers must, as soon as reasonably practicable, make the regulations necessary to assign it to a category (as they are required to do under section 28). In the meantime, the new regulator is deemed a category 2 regulator.
40.Subsection (6) sets out the factors that the Scottish Ministers must consider when assigning a regulator to a category. These relate to the type and range of legal services that are to be regulated, whether the services are to be provided directly to the public and how many legal services providers the regulator is likely to regulate. The Act does not specify particular types of legal services, or a number of providers, that will lead to a particular regulator being categorised as a category 1 regulator. However, the bigger the regulator, the more services provided directly to members of the public and the more significant the legal services, the more likely it is that a body will be categorised as a category 1 regulator.
41.The Scottish Ministers can only make regulations, which are subject to the affirmative procedure, under subsection (5)(a) at the request of the Lord President. Before making the request, the Lord President must consult the bodies listed in subsection (9). When making a request to the Scottish Ministers, the Lord President must include a document setting out the reasons for the request and copies of any written representations received in relation to the consultation. After making the request, the Lord President must publish those documents.
Requirements of category 1 regulators
Section 8 – Exercise of regulatory functions
42.This section requires a category 1 regulator to exercise its regulatory functions independently of its other functions or activities, and properly in all respects. This reflects that a body should carry out its regulatory functions separately from its other functions, especially any representative functions it may have, and do so in a manner that is appropriate for a regulator. The regulatory functions are instructive here as they point to what regulation is for and how regulators are to carry out that function. Where the regulator has functions other than regulatory functions, it must establish and maintain an independent regulatory committee to discharge its regulatory functions. A regulatory committee may delegate its functions to a sub-committee or an individual, subject to the restrictions in subsection (5) and a sub-committee can, with the approval of the regulatory committee, delegate functions to an individual (except the function described in section 8(5)(a)(ii)) (see section 11). It must also ensure that its governing body does not interfere with the committee’s discharge of these functions. The regulatory committee of a category 1 regulator must also maintain and publish a document setting out the matters in subsection (6) and must consult the governing body of the regulator before making any material changes to one of these matters, its governance arrangements.
Section 9 – Regulatory committee: composition and membership
43.This section sets out the requirements that apply in relation to the composition of a regulatory committee of a category 1 regulator. At least 50% of the members (including of any sub-committee) must be lay members. A person cannot be a member if the person is, or has been for at least two years, involved in the governing body of the regulator or the exercise of the regulator’s non-regulatory functions. Nor can a person be a member if the person’s right to practise has been removed as a result of a finding of misconduct by a professional or disciplinary body or the person is otherwise suspended from practising (in law or otherwise) by such a body, or if the person has been convicted of an offence involving dishonesty, or if the person has been convicted of an offence other than an offence of dishonesty, and the regulatory committee has determined that they may not be a member.
44.While it is generally for a regulatory committee to appoint its members, there may be situations where a regulatory committee is unable to do so and, in those circumstances, the regulator may appoint members to its regulatory committee. The Act gives the most obvious example of appointing the first members of the regulatory committee (as they could not appoint themselves). However, after that point, it covers the unlikely event that the regulatory committee isn’t quorate or able to appoint new members for some other reason. The regulatory committee may co-opt persons who are not members of the committee. The validity of the committee proceedings is not affected by a vacancy in its membership.
45.Subsection (10) requires a category 1 regulator to publish guidance (most likely prepared or updated by the committee itself) about how it applies subsection (4) (as read with subsection (6)). This is to enable it to provide more details about the specific bodies it regards as being relevant.
Section 10 – Regulatory committee: lay and legal members
46.This section sets out the criteria which must be satisfied if a person is to be appointed as a lay member or a legal member of the regulatory committee of a category 1 regulator. A lay member is a person who is not eligible for appointment as a legal member and must not have been so eligible for at least 10 years. They must also be qualified to represent the interests of the public in relation to the provision of legal services in Scotland or be otherwise suitable with regard to the operation of regulatory functions, for example, an expert in consumer issues.
47.Subsection (4) sets out who qualifies as a legal member. In subsection (4)(a), the reference to a person training to become a solicitor means a trainee solicitor and in subsection (4)(b) the reference to a person having matriculated as an intrant means a person (often referred to as a “
Section 11 – Regulatory committee: convener, sub-committees and minutes
48.This section sets out the arrangements for appointing a convener of the regulatory committee of a category 1 regulator and for otherwise chairing its meetings and any sub-committee. It also requires a copy of the minutes of a meeting of the regulatory committee to be provided on request.
Section 12 – Annual reports of category 1 regulators
49.This section requires a category 1 regulator (or, where it has non-regulatory functions, its regulatory committee) to prepare an annual report on the exercise of its regulatory functions. Subsection (2) sets out a range of material that must be contained in the report including information relating to compliance with the regulatory objectives, strategic priorities, accounts, payments from its compensation fund, the number of conduct and regulatory complaints remitted to it under the 2007 Act (and the number of those complaints that are determined, discontinued or reinstated by it or its regulatory committee), information about any directions given under section 20 to disapply rules, and details of the steps it has taken in relation to its regulated providers.
50.Where the category 1 regulator has a regulatory committee, the report must contain relevant information about the committee’s internal governance arrangements and the relationship between the committee and the regulator’s governing body. Subsection (3) places a duty on the regulator to make information available to the committee for the preparation of the report.
51.When preparing an annual report, the regulator or committee (as the case may be) must consult the independent advisory panel of the Commission.(5) A category 1 regulator or its regulatory committee must also publish a copy of the report and send a copy to the Lord President.
Section 13 – Compensation funds
52.This section requires a category 1 regulator to establish and maintain a fund for the purpose of making grants to compensate persons who suffer financial loss by reason of dishonesty by a legal services provider regulated by the regulator (or a provider it regulated at the time the dishonesty occurred). If the regulator has non-regulatory functions, the fund must be under the management and control of its regulatory committee including in respect of decisions about making payments from the fund. The regulator or the committee (as the case may be) must have rules which, among other things—
require contributions from the legal services providers that are being regulated,
specify the criteria for making a grant from the fund, and
state the minimum amount of money to be kept in the fund.
53.The Scottish Ministers (only at the request of the Lord President, the category 1 regulator, or the independent advisory panel of the Commission) may by regulations make further provision in connection with funds established under this section and the rules that the regulator or the committee must have for them. The regulations are subject to the affirmative procedure. Before making a request, the requestor must consult each category 1 regulator or, if applicable, its regulatory committee and the independent advisory panel of the Commission (but such a body need not be consulted if the body is the requester). The requester must also consult such other person or body as the requester considers appropriate. The Lord President must also agree to the making of the request (unless the requester is the Lord President). Subsections (12) and (13) set out the documents required when seeking the Lord President’s agreement and when making a request to the Scottish Ministers. As soon as practicable after the request is made, the requester must publish those documents.
Requirements of category 2 regulators
Section 14 – Exercise of regulatory functions
54.This section requires a category 2 regulator to exercise its regulatory functions independently of its other functions or activities, and properly in all respects. The regulator’s internal governance arrangements must include provision with a view to ensuring that it—
always exercises its regulatory functions in this way,
allocates sufficient resources to the exercise of these functions, and
regularly reviews how effectively it is exercising them.
55.This is less prescriptive than the requirements imposed on a category 1 regulator which must set-up a regulatory committee to discharge its regulatory functions.
Section 15 – Annual reports of category 2 regulator
56.This section requires a category 2 regulator to prepare an annual report on the exercise of its regulatory functions. Subsection (2) sets out a range of material that must be contained in the report including information relating to compliance with the regulatory objectives, strategic priorities, costs, details of the steps it has taken in relation to its regulated providers, information about directions given under section 20, details of how a regulator has complied with a direction in relation to the handling of complaints and of steps taken by a regulator to ensure compliance with any measures taken under section 19, and a statement indicating whether the regulator considers that the category to which it has been assigned is appropriate. When preparing an annual report, a category 2 regulatory must consult the independent advisory panel of the Commission. Each report must be published by the regulator and a copy sent to the Lord President.
Requirements of both category 1 and category 2 regulators
Section 16 – Register of regulated legal services providers
57.This section requires each category 1 and category 2 regulator to establish and maintain a register of the legal services providers that it regulates which are authorised to provide legal services. Subsection (8) makes it clear that a solicitor holding a practising certificate is authorised to provide legal services and must be registered, as must a practising advocate and an authorised legal business. It would likewise apply in a similar manner to a member of the Association of Construction Attorneys or a person who is regulated by an accredited regulator (see Chapter 3 of Part 1).
58.The register must contain information in relation to each legal services provider who is an individual, such as their name, the address of their place of business and details of any sanctions resulting from disciplinary action taken against them in the last 3 years. The register must also contain the same information relating to each legal services provider that is not an individual.
59.The register must also contain the details of any person or body that it regulates who is not authorised to provide legal services but would be entitled to be authorised to do so and wishes to appear in the register. A person who is suspended or disqualified from practice is not entitled to be authorised and the register should not therefore include such a person. Similarly, if a legal services provider’s authorisation to provide legal services is suspended, the corresponding entry in the register should be removed for the duration of the suspension. But if, for example, a solicitor chooses not to renew their practising certificate for a period of time and wishes to remain registered, the Law Society must include their details in its register (the roll of solicitors). Similarly, an advocate who works in-house or becomes a judge often chooses to become a non-practising member of the Faculty. If a regulator considers it appropriate, the register may contain such other information relating to any person or body it regulates.
60.Members of the public must have free access to the register and be able to search it. The requirement for it to be made available by such electronic means as the regulator considers appropriate is most likely to be satisfied by the regulator putting the register on its website. However, it is possible that it may use some other means such as an app to achieve that outcome.
61.The roll of solicitors kept by the Law Society under section 7 of the 1980 Act is expected to be the register for the purposes of this section. The Faculty also maintain a website showing practising and non-practising members.
Section 17 – Professional indemnity insurance
62.This section requires each category 1 and category 2 regulator to have rules concerning indemnity for the legal services providers it regulates against any kind of professional liability. A failure to comply with them may be treated as professional misconduct or unsatisfactory professional conduct. The Lord President must agree to the making of them and any amendments. While regulators are afforded some discretion in relation to how this is achieved, it ensures that insurance is in place to cover situations where the actions of a legal services provider results in a client suffering loss or damage.
Powers of the Lord President in relation to regulators
Section 18 – Review of regulatory performance by the Lord President
63.This section allows the Lord President to review the performance of a category 1 or category 2 regulator on the Lord President’s own initiative or if requested to do so by the Scottish Parliament, the independent advisory panel of the Committee or Consumer Scotland. A request may be made only where the requesting body is concerned that the regulator is failing to exercise its regulatory functions in a manner that is compatible with the regulatory objectives or failing to comply with the requirements imposed on the regulator under the Act or any other enactment. The requester must give notice to the regulator of its reasons for proposing to make the request.
64.When a review is being carried out it is to be done with a focus on, but not limited to, the regulator’s compliance with the regulatory objectives, the exercise of its regulatory functions, the operation of its regulatory committee (where relevant) or other internal governance arrangements and its compliance with any measures applied to it under section 19 of the Act or any direction from the Commission under the 2007 Act.
65.The Lord President may request information from a regulator in connection with an existing review relating to that regulator. If the regulator fails to provide the information, the Lord President may add such failure to the existing review (but the regulator must be given a chance to respond to this). If the Lord President thinks that any person other than a regulator holds information relating to the review, the Lord President may request the information from them (see subsection (9)). When conducting the review, the Lord President may consult such persons or bodies as they consider appropriate.
66.Following any such review, the Lord President must prepare and publish a report detailing the findings and any measures the Lord President intends to take under section 19. If a request is received and the Lord President decides not to conduct a review, the Lord President must give the requester the reasons for that, in writing.
Section 19 – Measures open to the Lord President
67.This section allows the Lord President to take specified measures (see subsection (4)) in relation to a category 1 or category 2 regulator. The Scottish Ministers may by regulations (subject to the affirmative procedure) specify other measures that may be taken by the Lord President and make further provision about the measures that the Lord President may take. This may involve a completely new form of sanction or action or adjusting an existing measure, perhaps by adding further procedural requirements.
68.The Scottish Ministers can only exercise the regulation-making power following a request from the Lord President to do so. Before making a request, the Lord President must consult with each category 1 and category 2 regulator, the independent advisory panel of the Commission, and any other appropriate persons or bodies. A request must include the reasons for making the request and copies of representations received during the consultation period. In addition, the Lord President must publish those documents.
Special rule changes
Section 20 – Power to direct special rule changes
69.This section allows a regulator, on the application of a legal services provider that it regulates, to disapply or modify any rule of the regulator in relation to the applicant. The regulator makes this change by giving a direction, but only if the direction is compatible with the regulatory objectives.
70.But a direction cannot disapply or modify a requirement under the Act or any other enactment. In addition, a direction may be given only if the regulator considers it—
desirable for the purpose of enabling a new or alternative way of providing or regulating legal services to be piloted (“the first purpose”),
reasonable and proportionate for the purpose of avoiding a regulatory conflict, removing an unnecessary rule, or making a rule less onerous (“the second purpose”), or
necessary or appropriate in the circumstances.
71.A direction has effect either indefinitely or for the period of time it specifies or until it is revoked. A copy of a direction must be given to the legal services provider to whom it relates and, in circumstances specified in subsection (7), to the Lord President.
72.A regulator must exercise this power of direction in accordance with section 3(1). This is because the power is a regulatory function of a regulator. The power must therefore be exercised in a manner which is compatible with the regulatory objectives in section 2(1) and in a manner which the regulator considers most appropriate to meet those objectives.
Section 21 – Powers to amend or revoke directions
73.This section allows a regulator to amend or revoke a direction given by it under section 20. But it can only amend a direction on the application of the legal services provider to whom it relates. The Lord President may also revoke a direction given for the first purpose under section 20(3)(a) at any time.
Section 22 – Register of directions
74.This section requires a regulator to establish and maintain a register of directions given by it under section 20 that are still in force. The register must contain a copy of the direction and any amendments made to it. It must also specify the day when each direction ceases to have effect or whether the direction is to have effect for an indefinite period. A regulator must withhold information from any document to be contained in the register if satisfied that its disclosure would, or would be likely to, breach data protection legislation. The regulator may also withhold information if satisfied that its disclosure would, or would be likely to, prejudice substantially the commercial interests of any person or breach an obligation of confidence owed by any person.
Chapter 3 – New regulators of legal services
75.This Chapter makes provision for new regulators of legal services. It replaces similar provisions that were contained in sections 25 to 29, section 42 and schedule 2 of the 1990 Act which enabled persons to obtain rights to conduct litigation and rights of audience.
Applications
Section 23 – Right to provide legal services
76.This section allows a body to apply to the Lord President for the purpose of enabling the body to become accredited to authorise persons to acquire the right to exercise any or all of the following (as well as the regulation of those persons’ exercise of acquired rights)—
rights to conduct litigation on behalf of members of the public,
rights of audience in courts,
the right to provide other types of legal service or services.
77.Only natural persons may acquire rights to conduct litigation or rights of audience. This means companies and other bodies which have legal personality cannot apply for authorisation for these rights.
78.The application must include, in particular, a draft regulatory scheme.
Section 24 – Regulatory scheme
79.This section sets out that a draft regulatory scheme under section 23 must—
specify the rights and legal services that it proposes persons authorised by the body may acquire,
contain the body’s proposed authorisation rules, practice rules, and (if applicable) its rules for authorising and regulating legal businesses for the purposes of Part 2,
set out how the body will exercise its regulatory functions compatibly with the regulatory objectives,
set out the regulatory category to which the body thinks it should be assigned, and
deal with such other regulatory matters as the Scottish Ministers may by regulations specify (and in such manner as the regulations may specify).
80.It also states what authorisation rules and practice rules are about, and what they must include. Where relevant, such as in the case of professional indemnity, these rules will have to take account of the requirements that will apply to the body depending on whether it is assigned as a category 1 or category 2 regulator.
81.The authorisation rules will set out the requirements an applicant must meet in order to become a provider that is regulated by the body and the process for seeking that authorisation. This may include granting authorisation subject to conditions (such as restricting the types of, or manner in which, services are to be provided) and how decisions can be reviewed. In particular, the authorisation rules must contain a rule that only fit and proper persons may be authorised and that the authorisation is to be withdrawn if any such person is not complying with the general regulatory scheme or other pertinent rules of professional practice.
82.The practice rules will cover the standards to be met by authorised persons when providing legal services as well as requirements in relation to accounting, auditing and professional indemnity. Practice rules will also set out how complaints are to be handled and the consequences for where there is a breach of the regulatory scheme that doesn’t merit the withdrawal of authorisation. This might, for example, be in the form of fines or being required to take remedial action within a set period. Subsection (8) sets out some particular rules that are required in respect of the exercise of rights of audience. These reflect the requirements imposed on other officers of the court (such as solicitors and advocates).
83.The practice rules must also contain a requirement to publish decisions in relation to conduct complaints about professional misconduct that have been referred to the Commission.
Section 25 – Regulatory scheme – additional matters to be included: further provision
84.This section provides that the Scottish Ministers can only exercise the power under section 24(1) if they have received a request to do so from the Lord President, an accredited regulator or the independent advisory panel of the Commission following a period of consultation with specified bodies. Except where the Lord President is the requester, the Lord President’s agreement must be obtained. The section specifies what information must be provided to the Lord President and the Scottish Ministers and what documents must be published.
Section 26 – Publication of draft regulatory scheme and representations
85.This section requires an applicant under section 23 to advertise the draft regulatory scheme included in its application. The applicant is required to send a copy of the draft regulatory scheme to the Competition and Markets Authority, the Commission and the independent advisory panel of the Commission seeking representations. The applicant must also make the scheme available electronically for a period of six weeks beginning with the date on which the application was made. During this period, any person may make written representations to the Lord President.
Consideration and grant
Section 27 – Consideration of applications
86.This section sets out how applications under section 23 are to be considered by the Lord President. It requires the Lord President to consider an application submitted under section 23(1) and any written representations made in accordance with section 26(3) and (4).
87.The application may not be considered if the Lord President is not satisfied that the requirements of section 26 have been, and are being, complied with. The Lord President may make preliminary observations and, if the scheme is adjusted in response, must consider the adjusted scheme. The Lord President must have regard to whether the scheme would achieve and maintain appropriate standards of conduct and practice by persons who may acquire the rights sought, and must also consult the Scottish Ministers, the Competition and Markets Authority, the independent advisory panel of the Commission and such other persons as the Lord President considers appropriate.
Section 28 – Approval of application and giving effect to the regulatory scheme
88.This section provides that if the Lord President is satisfied with a draft regulatory scheme included in an application under section 23 (having considered it in accordance with section 27), the Lord President must approve the application. If the Lord President is not satisfied, the Lord President must refuse it. The Lord President must publish notification of the decision and must include a summary of the reasons for the decision.
89.If the application is approved by the Lord President, the Scottish Ministers must lay before the Scottish Parliament draft regulations to assign the applicant as a category 1 or category 2 regulator. If the application is approved, the body must give effect to the draft regulatory scheme (and apply it as its regulatory scheme) and publish it. A body which has had its application (and regulatory scheme) approved under this section is referred to as an accredited regulator.
Exercise of the acquired rights
Section 29 – Exercise of rights to provide legal services
90.This section provides that where an accredited regulator has given effect to a draft regulatory scheme and applied it as its regulatory scheme under section 28(7), a legal services provider may be authorised by the regulator to exercise the right or rights to provide legal services specified and described in the scheme. To be authorised, a provider will (among other things) require to be a fit and proper person (see section 24(4)). It also makes provision in connection with, among other things, the exercise of a right of audience.
91.In practical terms, this means that a person who wishes to provide legal services that are regulated by an accredited regulator can apply to the regulator for authorisation to provide those services. This is distinct from persons who wish to be solicitors or advocates and is more likely to relate to specialist areas, for example commercial or employment law.
92.Subsections (3) and (5) to (7) deal with particular rights that arise where the rights being exercised relate to court practice. Subsection (3) preserves the inherent jurisdiction of the court to hear or refuse to hear any person (though it must give reasons if it refuses to do so). Subsection (5) obliges a person with a right of audience to prioritise work before the court over other business and subsections (6) and (7) provide the same protections to an authorised provider in relation to the conduct of litigation as exists for officers of the court.
Section 30 – Surrender of rights
93.This section allows an accredited regulator to apply to the Lord President to surrender some or all of the rights acquired (for example, if they no longer have a sufficient number of providers to make the running of the body feasible). Subsection (2) requires the accredited regulator to first consult each of the body’s authorised providers of legal services (and the application to the Lord President must include copies of any representations received). The Lord President must consult persons or bodies considered appropriate on the application.
94.The Lord President may give directions as to the requirements which a body wishing to surrender any such rights will have to comply with. Where the Lord President grants the application, the Lord President is to give notice to the regulator specifying the date on which it takes effect and publish that notice (see subsection (10)). From the date specified in the notice, persons authorised by the body may not exercise the right.
95.However, where the application is seeking to surrender all of the regulator’s acquired rights, the consultation under subsection (2) must seek the views of the body’s authorised providers about whether a majority of the providers would like another regulator to authorise them to exercise and regulate their rights or whether they would like to form a body and submit an application under section 23 to seek accreditation to authorise them to exercise and regulate their acquired rights. If the majority of consulted providers have expressed a preference of either of these outcomes, the notice from the Lord President under subsection (10) may give effect to this.
Section 31 – Offence of pretending to have acquired rights
96.This section provides for an offence of pretending to have acquired rights. In this section, an “
Review of regulatory scheme
Sections 32 – Review of regulatory scheme on initiative of accredited regulator
97.This section provides that, where an accredited regulator has reviewed its regulatory scheme under its own initiative and proposes such revision to its scheme as it considers appropriate, it must provide a report for the Lord President’s consideration to agree any changes. The provision gives the Lord President the power to approve or not approve the proposed revision or to direct the accredited regulator to revise the scheme.
Section 33 – Review of regulatory schemes
98.This section allows the Lord President to direct an accredited regulator to carry out a review of its regulatory scheme and report on the review including any proposed revisions to its regulatory scheme. If the Lord President is satisfied with a body’s proposed revisions, the Lord President must approve the revised scheme and direct the regulator to apply the revised scheme. If the Lord President considers that other revisions are required, the Lord President may direct the regulator to apply these other revisions or may make comments in relation to the proposed revisions and direct the regulator to take account of the comments. Following the revision of its regulatory scheme, an accredited regulator must publish is revised scheme. The Lord President may vary or revoke a direction made under this provision.
Section 34 – Revocation of acquired rights
99.This section allows the Lord President to revoke the approval of an application under section 28 where it appears to the Lord President that the body that made the application has failed to comply with a direction under section 32 or 33. Before revoking an approval, the Lord President must consult each person who is authorised by the accredited regulator to provide legal services and must ask whether those providers would like another category 1 or category 2 regulator to authorise them to exercise their acquired rights (and to so regulate their exercise of those rights), or whether they wish to form a body and submit an application under section 23 seeking accreditation.
Miscellaneous
Section 35 – Replacement regulatory arrangements for authorised providers
100.This section places a duty on the Lord President, where an accredited regulator is a discontinuing regulator (i.e. it is one where it has ceased to function by surrendering its rights under section 30 or has had its rights revoked under section 34) to consult each authorised provider to determine in particular whether a majority of the authorised providers would like another regulator to authorise them to exercise their acquired rights and regulate the exercise of such rights. If the majority is in favour of another regulator authorising and regulating the authorised providers, the Lord President can, in certain cases, amend the regulatory functions of the receiving regulator to enable it to regulate the authorised providers of the discontinuing regulator. In other cases, the Lord President can ask the Scottish Ministers to make regulations (subject to the affirmative procedure) to amend the functions of the receiving regulator.
Section 36 – Consequential amendments and repeals
101.This section amends and repeals provisions of the 1990 Act in consequence of other provisions of this Chapter.
Section 37 – Transitional and saving provision for regulators approved under the 1990 Act
102.This section makes transitional and saving provision for regulators approved under the 1990 Act. In particular, it provides for the review and updating of the regulatory scheme of any body that is approved under that Act and before Chapter 3 of Part 1 of the Act comes into force and also provides a way for those bodies to surrender their acquired rights or have them revoked.
These are the principles set out at section 6(3)(a) of the Regulatory Reform (Scotland) Act 2014.
A licensed legal services provider is a business entity which provides legal services for a fee, gain or reward under a licence issued by an approved regulator under the 2010 Act. In order to be eligible to be a licensed provider a body must have within it a practising solicitor (with a valid practising certificate that is free from conditions). For a more detailed explanation of licensed legal services providers, see Chapter 2 of the Explanatory Notes to the 2010 Act (available here: Legal Services (Scotland) Act 2010 – Explanatory Notes (legislation.gov.uk).
The independent advisory panel of the Commission operates under the name of the “Consumer Panel”. The Act and these notes, however, refer to it by its description in paragraph 11A of schedule 1 of the 2007 Act.
