Requirement to be authorised to provide legal services
Section 39 – Requirement for legal businesses to be authorised to provide legal services
105.This section defines what constitutes a legal business (and associated expressions) for the purpose of Part 2. It also makes it an offence for a person to own or operate a legal business which provides legal services to the public for fee, gain or reward without that business being authorised in accordance with this Part. A person who commits an offence under this section is liable on summary conviction to a fine not exceeding £20,000. The Scottish Ministers may by regulations substitute a different sum. Before making regulations, the Scottish Ministers must consult each category 1 regulator and other persons or bodies they consider appropriate and must publish the consultation responses. Those regulations are subject to the negative procedure.
106.A legal business is any business entity that provides (or offers to provide) legal services to the public for fee, gain or reward that is either wholly owned by a solicitor or solicitors, a qualifying individual or qualifying individuals, or a solicitor (or solicitors) and a qualifying individual (or individuals). Qualifying individuals are other persons who are regulated by a category 1 regulator and include registered foreign lawyers (“RFLs”) and registered European lawyers (“RELs”) defined in, and registered and regulated under, the 1980 Act. Under that Act, RFLs can own and operate a business known as a multi-national practice (as defined in the 1980 Act) but only where the owners of the business also include solicitors qualified to practise in Scotland.
107.Accordingly, a legal business may include sole traders, partnerships and corporate bodies, including those which are regulated as incorporated practices under the 1980 Act. A licensed legal services provider under the 2010 Act is not a legal business for these purposes as it can be owned by persons who are neither solicitors nor, as the case may be, qualifying individuals. Law centres and charities which provide legal services and other forms of charitable or third sector providers are also not included as they do not offer their services for fee, gain or reward.
108.In the event of a new regulator coming to the market, or an existing category 2 regulator being reassigned as a category 1 regulator, the offence will not bite until such time as the regulator is confirmed as a category 1 regulator and the persons that it regulates are regulated as such. Appropriate transitional processes will be put in place to ensure that any businesses that will become legal businesses under such a regime will have time to acquire authorisation before the regulator is formally assigned to category 1. Authorised legal businesses that already exist at the time the section comes into force are automatically treated as being authorised in accordance with this Part.
Section 40 – Offence of pretending to be an authorised legal business
109.This section makes it an offence for a person to, without reasonable excuse—
take or use any name, title, addition or description implying that the person is an authorised legal business, or
otherwise pretend to be an authorised legal business.
110.A person who commits an offence under this section is liable on summary conviction to a fine not exceeding £20,000. The Scottish Ministers may by regulations substitute a different sum. Before making regulations, the Scottish Ministers must consult each category 1 regulator and other persons or bodies considered appropriate and must also publish any responses to the consultation. Those regulations are subject to the negative procedure.