Andy Poole interviews Anne Macdonald, lead partner of Harper Macleod’s HM Connect, a referral and support network for law firms in Scotland.
Heading a law firm network with over 400 members throughout Scotland provides Anne the perfect insight into key impacts on Scottish law firms and current developments in the market. Andy Poole interviews Anne Macdonald to explore what’s hot in the Scottish legal profession:
Andy: What does the Scottish legal market look like right now – is it predominantly made up of smaller firms as with other jurisdictions?
Anne: I often reflect that we’ve had a decade of change but ultimately not much has changed, and by that I mean that the number of practice units has remained relatively stable given what at times has felt like seismic change – there are currently 1,120 law firms and when I look at my notes from a presentation back in 2011 we had 1,134 firms! The majority of practice units continues to be sole practitioner firms with around 500 such law firms, however where we have seen the most change is in the globalisation of Scottish legal market – there are over 50 multinational practice units operating Scotland and they employ almost a third of all Scottish solicitors in private practice - I think this has been the biggest, quietest, change in the market place. We have also had consolidation within the domestic marketplace with mergers between high street and rural firms to create stronger local brands and a number of mergers and takeovers by the medium/large indigenous Scottish firms to expand their footprint across Scotland and the focus here has predominantly been on private client services.
Andy: What are the top three concerns you hear from solicitors around managing their law firms?
Anne: A recurring topic for many years, but which has become more pronounced since lockdown, has been the talent war: recruitment and retention continues to be a challenge. We’re finding many firms are too heavily geared with a predominance of more senior lawyers (and this is across the spectrum of firms) and find it difficult to compete with the international firms on attracting NQs – three year PQE level lawyers.
Many lawyers I speak with are actively looking at retirement and plans that they thought they had in place are no longer viable due to associates being attracted elsewhere (in-house or to global firms) or leaving the profession and that’s putting a lot of pressure on our senior members of the profession. There also now seems to be a more realistic view on what options are available in terms of takeovers or mergers and an acceptance that golden handshakes do not exist and that premises may not be attractive to an acquirer.
Until May 2022, I served as a Council member of the Law Society of Scotland and one of the biggest take aways from my six years on Council is just how important the provision of legal aid is to fair and just society. It has been hugely important that profile has finally been given to the real difficulties encountered by solicitors when engaging with the legal aid system and the impact that this has on users of legal aid. I am hopeful that the small steps of progress that have already been achieved here is just the start of more fundamental changes.
Andy: What is the current status of the Roberton Review and how likely is imminent change to current regulatory framework?
Anne: The Roberton Review was published back in October 2019 and a public consultation on its recommendations ran from 1 October to 24 December 2021.
From the moment that Review was published there has been a divergence of views as between consumer groups, the profession and regulators. On 8 July 2022, the Scottish Government published its consultation report: Legal Services Regulation Reform in Scotland: Consultation Analysis, and the responses do reflect a range of views, with consumers generally favouring option one and the legal profession preferring option three. So what are the three options?
Option one: new independent regulator for all legal services in Scotland whose members would be appointed by the Scottish Government.
Option two: creation of a market regulator with an oversight role which would be in addition to existing regulatory structure and accountable to the Scottish Government.
Option three: retain the current structure, maintaining the Law Society as regulator and professional body with a renewed focus on accountability, transparency and reform of outdated procedures.
It is my understanding that the Scottish Government intend to engage further with key stakeholders before publishing their formal response in the autumn. It’s a case of watch this space…
Andy: What about ABS? Scotland is nearly 12 years down the line since the 2010 Legal Services (Scotland) Act, do you think the Law Society of Scotland will be accepting applications from Licenced Legal Service Providers (LLSP) in 2022?
Anne: It’s been a long time coming but it does now seem that applications for LLSP will be accepted from the late autumn onwards. Back in 2010 it was a debate that polarised the profession and resulted in the 49% external ownership provision. In essence since then, nothing meaningful has happened. Ironically, in England ABS has been around since 2007 and a number of these have bases in Scotland or have acquired Scottish firms, so we have had ABS through the back-door and it’s created an unlevel playing field for Scottish regulated firms. LLSP in Scotland may also provide a succession planning option for smaller firms – for those having difficulties recruiting or retaining an associate to take over their law firm, matching up with an accountancy or wealth planning businesses with similar issues may help alleviate what, at times, can be a lonely place. For others it will provide the opportunity to truly recognise the crucial contribution of executive roles within law firms and permit finance directors, marketing directors and HR directors to become owners.
