We planned to assure our members’ clients and employers by setting and upholding standards that ensure excellent legal and customer service.
| Action | Summary of progress for the year | Complete/Not complete |
|---|---|---|
| Legislative change
To continue our push new enabling legislation for the legal profession by:
1) Responding to requests for evidence by the independent Legal Services Review Group; 2) Putting forward proposals for change based on specific issues; 3) Reviewing the Report by the Chair of the Review Group; 4) Engaging with Scottish Government and other politicians following the publication of the report to press the case for the early introduction of a new Bill to the Scottish Parliament. |
Throughout the year we responded to requests from the independent review group for information. In January 2017 we submitted an updated “Case for Change” paper, and responded to the Call for Evidence with a paper which received favourable comments for its style and simplicity. We engaged specifically with the Association of British Insurers about their Call for Evidence response. We also engaged all the Justice spokespeople of the main opposition parties at Holyrood and the Justice Committee Convener in the summer about our ambitions and held a series of meetings with our largest legal firms to talk about the review and the issues. On 24 October the Roberton Review was published with the recommendation for a single independent regulator for the legal profession/services. Our work now continues to engage with key stakeholders and the profession. |
Complete |
| Anti-money laundering
To implement the Anti-Money Laundering Regime introduced through the Fourth Directive and Regulations including: 1) Implementing rules required to deal with our duties as a Supervisor; 2) Increasing as required the risk profiling of firms around AML inspections; 3) Responding to the FATF inspection (March 2018), providing the required evidence and dealing with any subsequent recommendations; 4) Working with our new overarching supervisor OPBAS to demonstrate our compliance with the regulations; 5) Ensuring all tasks such as registration of firms and fit and proper testing requirements are completed. |
In January the necessary new rules were brought to the SGM for comment with a view to implementation following consultation with the Lord President. However, there are legislative issues that require to be resolved before the rules can be introduced - after extensive discussion and negotiations with HM Treasury it is understood that regulations to implement the necessary changes to the Solicitors (Scotland) Act 1980 to allow the rules to come into play will take place in January 2019. Evidence was given to the Financial Action Task Force (FATF) in March 2018. The report is yet to be published for the UK. Our new AML supervisors, OPBAS, made their first visit to review our AML regime in May. An action plan has been agreed with them and we will be reporting quarterly. There is a formal project team and plan in place to deliver by summer 2019 as agreed with OPBAS. The Regulation 26 registration process was successfully completed and included building a portal to allow for registrations on line. The AML certificate was launched as planned. This has been developed to allow information to be collated and clustering of small to medium sized firms to be carried out based on risk to inform the required supervision regime going forward. |
Complete |
| Complaints To improve the handlings of complaints against solicitors in terms of conduct by: 1) Encouraging short term solutions to speed up complaints handling by working collaboratively with the SLCC and Scottish Government to reform the current gateway; 2) Proposing our alternative approach to complaints handling in the long term presenting the proposals to the Legal Services Review Group and seeking to influence stakeholders of the merits of our proposals; 3) Managing the available resources to handle the number. | In January a joint letter with the SLCC was submitted to Government proposing four quick fixes. This led to meeting in the spring at which point the SLCC brought forward a raft of proposed further changes to benefit their process based on some of the processes adopted by the Legal Ombudsman Service. These have been considered twice by the Regulatory Committee who have asked the SLCC to provide the views of their Consumer Panel on the changes and to give information on how any changes would be quality assured. The proposal around complaints handling for the future based on the English model was included within the Case for Change paper and was highlighted in the response to the call for evidence. Because the Legal Services Review was only published on 23 October there has been no discussion of this with stakeholders before the year end, but the idea was discussed in meeting with political party justice spokespersons in the summer of 2018. This year by the end of October the team had closed 319 files. There has been a specific focus on how reports can be shortened in appropriate cases to free up more resource. The two In-house Fiscals are now in place, they have been allocated cases and are under training. | Complete |
| Rules To continue with the second year of the Rules Review Project – and bring forward, if agreed by the Regulatory Committee: 1) Revised rules in relation to conflict of interest and related guidance; 2) Rules for approval in relation to Raising Concerns and Financial Well Being; 3) To report and make recommendations if appropriate on alternatives to Client Accounts. 4) Revised Admission Regulations. | The conflict of interest project remains live but awaits clarification as a result of the civil litigation reforms as to whether what is happening with those will impact on the rules and guidance in a significant way or not; this is unlikely to be resolved until 2019. However, during the year new rules and draft guidance were prepared and consulted on. Work on Raising Concerns is on hold following a review of the position by the Regulatory Committee. The question of alternatives to client accounts for firms has been carried forward as agreed and is a joint project between members Services and Regulation in 2018-19. Revised Admission Regulations were almost complete at the end of the year. | Not complete |
| Specialist Accreditation We will implement the findings of the review of specialist accreditation, including the establishment of a Residential Property specialism. | Work has been done to establish a residential property specialism, but due to concerns raised in relation to the attitude of mortgage lenders and the scope of the accreditation, further work will take place in 2018/19 to see if these concerns can be addressed. The number of specialists accredited now stands at 587. | Complete |
| Routes to qualification
Routes to qualification We will: 1) Review the current professional requirements of the LLB, and the requirements of the Diploma in Professional Legal Practice and the traineeship (PEAT) to ensure that the outcomes are delivering the appropriate skills for the solicitors of the future; 2) Continue our work to assess the viability of alternative routes to qualification as a Scottish solicitor, working with firms and Skills Development Scotland to consider the introduction of an apprenticeship route to qualification. |
Professional requirements for the LLB and PEAT have been reviewed via engagement with the profession and academia and changes to the outcomes agreed. Skills Development Scotland have indicated that there is no capacity or funding for development of a solicitor apprenticeship route before late 2019. In our response to the report from the Justice Committee round table on access to the legal profession, we have made it clear that we wish to pursue this route and requested that funding be made available. |
Not complete |
| Price transparency and consumer choice We will respond to the issues identified by the Competition & Markets Authority around price transparency and consumer choice in its recent review of the legal services market, through research into international practice in this area; a consultation with our members and stakeholders and developing specific proposals for consideration by our regulatory committee. | Work has been done to consider the issue of price transparency and research the position in other jurisdictions. Following a report to the Regulatory Committee a consultation with members and stakeholders took place. The Regulatory Committee decided to progress with guidance on the question of price transparency; the Committee also noted the proposal around the idea of a “Find A Quote” add on to the “Find A Solicitor” option for the public. Our Board has noted the position on guidance and suggested in reviewing this, consideration ought to be had to what is already in place around letters of engagement and guidance. | Complete |
| Licensed Legal Service Providers (item c/f from 2016/2017) We will be authorised by the Scottish Government as an Approved Regulator of Licensed Legal Services Providers, and have commenced issuing licenses. | After discussions with Government in the early part of the year, Government produced draft regulation and guidance about how complaints against approved regulators are going to be dealt with. After detailed discussions which also involved the SLCC - because they will be responsible for dealing with such complaints – apart from sanctions under powers delegated by Government, draft regulations were brought to be brought to the Parliament in early November 2018. We reconsidered the draft scheme approved in January 2017 (submitted to Government in December 2015) and have re-submitted the scheme with amendments to take account of changes to the practice rules, a change of policy about exemptible investors and to take account of the Approved Regulator levy charged by the SLCC as part of increased fees proposed. Our Council signed off on that revised model at the end of October 2018 on which the Government now require to consult. |
Not complete |
Introduction
This has been another busy year for the Regulatory Committee. In addition to the task of overseeing the work of the Council’s Regulatory sub Committees we also played a part in responding to the Roberton Review of Legal Services, the report of which was published towards the end of 2018.
The Committee met six times during the year and also joined with the Board for a special meeting in September to consider and discuss the potential outcomes of the Roberton Review. We also considered the Council’s original Case for Change paper and the responses sent to the review group following the Scottish government’s call for evidence in the summer.
One of the continuing challenges facing both the profession and the public is the current system for dealing with complaints against legal professionals. The system created by the Legal Profession and Legal Aid (Scotland) Act 2007 does not work as well as it could. Too much of the complaints process is hard-wired into the legislation. Following discussion between the Society and the Scottish Legal Complaints Commission concerning the Anderson Strathern decision in the Court of Session on hybrid cases, and the subsequent court case involving LSS and the SLCC, a joint agreement was reached on a small number of quick fixes which might improve the current process in the short term. These were passed to government officials and, as a result, discussions are now ongoing in regard to further changes which may be beneficial to the process.
The Chief Executive of the SLCC spoke to the October meeting of the Regulatory Committee about a number of the proposed changes and it is anticipated that in 2018-19 it will be possible to present to Scottish Government a package of agreed measures which could be introduced by Regulations and which could improve matters in the short term, pending any decision on primary legislation in the light of the Roberton Review.
We consider that any short-term changes which could improve the current system for the public and legal professionals should be pursued.
Regrettably, it seems unlikely that it will be possible to effect any changes to the process by which the Society investigates conduct complaints as the relevant sections of the 1980 Solicitors (Scotland) Act 1980 cannot be amended by Regulations.
FATF is an inter-governmental body whose objectives are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. FATF undertake a programme of reviews of member countries to assess the adequacy of AML controls in place.
As part of the FATF review of the UK’s AML controls, the Society was selected to meet with the FATF review team to explain how it delivers AML supervision of Scottish solicitors. The Society was one of only two UK legal sector supervisors who took part in this meeting. The meeting built on extensive material including case studies which had been provided in advance of the meeting.
A key area of interest for FATF was the extent to which AML supervisors have implemented a risk-based approach to AML supervision. The Society is currently concluding a large-scale risk profiling exercise which builds on previous risk-based work. This will enable the Society to allocate its supervisory resources according to the risk level attributed to firms or cluster of firms. During 2018 the Society also undertook an extensive exercise to achieve full compliance with the verification requirements for owners and managers of practice units set out in the 2017 Money Laundering Regulations.
The FATF review of the UK was published in December 2018 and the Society will continue to work with HM Treasury and other professional body AML supervisors to take forward recommendations in the report.
The Law Society of Scotland is highly regarded as an anti-money laundering supervisor and our Director of Financial Compliance, Ian Messer, chairs the United Kingdom Legal Services Affinity Group (LSAG) which works with HM Treasury and the newly created oversight regulator, the Office of Professional Body Anti-Money Laundering Supervisors (OPBAS). This is part of the Financial Conduct Authority and was created by the UK Government in January 2018 to strengthen the UK’s AML supervisory regime and to ensure that professional body AML supervisors provide consistently high standards of AML supervision.
One of the main pieces of work before the Regulatory Committee this year was the response to the OPBAS recommendations, following their first supervisory visit to the Society in May.
The Society was able to brief OPBAS on several significant developments in our AML supervisory regime such as the development of a new dedicated AML supervisory team consisting a Head of AML and two other staff with the deep skills necessary to add value to the profession. Following the inspection, the Society prepared a detailed response and action plan which has been accepted by OPBAS. Work is now being undertaken to deliver on that action plan by implementing a number of recommendations arising form that first visit including the completion of the AML risk profiling exercise noted above. The Society is also taking the opportunity to implement a new governance structure for AML supervision and this includes an AML Sub-Committee reporting to the Regulatory Committee. Development work took place during the year and this new committee will meet for the first time in January 2019.
It is expected that there will be a further visit from OPBAS in 2019 to review the steps taken to implement their recommendations.
One of the areas identified in the Society’s Annual plan was the issue of price transparency for legal services. This matter had been highlighted in England and Wales following the Competitions and Markets Authority (CMA) report on the legal services market and the move by the overarching regulator in England, the legal Services Board, to press regulators to introduce rules around this.
Having carried out investigations and having consulted with the profession, the Committee considers that this is a controversial and difficult area. We agreed that guidance for firms should be developed and brought forward at this stage, rather than developing a rules-based solution. That guidance is expected to be available in spring 2019 and its impact will be monitored, as will developments south of the border.
The Committee also considered the progress of the review of the current rules on conflict of interest and the related guidance. A consultation has been underway, but the number of responses received was disappointing and inconclusive.
Matters have been put on hold for now because of the introduction of the Civil Litigation (Scotland) Act and particularly the issue of success fee agreements where there is a clear conflict of interest point to be considered. This matter will be considered further once the Scottish Government have completed their consultation.
By the time you read this, I will no longer be serving as convener of the Committee, having served in that position since the Committee was created in June 2011.
It has been an interesting and enjoyable experience, and the Committee has developed its vital role and procedures over time. It is disappointing that the Roberton Review has not recognised the work of the Committee and the independent view that it brings to the regulatory work of the Council.
I have also enjoyed attending the Board on a regular basis as an observer and my periodic appearances at Council. I have developed a far better understanding of the range of the work of LSS and the clear public interest perspective brought to that work both by Council and through regulation.
I think that the Regulatory Committee has made a positive contribution to the work of the Society and has been vigilant in protecting the interests of both the public and solicitors.
I wish my successor, Craig Cathcart, an enjoyable and productive convenership.
Carole Ford
Regulatory Committee Convener
2011-2018
The Fund reports a surplus for the financial year ended 31 October 2018 of £252,000 (2017 – £114,000)
The focus of our equality work in 2017-18 was our fourth Profile of the Profession survey and our response to the survey. Nearly 3,000 solicitors and accredited paralegals took part in the survey giving us a robust evidence base for future equality work. We published a blueprint for a more diverse profession outlining 28 steps that we will take in the coming years.
This year we will:
- produce guidance on providing reasonable adjustments
- host a summit aimed at preventing bullying and harassment in the profession
- hold a series of roundtables on gender equality within the profession
- run a digital campaign highlighting solicitors from different backgrounds
- hold a series of roundtables focusing on the experiences of BAME people on the route to qualification
- meet with organisations across the profession to work with them to help create a more inclusive profession
We published our gender pay gap in April although we are not covered by the gender pay gap reporting regulations as we employ significantly below the 250 staff threshold. We chose to publish our pay gap because we thought it was the right thing to do. Our median pay gap is 21%. We do not pay bonuses so there is no bonus gap. As well as providing context for our figures, we identified a number of action points. Recognising that gender equality is not solely a women’s issue, our action points were focused on ensuring everyone in organisation was involved in addressing our gender pay gap by:
- offering unconscious bias to all staff. We ran two optional in-person sessions on unconscious bias (around 30% of staff attended) and followed this with mandatory online training (over 90% of staff have taken part)
- we have instituted a mentoring programme for our staff (building on our successful mentoring service for members)
- our senior leadership team have committed to champion gender equality across all of our activities
- our colleague forum has considered how and where we could improve
- we have begun to monitor gender at recruitment and selection stages and we will publish findings in early course
We continued to support the Scottish Ethnic Minorities Lawyers Association; the GLASS Network; and Women in Law Scotland.
We have an overarching objective of leading legal excellence and to be a world-class professional body, understanding and serving the needs of our members and the public.
We are pleased to set our gender pay report in accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Under these regulations we are not required to report, however, we believe it is important to our staff, our members and the wider public that we do so. We also reported in 2017/2018 (the 2017 report can be found here)
Our median pay gap as at 5 April 2018 is 21% (no change from previous year) with a mean pay gap of 19% (+2 from previous). Within the timeframe for this year’s reporting we have not made any bonus payments therefore we have no bonus gap to report. The gender distribution at the Law Society of Scotland across four equally sized quartiles, each containing just over 30 staff is shown below.
|
Males |
Females |
Quartile |
|
22% |
78% |
Lower Quartile |
|
25% |
75% |
Lower Middle Quartile |
|
34% |
66% |
Upper Middle Quartile |
|
53% |
47% |
Upper Quartile |
Over the last year we have undertaken a number of actions to promote the importance of gender equality to our organisation. All of that activity, however, took place after 5th April 2018 so we are likely only to see the benefit of that in future reports.
A large part of our pay gap can be attributed to the distribution of males and females within the organisation. Given our breakdown in males and female staff, males disproportionately feature in the top quartile whereas females disproportionately feature in the lower and lower middle quartile. As a relatively small organisation (circa 125 staff) we are aware that our figures may fluctuate simply with a small number of colleagues leaving or joining the organiation.
As in 2018 this was a helpful exercise and has provided renewed impetus and ideas to add to our equality and diversity strategy.
What did we do last year?
- we offered unconscious bias training to all staff. We ran two optional in-person sessions on unconscious bias (around 30% of staff attended) and followed this with mandatory online training (over 90% of staff have taken part)
- we instituted a mentoring programme for our staff (building on our successful mentoring service for members)
- our senior leadership team committed to champion gender equality across all of our activities
- our colleague forum considered how and where we could improve
- we began to monitor gender at recruitment and selection stages and we will publish findings in early course
- as part of our wider equality work, we undertook a major profile of the profession research exercise.
What will we do next?
Gender equality is not solely a women’s issue. We understand that gender equality is everyone responsibility. In recognising this, we commit to:
- continuing to offer unconscious bias training to staff.
- continuing to use our mentoring programme to benefit our staff.
Whilst we offer significant flexibility to all staff and offer sector-leading parental leave we are aware that comparatively few men take anything more than the statutory paternity leave or work flexibly. We will promote flexible working to all in our organisation but begin discussions with our male colleagues to learn more about why they choose not to work flexibly and what we could do to support them doing so.
We will consider the output of our monitoring of gender at recruitment and selection stages and analyse those trends. We will, in turn, consider whether our advertising, wording and processing of applications at different levels attracts a particular gender.
Lorna Jack
Chief Executive Officer
