Scottish Government

Chapter 5 Professional rules etc with potential implications for competition in the Scottish legal services market

5. Chapters 5-8 identify the competition issues associated with certain professional rules and the sometimes diverging views which exist about where the public interest lies in relation to such rules. These chapters contribute to the specific aims of the Research Working Group :

• to identify restrictions, whether deriving from statute, professional rules or custom and practice, which may have the effect of preventing, limiting or distorting competition in the different Scottish markets;
• to identify access to justice, public interest and consumer protection factors that may justify such restrictions and to evaluate whether the restrictions are proportionate to their purpose.

Background

5.1 These particular aims were designed to take forward in relation to Scotland the review agenda provided by the EC Report on Competition in Professional Services (see chapter 1). To discharge that agenda the UK national competition authority (the Office of Fair Trading), the Scottish Executive and the Scottish legal professional bodies needed to ensure that regulation of the Scottish market for legal services was compatible with both European and domestic competition law.

5.2 The approach advised by the Commission was that a proportionality test should be applied in scrutiny of professional regulations. The test advocated by the Commission was that professional rules had to be (a) objectively necessary to attain a clearly articulated and legitimate public interest objective and (b) the mechanism least restrictive of competition to achieve that objective. The Commission believed that rules which satisfied these requirements served the interests of users and professionals alike. The Commission invited regulatory authorities in the member states and professional bodies to review existing rules, taking into account:

• whether those rules were necessary for the public interest;
• whether they were proportionate; and
• whether they were justified.

5.3 The EC Treaty contained competition provisions (Articles 81 and 82) which had been applied in UK law by the Competition Act 1998. The 1998 Act provided that agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the United Kingdom and have as their object or effect the prevention, restriction or distortion of competition within the UK were prohibited and void (subject to certain exceptions). Law firms were regarded as "undertakings" and the legal professional bodies as "associations of undertakings" and therefore fell within the ambit of competition law.

5.4 The 1998 Act had to be applied consistently with the principles of Community law. With effect from May 2004 Articles 81 and 82 of the EC Treaty had applied direct in EU member states and the Commission was pressing competition bodies in member states to ensure their governments applied the Articles uniformly throughout their state. Member states were required to take competition principles into account when approving professional rules made by professional bodies in addition to the public interest considerations which the bodies might have had in mind in promoting such rules.

5.5 These chapters have been based on discussions within the Research Working Group. Comments from the Group on points of detail have been assimilated, but more substantial commentary, such as that from the Law Society of Scotland, the Faculty of Advocates and the Office of Fair Trading is clearly attributed. Economic analysis has been provided by Professor Frank Stephen of the University of Manchester (formerly of the University of Strathclyde).

A. Law Society of Scotland

(a) Restriction on practice as a principal

5.6 One of the professional rules of the Law Society of Scotland ⁴⁷ restricted solicitors from practising as a principal in a law firm unless they had been employed as a solicitor for a cumulative period of three years. This rule might be challenged as having an anti-competitive effect by imposing an unnecessary restraint on able, newly qualified solicitors who might wish to practise as a principal without first having acquired three years experience.

Rationale for the restriction

5.7 The Law Society of Scotland believed that the rule was justified on the basis of previous experience of what could go wrong if newly admitted solicitors were permitted to act as principals of law firms immediately. There was evidence that such solicitors were not always able to provide an adequate service to their clients, which included proper risk management and compliance with the Society's practice rules. The Society's note at annex B explains the public interest which the rule was designed to protect more fully.

5.8 The Group found no evidence that the rule was unnecessarily restrictive, taking account of the public interest considerations identified and the flexibility which the Society's power of waiver provided to deal with exceptional cases.

(b) Restriction on receiving a payment for referring a client

5.9 The rules of the Law Society of Scotland did not permit solicitors to pay commission/referral fees to third parties (such as estate agents or mortgage providers) for the introduction of business ⁴⁸.

Rationale for the restriction

5.10 The Law Society of Scotland believed it was prejudicial to the independence of the profession for solicitors to pay for referred business, as doing so might lay them open to charges of pursuing their own financial interests in advance of the best interests of their clients. The Society considered that clients should be free to choose their own agent rather than have their work commoditised and sold on to solicitors who were prepared to pay for it. The Society maintained that referral fees did not increase competition as solicitors required to compete against one another for all work. The Society noted that solicitors currently involved in referral schemes where no referral fee was payable already had an incentive to maintain a high standard of service so as to get repeat custom. Where referral fees were involved, the Society believed that the company referring would judge which solicitor to refer the business to by the amount it would receive by way of fee.

5.11 If that rule were to be relaxed to allow payment of referral fees, the Society believed there would be considerable pressure on some solicitors to pay a fee for the referrals, and that in certain areas referrals would be awarded to whoever was prepared to pay the highest fee, not necessarily to the firm giving the best service. The Society did not believe that disclosure to the individual client that a firm had paid for the referral was a protection for the client.

5.12 The Law Society of Scotland had prohibited solicitors from sharing commission since 1964. In response to media reports that solicitor firms in England and Wales were offering doctors payments for referring patients, the Law Society of Scotland issued a news release on 2 September 2004 confirming that solicitors in Scotland continued to be banned from paying other people for introducing clients. The Society's view was that intermediaries created an economic activity which was entirely unnecessary, potentially prejudicial to the independence of the adviser and which would ultimately be paid for by the consumer.

Competition issues

5.13 In its report on Competition in Professions⁴⁹ the OFT expressed concern that a restriction on referral fees in England and Wales might be hampering inter alia the development of an online market place that could bring clients and solicitors together (eg payment to an intermediary firm that 'introduced' clients and suppliers over the internet) and the ability of solicitors to compete with non-legally qualified practitioners.

5.14 The OFT considered that:

• a blanket prohibition on the payment of referral fees was unlikely to be necessary to guarantee solicitor independence, which could generally be protected by transparency rules requiring that the client be fully informed of any referral fee paid;
• referral fee arrangements could enhance competition, as solicitors had to compete against each other to obtain such referral work;
• solicitors who were involved in referral fee schemes would have an incentive to maintain a high standard of service so as to get repeat custom from referred clients as well as the referrer. The reputation of both firms was dependent on both providing a quality service to build their reputation and to gain repeat custom; and
• A prohibition on referral arrangements would therefore have the effect of reducing competition amongst solicitors to the detriment of clients, who were less likely to obtain the quality and price of legal services that best met their needs.

5.15 The OFT noted that consumers generally found it difficult to access information about professional services. A prohibition on referral fee arrangements increased clients' search and transaction costs. Referrers might develop a better understanding about professional services than clients and therefore be in a better position than clients to identify solicitors who provided legal services of a high quality for relative good value. On that basis a referral fee arrangement was likely to minimise the effects of information asymmetry in the legal services market between lawyers and clients, and a prohibition on referral fees would prevent such benefit. Further, referral websites could significantly reduce search costs ⁵⁰, thereby enabling clients to find the quality and price of legal services that best met their needs.

5.16 As referrers developed a good understanding about legal services and thereby developed bargaining power, they were likely to be able to negotiate for high quality services for relative good value. The OFT considered that the effect of a prohibition on referral fees might therefore be to impede the development of better services and lower fees, thereby potentially limiting competition amongst solicitors. Referral services would provide an additional choice by which a client could choose a solicitor. A prohibition on referral fees might also have the effect of restricting clients' freedom to access a solicitor indirectly i.e. through a referral arrangement.

5.17 The OFT concluded that referral fee arrangements could act as a competitive tool for new firms entering the market, where such arrangements were not common practice in the market.

Conclusion

5.18 The Law Society of Scotland considered that more research required to be done before a firm conclusion could be reached. As referral fees were banned in Scotland, the only practicable form for such research would be to consider experience of the impact of referral fees in similar jurisdictions where they were permitted.

5.19 In England and Wales the Law Society debated the removal of the restriction on several occasions in 2003 and resolved in December 2003 that it would be in the public interest to allow referral fees, provided that such payments were disclosed to clients ⁵¹. The Law Society of England and Wales undertook a review of the impact of the changes it made in 2004 to the professional conduct rules on referrals, which included a survey of the experiences and attitudes of clients. At its Council meeting in July 2005, the Law Society of England and Wales decided that it would not for the time being reintroduce a prohibition on referral fees, but would instead issue enhanced guidance to the profession. The Society's Council decided to refer the issue of the reintroduction of the ban to the Law Society's new Regulation Board.

5.20 The Scottish position should be reviewed when clearer evidence became available of experience in England and Wales.

(c) Professional indemnity insurance

5.21 The Law Society of Scotland maintained a Master Policy to provide indemnity for all Scottish solicitors. The arrangement was governed by rules which required solicitors to purchase professional indemnity insurance through the Master Policy ⁵².

Competition issues

5.22 The OFT believed that it had reasonable grounds to suspect that a restriction on competition might arise from the inability of Scottish solicitors to choose their own provider for professional indemnity insurance and perhaps to seek professional indemnity insurance on better terms than were offered by the Master Policy. The OFT wished to assess whether the decision by the Law Society of Scotland to require all solicitors in Scotland to obtain their professional indemnity insurance through the Master Policy might be an unnecessary restriction on competition between solicitors in Scotland.

5.23 The OFT also considered whether the Master Policy might be reducing the capacity for solicitors with a good claims record to benefit from the competitive advantage inherent in a lower premium for professional indemnity insurance.

5.24 Lastly, the OFT considered an allegation made by some users of legal services that Scottish solicitors had a mutual interest in avoiding claims on the Master Policy and might therefore refuse to advise a client who required assistance in acting against another solicitor.

(i) Choice of insurance provider

5.25 The OFT compared the requirement for all Scottish solicitors to obtain their professional indemnity insurance cover under the Master Policy with arrangements in other jurisdictions, such as England and Wales where solicitors could choose their insurer from a list maintained by the Law Society of England and Wales.

5.26 It was not clear however that the apparent benefits of the arrangements in England and Wales, in terms of greater freedom to solicitors to seek insurance directly from an approved pool of insurers, could similarly be achieved in the context of the much smaller solicitor profession in Scotland. In the course of its investigation the OFT had not received representations from any Scottish law firm alleging that their ability to compete was restricted by the current arrangements. The OFT concluded that it was unlikely that there was strong and compelling evidence that the decision by the Law Society of Scotland to maintain in force the Master Policy arrangements had the effect of preventing, restricting or distorting competition.

(ii) Impact of good claims records on premiums

5.27 Having considered the Master Policy guidelines and premium documentation, the OFT was satisfied that under the arrangements then in place the premiums set for professional indemnity insurance did take account of the relative levels of risk associated with different sized law firms, and the level of expertise provided by the number of partners within the firm. It appeared to the OFT that bigger practices paid more in premiums; and those practices with a high ratio of partners to non-partners paid less than practices with very few partners (and therefore more limited supervision or expertise). Most importantly, a discount or penalty was included in the calculation of premium depending on the practice's claims record. Thus firms with a good claims history were eligible to receive a premium discount, whereas firms with a poor claims history would pay a higher premium.

5.28 The OFT noted from the information provided that the Law Society of Scotland had in the past regularly reviewed and increased the impact of a firm's claims record on the level of premium payable under the Master Policy. The Society had also expressed an intention to continue reviewing that in the future. The OFT encouraged the Society to continue to do so to ensure that the claims record of a solicitors' firm was adequately reflected when premiums were set under the Master Policy.

(iii) Alleged refusals by solicitors to provide services

5.29 The OFT considered lastly whether the alleged mutual interest of Scottish solicitors in avoiding claims on the Master Policy might be resulting in a refusal to supply services where the client required assistance in acting against another solicitor.

5.30 While the OFT was aware of instances of complainants reporting difficulty in finding a solicitor to represent them, the OFT did not have sufficient evidence to establish that an alleged mutual interest of Scottish solicitors in avoiding claims under the Master Policy was a significant factor in a solicitor's decision not to represent a client. In the absence of such evidence the OFT considered that any difficulties experienced by legal services clients in obtaining representation ought to be considered as an access to justice, and not a competition, issue.

Conclusion

5.31 The OFT noted that the Law Society of Scotland had reviewed on a number of occasions the appropriateness of its arrangements for professional indemnity insurance and encouraged it to continue to conduct such reviews regularly with a view to ensuring that the arrangements in place were those that minimised restriction to competition while ensuring that solicitors had adequate professional indemnity insurance. Having reviewed the extensive information provided by the Law Society of Scotland, the OFT announced on 11 February 2005 that it had decided to close its investigation.

(d) Legal professional privilege

5.32 Lawyers could not be compelled in court to disclose legal advice which they had given to their clients. The Code of Conduct for Solicitors holding Practising Certificates issued by the Law Society of Scotland provided that the observance of client confidentiality was a fundamental duty of solicitors (rule 4). That principle was recognised by the courts as being essential to the administration of justice and to the relationship of trust which had to exist between solicitor and client. Legal professional privilege was a privilege which belonged to the client, rather than to the solicitor or advocate, and affected advice as well as litigation.

5.33 A similar privilege did not however apply to other professions, who complained that there was not a level playing field. In the White Paper "The Future of Legal Services : Putting Consumers First" published in October 2005 the UK Government indicated that it did not at that stage propose to extend legal professional privilege to include communications between a particular client and non-lawyer members of a firm providing legal and other services to the consumer (see chapter 6).

Competition issues

5.34 Where the subject of exchanges between clients and their legal advisers was advice that could equally be provided by a member of another profession, the OFT believed that there was a case on efficiency and competition grounds for either a reduction in the scope of privilege of legal advisers or a limited extension of privilege to others in order to remove the distortion of competition that favoured the lawyer. An example was tax advice where accountants felt themselves at a disadvantage to lawyers.

Conclusion

5.35 The issue of whether privilege should be extended to others than lawyers was beyond the scope of the report. The balance of opinion within the Group was that the competition argument for getting rid of legal professional privilege did not seem particularly strong. Following consultation in England and Wales, the Department for Constitutional Affairs decided for its part that there should be no alteration to the scope of legal professional privilege, that there was no evidence that the existing privilege was significantly distorting the market in favour of lawyers and that the drawbacks in terms of public interest would outweigh the removal of any minor distortions that may exist. With the exception of the OFT, the Group concluded that there was not a strong competition argument for getting rid of legal professional privilege. Solicitors should not be compelled in court to describe the legal advice they have given their client; though this meant that there was not a level playing field, the privilege seemed necessary for the adversarial system to work.

(e) Solicitor advocates

5.36 Until 1990 solicitors were able to appear only before the district and sheriff courts and only advocates were permitted to represent clients before the supreme courts. The Law Reform (Miscellaneous Provisions)(Scotland) Act 1990 introduced a right of audience in the supreme courts in Scotland (as well as in the House of Lords and the Judicial Committee of the Privy Council) for solicitors who could satisfy the Council of the Law Society of Scotland about both their professional conduct and reputation and their competency in the practice and procedure of the Supreme Courts. Solicitors who wished to practise as solicitor advocates also required to pass an examination.

5.37 The reform was introduced as part of the then Government's policy of increasing competition in the provision of legal services and improving consumer choice, and was intended to promote greater choice for the public as to whom they could choose to represent them, while at the same time maintaining the quality of service provided.

5.38 The first solicitor advocates ( i.e. solicitors with extended rights of audience) were admitted in May 1993. As at January 2006 there were 192 solicitor advocates with 108 practising criminal law, 82 practising civil law and 2 practising both criminal and civil law.

Competition issue

5.39 Solicitor advocates were not permitted to appear in the same case as advocates by virtue of a rule of the Faculty of Advocates which prohibited "mixed doubles" (considered in section B of this chapter). The Society's Rules of Conduct for Solicitor Advocates 2002 also provided that "A solicitor advocate may not accept instructions on any basis which would deprive him of the responsibility for the conduct of the case…". That rule might be construed as preventing a solicitor advocate from appearing with senior counsel, as in such circumstances the solicitor advocate might not be regarded as having responsibility for the conduct of the case.

5.40 The Law Society of Scotland did not perceive the rule to have the effect of barring solicitor advocates from combining with advocates, though the rule had not been tested in practice.

5.41 An equivalent rule applied to advocates which stated "An advocate may not accept instructions on any basis which would deprive him of responsibility for the conduct of the case or fetter his discretion to act (in consultation with the solicitor and the client) in accordance with his professional judgment and public duty." ⁵³

Conclusion

5.42 The Scottish Consumer Council, the Office of Fair Trading, the Scottish Legal Aid Board and the Law Society of Scotland believed there was a strong case for solicitor advocates to be able to appear with advocates and for both of these rules to be modified for the avoidance of doubt. The Faculty of Advocates disagreed and its views on this issue are set out more fully below.

B. Faculty of Advocates

(a) Restriction on 'mixed doubles'

5.43 The Faculty's rule ⁵⁴ against "mixed doubles" prevented an advocate appearing with a solicitor advocate in the same case.

5.44 Research was commissioned by the former Scottish Office to assess the impact of the introduction of solicitor advocates. The research sought to establish the extent to which the policy objectives of widening consumer choice in the market for legal services, while maintaining quality of service, were being maintained. The reports and research findings summaries published in 2000 ⁵⁵ addressed among other issues the impact of the Faculty's rule against "mixed doubles". A summary of relevant findings from that research is at annex C.

Rationale for the restriction

5.45 The justifications advanced for the rule were (a) that advocates and solicitor advocates were regulated under the different regulatory codes of the Faculty and the Law Society of Scotland respectively (the appearance of an advocate and a solicitor advocate in the same team might therefore present possible difficulties, if for example the handling of a case by a mixed team were to be the subject of a complaint either by the Court or the client); and (b) the need to preserve choice and access to justice over the long term, for the reasons identified by the Scottish Office research mentioned in Annex C.

5.46 The Faculty agreed that the introduction of "mixed doubles" could have the long term effect of reducing choice and access to justice, and that the differences between the roles of solicitor advocates and advocates and the regulatory codes applicable to them could give rise to difficulties if they were to appear together as part of the same team.

5.47 The Faculty provided some further explanation of the latter point. A solicitor was the client's agent and had responsibility, on the client's behalf, for the management of the case. He would be responsible, for example, for precognoscing witnesses, for dealing with the offices of Court, and for advising the client on the choice of an advocate. Advocates however were free to concentrate on the presentation of the case. The Faculty saw this as a logical and practical division of responsibilities, and noted that when a solicitor advocate appeared, he would often in practice be instructed by someone from his own firm. The function of the person performing the advocacy in the case was not a duplication of the management and administrative functions performed by the solicitor. In every case, these distinct functions required to be performed, whether by the same person or by different persons. If a case justified the attention of two advocates, the Faculty believed that it was essential that both of them devoted themselves fully to the presentation of the case and that one of them was not also trying to perform the functions of instructing solicitor.

5.48 The Faculty recognised that the solicitor's role in advising the client on the choice of an advocate was an important one. Court proceedings were often of critical importance to the personal lives and businesses of clients. Advocacy was a specialised skill and most clients were not in a position to assess the suitability of the person who was going to present the case on their behalf. The client relied on his solicitor to give him wholly impartial advice as to the respective merits of representation by a solicitor advocate on the one hand or an advocate on the other, and on the selection of the advocate or advocates to be instructed for the case. The Faculty maintained that a solicitor advocate, or a solicitor in a firm which included solicitor advocates, inevitably faced a potential conflict of interest in advising his client in relation to this ⁵⁶.

5.49 The Faculty believed that the playing field between a solicitor advocate and counsel was not a level one. Solicitor advocates who practised in the Supreme Courts, had the freedom, as did all solicitors, to act or to decline to act for a particular client. In practice they also had power to pick and choose which cases, or which parts of cases, they would conduct themselves, and for which cases they would instruct counsel or another solicitor advocate. While a solicitor advocate had responsibilities in respect of the cancellation of instructions ⁵⁷, the Faculty argued that it was implicit in those rules that he might, provided he observed them, cancel instructions which he had previously accepted. By contrast, in accordance with the cab-rank rule advocates had to accept any instructions to appear in court, subject only to the qualifications set out in the Guide to Professional Conduct, and might withdraw from acting only in circumstances where it would no longer be proper for them to continue to act. While solicitor advocates were required to accept that it was the responsibility of the Council of the Law Society of Scotland to make rules to secure that any person wishing to be represented before a court by a solicitor advocate was so represented ⁵⁸ where reasonably practicable, the Faculty did not believe that this rule replicated the cab-rank rule as it was observed by members of Faculty.

5.50 Should "mixed doubles" be permitted, the Faculty anticipated that difficulties could arise from the differences between the roles of solicitor and advocate. It would be anomalous that the solicitor member of the team could speak to witnesses to fact ⁵⁹ while the advocate could not. There would be a risk in the Faculty's view that the solicitor advocate would be distracted from his role in the advocacy team by the expectation that he would be available to speak to clients and witnesses. Acute difficulties could arise in circumstances where there was a difference of view as to the proper conduct of a case (and such issues could arise at any stage in a litigation). At present, if a solicitor instructed senior and junior counsel, the respective roles and responsibilities of senior and junior counsel and the instructing solicitor were well understood. If there was a difference of view between senior and junior counsel as to the propriety of a particular course of action, it could be resolved immediately by reference to a Faculty office-bearer. There was no equivalent mechanism for resolving differences of view between an advocate and solicitor advocate instructed as part of the same team. If senior counsel was not content with the assistance provided by junior counsel, he might take the matter up with the instructing solicitor, who might withdraw the instructions from junior counsel. There would be obvious difficulties if the instructing solicitor, or a member of his firm, was also acting as "junior counsel".

Society of Solicitor Advocates

5.51 The Scottish Executive invited the Society of Solicitor Advocates to comment on this restriction. The main points made by the Society were :

• A solicitor advocate could provide a client with the benefit of continuity of experience as the solicitor advocate would have handled the case from the outset and built up a detailed knowledge of it. These benefits were diminished by the "mixed doubles" rule which meant that the solicitor advocate was unable to appear in court in the same team as Senior Counsel. The Society believed that it was not in the interests of the client to have to engage junior counsel in such circumstances;
• The rule prevented solicitor advocates from gaining experience by appearing in Court in the same team as senior counsel;
• Removal of the rule would extend choice of representation for the users of legal services; and
• Mixed teams of barristers and solicitor advocates appeared in the courts in England and Wales without apparent problems.

5.52 The Society's letter setting out its views is at annex D. The Faculty commented on that letter as follows :

• The Faculty believed that the Society's point about continuity of representation was overstated. Continuity of representation might be secured by instructing the same counsel for various stages of a case. On occasion, the counsel of choice could not appear at a particular stage in the case because of a prior or overriding commitment. The Faculty thought that this would be equally a problem for any solicitor advocate who was practising with any degree of regularity in the Courts. In the Faculty's view it was a mistake to believe that the accumulated knowledge of the solicitor was lost to the client if he instructed counsel. It was his responsibility to ensure that counsel was fully briefed. The solicitor would in any event often be present in court to instruct counsel. The client was not "deprived of his services" simply because he was in the second row instructing counsel rather than sitting in the front row presenting the case;
• The respective roles and functions of the advocate (whether solicitor advocate or counsel) and solicitor needed to be kept in mind when addressing the issue. The solicitor was his client's agent and had full responsibility on his client's behalf for the management of the case, including taking instructions from the client, precognoscing witnesses and ensuring their attendance, and dealing with the offices of Court. A variety of matters might demand his attention in the course of the preparation for and conduct of any sort of court hearing. By contrast, counsel, in order to do his job effectively, had to focus solely on the presentation of the case. The demands which senior counsel might make of a junior were quite different from the functions which the instructing solicitor was called upon to do. They might include researching the law, drafting relevant court documents, preparing particular aspects of the case for the purposes of its presentation, and noting and analysing the evidence. In a debate or appeal, the junior might be required to make the first speech. Neither senior nor junior counsel had any contractual relationship with the client and both were free to focus on the presentation of the case. The anomalous position if a solicitor advocate were to appear as "junior counsel" would be apparent; and
• The Society's letter emphasised the potential benefits which solicitor advocates might obtain by learning from participation with senior counsel in presenting a case. The Faculty agreed with the Society that skill in advocacy was enhanced by experience in advocacy. A court practitioner was constantly learning not only by doing, but also from opponents and by seeing other people at work. A solicitor advocate had available every opportunity to practise advocacy and did not need to appear with a senior to do this.

Competition issues

5.53 The practical effect of the rule against "mixed doubles" was to avoid regulatory complications, but more importantly to prevent some 470 advocates and 190 solicitor advocates, whose expertise could be very similar despite the difference in regulatory code, from appearing together as part of the advocacy team in the same case.

5.54 The Office of Fair Trading believed that such a rule clearly restricted the freedom of both advocates and solicitor advocates and by limiting the opportunity available to solicitor advocates to gain experience of higher court work might be an unnecessary restriction on competition.

5.55 With regard to redress, the OFT suggested that it should be sufficient for each professional to identify to the client the professional body by which he or she was regulated. That would ensure that the client was aware to which body or bodies he should turn if an issue of misconduct arose. The OFT pointed out that that would be in line with the recent draft European Commission Directive on Services that called on Member States to ensure that all service providers provided this information to clients. (This approach would also be relevant if a single body were to be set up with responsibility for dealing with complaints from all users of legal services.) In any event the OFT found it difficult to see how the hindering of professional collaboration between advocates and solicitor advocates could be justified. The Scottish Consumer Council agreed with the OFT's views on this issue.

5.56 With regard to specialisation, the Faculty's argument suggested that current structures, and in particular, self-employed advocates within Faculty, were a necessary pre-condition. While the OFT entirely agreed that specialisation might raise quality and enhance efficiency, and thus benefit consumers, the question that the prohibition on mixed doubles (and on partnerships between advocates) raised was whether the prohibition was necessary to achieve that efficiency. Permitting advocates who wished to practise alongside solicitors in either mixed doubles or in partnership to do so, would not in the OFT's view deprive clients of the benefits of specialisation. In the legal profession in other jurisdictions, and in other professions, where no such prohibition was imposed, specialisation emerged in response to client needs. Indeed within the legal profession in Scotland, as the Faculty pointed out, the solicitor advocate represented an example of such specialisation.

Conclusion

5.57 The Scottish Consumer Council, the Office of Fair Trading and the Law Society of Scotland noted the arguments advanced by the Faculty in support of this restriction, but believed that the rule had a negative impact on competition in the provision of advocacy services. Except for the Faculty, the Group considered that it would be in the interests of users of legal services for the rule to be withdrawn. Research previously carried out by the Scottish Office suggested it was at least possible over the long run that the abolition of the mixed doubles rule might weaken the bar and have an adverse impact on choice and access to justice, particularly for the less well off. If the rule were to be abolished, it might be necessary to consider safeguards to secure access to justice.

(b) The "Cab rank" rule

5.58 The market for advocates' services operated on the basis that the client was free to select the advocate of his choice, though in practice the client would usually choose an advocate on the basis of the advice of his instructing solicitor.

5.59 A cardinal principle of the Faculty was that an advocate could not choose his clients. Provided that a reasonable fee was tendered, an advocate might not refuse to do any work which was sent to him except upon reasonable cause, for example because he had already been instructed to appear in another court. This duty, the "cab rank" rule applied to all practising members of the Faculty of Advocates. The Guide to the Professional Conduct of Advocates stated the rule to be that : "an advocate may not pick and choose between clients according to his personal preference, or refuse to act for a client for whom he is otherwise professionally at liberty to act." ⁶⁰. The rule was also a rule of law and not merely a rule of professional practice ⁶¹.

Competition issues

5.60 The issues which the Group considered in relation to the "cab rank" rule were : (a) whether its existence inhibited the development of specialism; (b) whether the arrangements for policing the operation of the rule were adequate; (c) whether it required advocates to practise only as sole practitioners; and (d) transparency as to how the rule was operated and whether it actually worked in practice in the way it was supposed to.

5.61 It could be argued that the existence of the rule inhibited the development of specialisms because advocates had to be prepared to accept any kind of case that came to them. By and large advocates were generalists who had traditionally been regarded as being able to deal with the full range of business which came to them; advocacy itself might be regarded as a specialism. Specialised experience could certainly be identified within the Faculty however and the Faculty's Guide to Professional Conduct required an advocate to inform an instructing solicitor if a client would be better served by another advocate.

Rationale for the restriction

5.62 The rule was intended to be a public interest safeguard which ensured litigants always had representation in a case in the Supreme Courts, where the litigant could pay the advocate's fee or was in receipt of legal aid . If one advocate was unable to take the case, the cab-rank rule ensured that another advocate would be available to take over.

5.63 The Faculty believed strongly that the cab-rank rule operated in the public interest and noted that the constitutional importance of the rule had been recognised at the highest judicial level ⁶²:

"The starting point must be a recognition of the role of the advocate in our system of justice. It is fundamental to a just and fair judicial system that there be available to a litigant (criminal or civil), in substantial cases, competent and independent legal representation. The duty of the advocate is with proper competence to represent his lay client and promote and protect fearlessly and by all proper and lawful means his lay client's best interests. This is a duty which the advocate owes his client but it is also in the public interest that this duty should be performed. The judicial system exists to administer justice and it is integral to such a system that it provide within a society a means by which rights, obligations and liabilities can be recognised and given effect to in accordance with the law and disputes be justly (and efficiently) resolved. The role of the independent professional advocate is central to achieving this outcome, particularly where the judicial system used adversarial procedures. … the professional rule that a barrister must be prepared to represent any client within his field of practice and competence and the principles of professional independence underwrite, in a manner too often taken for granted, this constitutional safeguard."

The rule ensured that an advocate could not decline to represent a particular client because the advocate disapproved of the client or the client's views, or because the advocate perceived some personal disadvantage in acting for the particular client ( e.g. because the opposing party was influential or powerful). For example, in one early case where the Lord President of the day was one of the parties to the litigation, the Court ordered an advocate who had declined to act for the other party to accept the instruction. The rule operated within a context in which advocates were providing referral services on the instructions of solicitors and other qualified professionals. The Faculty did not consider that the cab-rank rule could reasonably be applied to a professional who offered services directly to lay clients.

5.64 The Faculty was not aware that the arrangements for ensuring adherence to the cab-rank rule gave rise to any particular difficulties in practice. As with all rules of professional practice, there was no direct or immediate policing of the cab rank rule, but any failure to abide by the rule could be the subject of a complaint by a solicitor or his client which would render the advocate liable to disciplinary action. Advocates accepted instructions in accordance with the Guide to Professional Conduct. Where an advocate had a reason for declining instructions, this was communicated to the instructing agent through the advocate's clerk and the matter was resolved by the solicitor instructing an alternative advocate. On occasion the solicitor might be able to accommodate the difficulty which the advocate of choice had ( e.g. by re-arranging a diet, or accepting that a piece of work would not be done as quickly as initially indicated).

5.65 As regards the existence of specialism within the Bar, the Faculty did not maintain data about the degree of specialism of its members, but certain broad areas of specialised practice existed. For example, a body of advocates practised exclusively or almost exclusively in the criminal courts, and others in point of fact specialised in family law, personal injury law, planning law and commercial law, among other subjects. Moreover, individual members might have more specific specialisms arising from their particular interests and experience. There were special interest groups within the Faculty, such as a planning, local government and environmental law group, a commercial law group, an advocates personal injury law group. These groups arranged seminars (which were not normally limited to members of the group) and provided other opportunities for advocates to enhance their skills and knowledge in particular areas of practice. Members were free to disclose their areas of particular interest and to include these in the Faculty Directory. Clerks were well aware of the experience and interests of the advocates in their stables and were accordingly in a position to discuss this with solicitors and others who wished to instruct counsel. The Faculty was not convinced that the cab-rank rule in fact inhibited the development of specialist expertise. Any limitations in the extent to which specialist expertise had developed were probably attributable to the inherent nature of practice in a relatively small jurisdiction such as Scotland rather than to the cab-rank rule. In any event, the rule was in the Faculty's view sufficiently justified by the public interest considerations identified above.

Office of Fair Trading

5.66 The OFT did not object to the cab-rank rule on competition grounds, but did question whether the operation of the rule was dependent upon advocates continuing to practise as sole practitioners. While it might be the case that advocates in partnership might not be subject to the cab-rank principle, the OFT believed that the principle would continue to apply to advocates in independent practice and might apply also at the level of the partnership.

Scottish Consumer Council

5.67 The Scottish Consumer Council thought that it was not clear how the cab rank rule operated in practice. The procedures involved were not sufficiently transparent in the Council's view : in particular the circumstances under which an advocate might refuse to take on a case and the action a client might be able to take where that happened. While in theory the rule appeared to be in the public interest, the consumer benefits were less clear in practice and the Scottish Consumer Council would like to see greater transparency in how the rule was operated and enforced.

(c) Professional indemnity insurance

5.68 Indemnity insurance was effected by the Faculty for its members on a block basis ⁶³.

5.69 The OFT observed that the main competition issues were likely to be similar to those considered in its review of the Law Society of Scotland Master Policy (see above). It would be for the Faculty to review its current indemnity arrangements, having regard to the conclusions reached in the OFT's investigation of the Law Society of Scotland's Master Policy.