Brian Inkster

Alternative business structures (ABS) in Scotland being kicked into the long grass was a possibility raised yesterday. This was at an online event organised by the Law Society of Scotland: ‘Policy perspectives: Regulation of legal services reform’.

Law Society president Patricia Thom; convener of the Regulatory Committee, David Gordon; and executive director of external relations, Kevin Lang, provided a session looking at the Regulation of Legal Services (Scotland) Act 2025 as we enter the implementation phase.

ABS were called that by the event panel. Not Licensed Legal Service Providers (LLSP) as the Act calls them. However, ABS has become the ‘Hoover’ word.

The 2025 Act reduces the requirement of 51 per cent ownership of an ABS by solicitors to 0 per cent. However, Scottish ministers still require to bring that provision into force. That is also the case with the many other provisions of the Act. We were told that was unlikely to happen before 2026.

The original 51 per cent ownership provision was contained in the Legal Services (Scotland) Act 2010. However, it never saw the light of day. The Law Society of Scotland and the Scottish government spent 15 years devising a scheme. That was put on hold in 2022, when it was announced that a Regulation of Legal Services Bill was to be introduced.

It was not for the Law Society of Scotland to pause the process to consider what effect possible future legislation may have on the existing unimplemented legislation.

When the amendment to zero per cent solicitor ownership was made, I hoped that: “When the Regulation of Legal Services (Scotland) Bill is enacted the Law Society of Scotland will have run out of excuses and will start accepting applications for licensed legal services providers without further ado. At least now they do not have to consider the question of majority ownership when so doing.”

However, we discovered at the event yesterday that this might not in fact be the case. It looks as though ABS in Scotland could be kicked into the long grass yet again.

A delegate, in the chat, asked: “In looking at the opening up of ABS – when will this be implemented to allow broader external investment in legal firms?”

Kevin Lang replied: “We are still working our way through the (substantial) changes made to the ABS requirements which will mean we will need to revise our regulatory scheme which will then need to go back to the ScotGov and Lord President for approval. We hope to say more on this soon.”

Really?! There are only five sections in the 2025 Act (sections 84 to 88) dealing with ABS. These, together, could not be classed as “substantial” compared to what was contained in the 2010 Act. Significant, perhaps, is the reduction from 51 per cent solicitor ownership to zero per cent. However, the possibility of such percentage changes were foreseen in the 2010 Act. That Act allowed for this by order of the Scottish ministers. Thus, the existing regulatory scheme surely covers the position already if it even has to. If not, why not?

The 2025 Act was not necessary to achieve the percentage change. That change might not happen until 2026 at the earliest. I trust that, in the meantime, the Law Society of Scotland, Scottish government and the lord president can work together to revise the regulatory scheme, if such revision is actually required. That should be done before sections 84 to 88 of the 2025 Act are brought into force. This will avoid further delays and reduce accusations of them kicking ABS in Scotland into the long grass yet again.