February feature: On-going regulatory reform

This month’s feature looks at a few of the jurisdictions currently engaging in a review of the legislative framework for the regulation of legal services. These reviews cover issues ranging from a restatement of the objectives of lawyer regulation through to a fundamental redesign of the architecture of regulation and the roles and responsibilities of the organisations involved.

On 8th February the Equalities and Human Rights Committee of the Scottish Parliament published the Stage 1 Report on the Regulation of Legal Services Scotland Bill. The overarching policy objective of the Bill, which was first published in April 2023, is to provide a “modern, forward-looking regulatory framework for Scotland that will best promote competition, innovation and the public and consumer interest in an efficient, effective legal sector.” The Bill is also intended to “implement a number of key recommendations from the ‘Independent Review of Legal Services Regulation in Scotland’ by Esther Roberton”.

As suggested above the bill comes on the back of significant research and review into the regulation of the legal industry in Scotland, chiefly, the Fit for the Future – Report of the Independent Review of Legal Services Regulation in Scotland, published in 2018. The most significant recommendation to come out of this report was the recommendation for the creation of an independent regulator of the legal profession, fully separating regulatory powers from the representative professional bodies.

The Bill did not follow the Roberton Review’s recommendations for a new independent regulator but instead proposed an adaptation of the existing framework of regulation by the Law Society of Scotland and Faculty of Advocates. The main changes proposed by the Bill are:

  • The setting up of a framework that assigns regulators a category 1 or category 2 status depending on the extent to which the community they regulate deals with the public,
  • The introduction of direct oversight powers for Scottish Ministers to review the regulatory performance of regulators and intervene,
  • The updating of the legislation on the regulatory objectives and professional principles for those providing legal services,
  • The introduction of “entity regulation” for legal businesses,
  • Updated provisions on alternative business structures (ABSs), increasing the threshold for non-lawyer ownership to 49% (previously it was limited to 25% but had never been implemented)
  • Making it an offence to use the title “lawyer” with intent to deceive in connection with legal services to the public for a fee, gain or reward.

The Bill is now making its way through the Scottish Parliament. The Stage 1 report on the Bill by the Equalities, Human Rights and Civil Justice Committee of the Scottish Parliament which was published on 6 February takes note of the conflicting positions that have been expressed by the legal profession and consumer groups and others, in relation to the creation of a new independent legal regulator for Scotland. Its report observes that the Bill as proposed, which is an adaptation of the existing framework of self-regulation by the Law Society of Scotland and Faculty of Advocates, does not appear to satisfy anyone. The Committee however did express strong views in relation to the extensive powers to take over regulation directly in certain circumstances, that have been proposed for Scottish Ministers in the first version of the Bill.

Read the Bill here.

British Columbia

In Canada, The Government of British Columbia has postponed proposed legislation which would include the introduction of a single legal regulator, including licensing for lawyers, notaries public, and paralegals, until spring 2024.

An important driver of this legislation is the creation of a single regulator to oversee different types of legal service providers, not just BC lawyers but also notaries and paralegals. The Law Society of British Columbia had been preparing to license paralegals through its innovation sandbox initiative but the BC government deferred the Law Society’s request to enact amendments allowing immediate paralegal licensing pending the introduction of new legislation and a final decision on the new regulatory architecture.

Learn more about British Columbia’s regulatory change here.


New Zealand

The reform dynamic in New Zealand is slightly different. The impetus for reform came from the Law Society itself which commissioned an Independent Review Report in 2021.

The Law Society responded to the proposals of the Independent Review, including the proposal for new independent regulator. The Society acknowledged the concerns that its current structure, as both a regulatory and membership body might create, including reluctance among NZ lawyers in accessing its health and wellbeing services. The Law Society overall submitted qualified support for the Review’s recommendations to the then Minister of Justice at the end of August 2023.

As legislative change is required to implement such a change, it is now up to the new Government to determine if legislative reform is warranted and what form it might take. Meanwhile, the Law Society of New Zealand is taking steps to improve the financial sustainability of the representative function of the organisation.

Learn more about New Zealand’s reform progress here.


Is your jurisdiction undertaking a review of the legal regulatory framework? If so, let us know and join the conversation – contact@iclr.net

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