In the Media

English legal plan sparks crime fears

PUBLISHED July 16, 2007

Plans to allow English law firms to take on outside investors would increase the risk of money laundering and could even lead to the profession being used by criminals as a Liberian-style flag of convenience, a top official at Scotland?s legal regulator has warned.

Douglas Mill, chief executive of the Law Society of Scotland, said he was worried the legal services bill going through the Westminster parliament could prompt a southern migration of Scottish law firms.

Mr Mill?s comments highlight tensions between the Scottish and English legal professions over the so-called ?Tesco Law? bill, which would allow English lawyers to go into business with other professionals, take on private capital and float on the stock market.

Mr Mill said the plan could lead to a ?downstream disaster? if people from outside the profession had power over client money with little or no supervision.

?There hasn?t been any consideration given to how these people are regulated or whether they are even regulatable,? Mr Mill said. ?[It] could end up like the Liberian flag on your merchant shipping: ?We don?t do health and safety here?.?

Mr Mill said the liberalisation of English lawyers would probably force the Scottish profession to make similar changes or else face the prospect that Scottish firms would register in England to allow them to work under the new rules there. That could accelerate the disappearance of law firm offices from rural Scottish communities, further starving them of legal services.

?It?s a piece of legislation 450 miles away which is going to have an impact on Scotland, without any research on the Scottish marketplace,? he said.

Mr Mill?s comments come amid a tussle in Westminster over rules governing so-called alternative business structures under which lawyers will be able to team up with outside investors and other professionals such as accountants and architects.

The English profession is broadly in favour of the proposals and has defended them against criticisms the government has not put in place sufficient safeguards to ensure those involved in alternative business structures are ?fit and proper?.

The Law Society of England and Wales dismissed Mr Mill?s concerns, saying the Scottish Law Society had always taken an ?unjustifiably negative attitude? towards the proposals.

?There are comprehensive provisions in the legal services bill to ensure fitness to own,? said Desmond Hudson, chief executive of the English Law Society. ?We do not regard their concerns about money laundering as persuasive.

The Scottish profession, which Mr Mill described as collegiate, has been accused of being cosy, uncompetitive and resistant to change.

In May, Which?, the consumer body, asked the Office of Fair Trading to investigate Scottish legal profession restrictions on business structures and access.