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THE MONOPOLIES AND MERGERS COMMISSION Services of Solicitors in Scotland A Report on the Supply of Services of Solicitors in Scotland in Relation to Restrictions on Advertising Presented to Parliament in pursuance of Section 83 of the Fair Trading Act 1973 Ordered by The House of Commons to be printed 28th July, 1976 LONDON HER MAJESTY'S STATIONERY OFFICE £1.15 net 558 ISBN 0 10 255876 0 Members of the Monopolies and Mergers Commission J G Le Quesne Esq QC (Chairman) Sir Alexander Johnston GCB, KBE1 (Deputy Chairman) E L Richards CBE, MC, TD2 (Deputy Chairman) G F Ashford Esq QBE R G Aspray Esq Professor T Barna CBE Sir Dallas Bernard Bt, Fcis2 Lady Bowden Sir Max Brown KCB, CMC1 J S Copp Esq Sir Roger Falk QBE John Gratwick Esq1 Laura Margaret, Lady Hall2 Dr Francis Edgar Jones MBE, FRS2 T P Lyons Esq Mrs Caroline M Miles R G Opie Esq CBE C T H Plant Esq QBE Lewis Robertson Esq CBE1 S A Robinson Esq J S Sadler Esq Miss Rita Stephen MBE Professor Harry Street2 Professor B S Yamey CBE2 Miss Y Lovat Williams (Secretary) Wote by the Department of Prices and Consumer Protection: Sir Alexander Johnston completed his term of appointment on 30 April 1976 and Sir Max Brown succeeded him as Deputy Chairman on 1 May 1976. Mr J Gratwick and Mr L Robertson have ceased to be members of the Commission, and Mr C J M Hardie has been appointed a member since the report was signed. 2 These members formed the group which was responsible for this report (see paragraph 2). Contents Chapter Page Introduction ... 1 1 The Law Society of Scotland; solicitors in Scotland ... ... 4 2 Current restrictions on advertising; collective advertising ... 8 3 The views of interested parties 13 4 The views of the Council of the Law Society of Scotland ... 17 5 Conclusions ... ... ... 25 Appendices 1 Rules of the legal profession in other countries ... ... i 2 List of bodies and individuals who provided us with views and information ... ... Iv List of abbreviations Abbreviations and short titles used in the report and appendices are given below: Abbreviations CAB Citizens' Advice Bureau CABx Citizens' Advice Bureaux NACAB The National Association of Citizens' Advice Bureaux The Scottish LAG The Scottish Legal Action Group Short titles The Council The Council of the Law Society of Scotland Our 1970 general report The Monopolies Commission: A report on the general effect on the public interest of certain restrictive practices so far as they prevail in rela- tion to the supply of professional services. (Cmnd. 4463 of October 1970.) The Society The Law Society of Scotland. Introduction 1. On 24 July 1974 the Director General of Fair Trading sent the following reference to the Commission: Fair Trading Act 1973 Monopoly references Solicitors' services and their advertisement The Director General of Fair Trading, in exercise of his powers under sections 47(1) and (2), 49(1) and 50(1) of the Fair Trading Act 1973 (here- after called 'the Act'), hereby refers to the Monopolies and Mergers Com- mission the supply of services of solicitors in Scotland. The Commission shall investigate and report on the questions whether a monopoly situation exists in relation to such supply and, if so: (a) in favour of what person or persons that monopoly situation exists; (b) whether any steps (by way of uncompetitive practices or otherwise) are being taken by that person or those persons for the purpose of exploiting or maintaining the monopoly situation and, if so, by what uncom- petitive practice or in what other way; (c) whether any action or omission on the part of that person or those persons is attributable to the existence of the monopoly situation and, if so, what action or omission and in what way it is so attributable; and (d) whether any facts found by the Commission in pursuance of their investigations operate, or may be expected to operate, against the public interest. The Commission shall, for the purpose of this reference, limit consideration to agreements and practices relating to the advertising by solicitors of their professional services, whereby they conduct .their affairs as mentioned in section 7(2) of the Act. The Commission shall report on this reference within 18 months from the date hereof. (Signed) JOHN METHVEN Director General of Fair Trading Dated this 24th day of July 1974 2. The then Chairman of the Commission acting under Part II of Schedule 3 of the Fair Trading Act 1973 directed that the functions of the Commission in relation to the investigations under the reference should be discharged through a group consisting of six members of the Commission, with Mr E L Richards as Chairman. The names of the members who formed the group are indicated in the list of members which prefaces this report. 1 3. We received certain submissions in writing from the Council of the Law Society of Scotland, the governing body of those supplying the services falling within the reference, and its representatives attended two meetings in Edinburgh for the purpose of discussing these matters with us. 4. We also invited evidence from bodies and individuals who we considered might be interested in the supply of these services. We received a number of submissions and we took oral evidence from the National Association of Citizens' Advice Bureaux. We invited the Council to make suggestions for "bodies from whom we might seek evidence; no such suggestions were received. 5. We informed the Council on 13 March 1975 of our provisional conclusion that a monopoly situation, as defined in section 7 of the Fair Trading Act 1973, existed in favour of solicitors in Scotland in that the total supply of the services covered by the reference was by persons who so conduct their affairs as to restrict competition in that all solicitors in Scotland accept the restrictions on advertising as laid down by the Council of the Law Society of Scotland. The nature of the restrictions is described in paragraphs 28 and 29. In accord- ance with our usual practice we asked the Council for comments on: (a) a detailed statement of actions and arrangements of solicitors in Scotland with respect to advertising restrictions relevant to questions affecting . the public interest; (b) a statement of issues, which, in the view of the Commission, arose out of those actions and arrangements which might be relevant to questions affecting the public interest; (c) a summary of the complaints and criticisms relating to the advertising restrictions which the Commission would be considering. 6. For the purposes of this inquiry we have treated the term 'advertising restrictions' in the same way as in paragraph 215 of our 1970 general report. We regard it as covering practices which are restrictive of (i) advertising and promotion in the commercial sense (ii) canvassing (or 'touting') and forms of self advertisement that might attract business (iii) the dissemination of informa- tion about professional business. We explained to the Council that it was our intention to use this interpretation. We use the term 'collective advertising' to mean advertising undertaken by a professional body on behalf of the profession as a whole; it is thus synonymous with the terms 'corporate advertising' or 'institutional advertising' used by some of our witnesses. We use the term '-individual advertising' to mean advertising by an individual member of a profession or by a firm. The distinction between collective and individual advertising sometimes seems to be regarded as equivalent to the distinction between informative and promotional advertising. This is not so. Collective advertising can be promotional and vice-versa. Indeed, on one view, it is virtually impossible to give information without some overtones of persuasion. 7. Curiously enough there is no authoritative or generally accepted definition of 'touting' in the context of this reference. The term seems however to be used in the sense of canvassing of business by personal contact, with at least a nuance of 'unfair' attraction of such business. An example of the current use is that a solicitor is not 'touting' if he writes to his existing clients informing them of a change in legislation which may affect them and on which they may need legal advice. If, however, he were so to write to others, including the clients of other solicitors, he would be 'touting'. 8. We use the term solicitors to mean both individual solicitors and firms of solicitors, unless the context requires otherwise. 9. We wish to record our appreciation of the assistance given to us by the Law Society of Scotland and by others who have provided us with views and information, a list of whom is at Appendix 2. CHAPTER 1 The Law Society of Scotland; solicitors in Scotland The Society; numbers of, and services supplied by, solicitors in Scotland 10. The Society was established on 1 November 1949 by the Legal Aid and Solicitors (Scotland) Act 1949, and the Society's constitution has effect as if enacted in,that Act. The Society is the professional association and the governing body of the solicitors' branch of the legal profession in Scotland; membership is compulsory. At 31 October 1975 there were 4,262 members of whom 3,661 held practising certificates. Of these 2,600 were in private practice as principals and 400 as qualified assistants with professional firms. 11. Solicitors are general practitioners in the law and offer a wide range of services. Their practice includes general family business; commercial business and agricultural business; conveyancing in connection with the purchase and sale of estates, farms and houses, and commercial and industrial heritable (real) properties of all kinds; the preparation of leases, loan agreements and mortgages; the administration of Trusts (there is no Public Trustee hi Scotland); the preparation of wills and the administration of estates of deceased persons; and assisting the settlement of matrimonial disagreements. Their practice in- cludes such matters as company and commercial law and tax business, or specialised matters such as banking, bankruptcy and liquidation (there is no Official Receiver in Scotland). Their practice also includes services in con- nection with litigation, civil and criminal, including advocacy in those courts where solicitors have a right of audience, namely all the courts of Scotland except the Court of Session (where they have a right of audience only in respect of business dealt with at vacation courts) and the High Court of Justiciary. They appear frequently in important litigations, criminal and civil. 12. The solicitor in Scotland also often acts as a general man of business. The following are examples. Work in connection with buying and selling houses and other types of heritable (real) property, normally done in England by estate agents, is habitually carried out in Scotland by solicitors. A number of Scottish solicitors carry on the administration (factoring) of landed estates and farms; this work in England would normally.be handled by land agents or accountants. A number carry out the function of advising on investment and insurance matters. 13. The Society controls admissions to the Roll of Solicitors in Scotland and issues practising certificates annually. It formulates and enforces rules for regulating the professional practice and conduct of solicitors. In general terms a solicitor in Scotland has two statutory monopolies. First, only a qualified solicitor holding a practising certificate may appear and plead in those courts where he has the right of audience or may practise in the Court of Session, excluding only the rights of party litigants and all members of the Faculty of Advocates (the Solicitors' (Scotland) Act 1933 section 20 and the Solicitors' (Scotland) Act 1949 section 19). Secondly, solicitors in Scotland have a statutory monopoly relating to the preparation of those writs and other matters specified in section 39 of the Act of 1933 excluding the rights therein of members of the Faculty of Advocates. Membership and composition of the Council 14. The Council consists of 40 members directly elected from 13 geographical constituencies together with a maximum of 7 co-opted members; all members of the Council are solicitors. There are at present 6 co-opted members of the Council; these members are appointed for one year but are eligible for re-election and are normally re-elected. The elected members serve for three years and are eligible for re-election. The Council elects a President and Vice- President annually. Under section 20 of the Legal Aid and Solicitors (Scotland) Act 1949 the Council may make rules for regulating the professional practice, conduct and discipline of solicitors. Any such rules require the approval of the Lord President of the Court of Session. Failure to comply with such rules may be treated as professional misconduct. Rules of the Society 15. Rules relating, inter alia, to advertising were made by the Council in 1964 and 1969 (see paragraph 28). Committees concerned with advertising 16. The Council maintains two standing committees which have the primary responsibility for evolving policy in this field. The Professional Practice Committee 17. This Committee has the responsibility of advising the Council as to general standards of professional behaviour and ethics and, on its policies being approved by the Council, of putting them into practice in dealing with individual enquiries or complaints. One of the Committee's duties relates to the application of the existing statutory Practice Rules and the Society's general policy restricting promotional advertising. The Committee also has the function of dealing with complaints which arise, either at the instance of members of the public or between individual solicitors, as to practices which are adopted or devised by an individual solicitor or firm of solicitors. The Public Relations Committee 18. This Committee has responsibility for advising the Council in arriving at policy in order to maintain and improve communication: (i) between the Society (and therefore the profession) and the public at large; (ii) between the Council and individual members of the Society; and (iii) between the solicitor and his client. 19. In general the Public Relations Committee concerns itself with improving the flow of information. So far as the profession and the public are concerned it accepts the need for informative publicity about the range of services offered by the profession. It devises and promotes ways and means whereby such publicity can be undertaken on a collective basis. 20. So far as the Council and the members of the Society are concerned, the Committee maintains a continuing interest in receiving the views of the profession in every field of professional interest. Conversely the Committee conveys to members of the profession information about matters currently being discussed or determined by the Council which are likely to affect their professional lives so as to stimulate reaction, favourable or otherwise. 21. So far as the individual solicitor and his client are concerned, the Committee recognises that some basic understanding of what a solicitor can do and is actually doing is, for both client and solicitor, of the greatest importance in establishing and maintaining mutual trust. It therefore seeks to devise and promote ways and means whereby, in its view, a reasonable flow of information to the client can be maintained. 22. The Council also maintains four other committees, some part of whose activities relates or may relate to advertising. (i) The Legal Aid Committee This standing committee recommends policy on advertising the Legal Aid Scheme. (ii) The Committee on Purchase and Sale of Heritage This ad hoc committee has responsibility for recommending to the Council the policy to be adopted by solicitors in advertising heritable property for sale in Scotland on behalf of clients. (iii) The Committee on the Future of the Profession This ad hoc committee is charged with the duty of considering the future pattern and development of the profession, its relations with other professions, its ability to adapt to modern business methods and machinery and its capacity to meet changes in the needs of the community. (iv) The Committee on Law Centres This ad hoc committee was constituted to advise the Council on the policy to be adopted with regard to legal advice centres and law centres. 23. Most of the above mentioned committees of the Council largely consist of members of the Council itself with occasional co-options of non-Council members. The Committee on the Future of the Profession, however, consists to a material extent of co-opted non-Council members. 24. The committees vary in size from 12 to 18 members and are appointed annually. The standing committees meet not less than once a month and are each serviced by a small full-time department presided over by a Deputy or Assistant Secretary to the Society. 25. The committees' recommendations are contained in printed Minutes which are circulated to the entire Council and require its approval, usually at the immediately succeeding monthly Council meeting. A summary of principal recommendations is printed and distributed to all members of the Society with the Society's monthly Journal. ' 26. The fundamental principal observed by all these committees is that there is a distinction to be drawn between conveying essential information to the public about the profession of solicitors as a whole on the one hand and promoting the business of a particular firm of solicitors or an individual solicitor on the other. How the Council obtains the views of the profession 27. As mentioned above, the Council's Public Relations Committee has the responsibility of promoting communications between the Council and individual members of the Society. In this it reflects the importance which the Council attaches to sounding out the profession at large on matters of policy. The Council told us that this is achieved in a number of ways. These include the f ollowing: (i) Four years ago the Council decided to hold its Annual General Meeting in a conference setting. More time was made available for discussion of matters of general interest at the formal General Meeting and provision was made for simultaneous seminars on subjects of more specialised concern. (ii) Individual local faculties or societies of solicitors have been encouraged to submit resolutions, motions and topics for consideration at the Conference and Standing Orders have been revised and re-revised to take account of the response to this approach. (iii) The Council has also recently completely redesigned and expanded its monthly Journal. It frequently contains controversial views in contribu- tions and correspondence in addition to more traditional articles and general information. (iv) The views of individual members are frequently solicited by the Council by direct communication through the Society's secretariat on specific matters of importance, through the agency of local societies and faculties or, more informally, by individual Council members in their respective constituencies. (v) The secretariat in addition requires to deal increasingly with correspon- dence from individual solicitors. This correspondence includes the expression of comments and opinions not only on the activities of the Law Society in particular but also in relation to legal practice in general. The secretariat in addition receives a substantial volume of enquiries from solicitors mainly about administrative matters. This correspondence is referred to the appropriate committee for attention. (vi) The Council has promoted in recent years a series of study weekends and seminars devoted to general or specialised aspects of law and professional practice at which the views of members attending are sought and often forcibly given. Although it is not their primary purpose, these seminars furnish most valuable intelligence to the Council on a great variety of topics.
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