Multi-national practices (Hansard, 16 October 1990)

HC Deb 16 October 1990 vol 177 cc1102-6 1102

§ 60A.—(1) Subject to the provisions of this section, solicitors and incorporated practices may enter into multi-national practices with registered foreign lawyers.

§ (2) The Council shall maintain a register of foreign lawyers, and may make rules with regard to registration; and, without prejudice to the generality of the foregoing, such rules may include provision as to—

(a) the manner in which applications for registration are to be made;
(b) the fees payable in respect of such applications;
(c) conditions which may be imposed in respect of registration; and
(d) the period for which any such registration is to run.

§ (3) Section 34(2) and (3) apply to rules made under subsection (2) as they apply to rules made under that section.

§ (4) Any foreign lawyer may apply to the Council to be registered as such for the purposes of this section and the Council shall, if they are satisfied that the legal profession of which the applicant is a member is so regulated as to make it appropriate for him to be allowed to enter into a multi-national practice with solicitors or incorporated practices, enter his name on the register.

§ (5) Subject to subsection (6), the Secretary of State may by order made by statutory instrument provide that any enactment or instrument—

(a) passed or made before the commencement of this section;
(b) having effect in relation to solicitors; and
(c) specified in the order,

shall have effect with respect to registered foreign lawyers as it has effect with respect to solicitors.

§ (6) Before making any order under subsection (5), the Secretary of State shall consult the Council.

§ (7) An order under subsection (5) may provide for an enactment or instrument to have effect with respect to registered foreign lawyers subject to such additions, omissions or other modifications as the Secretary of State specifies in the order.

§ (8) No order shall be made under subsection (5) unless a draft of the order has been approved by both Houses of Parliament.".'—[Lord James Douglas-Hamilton.]

§ Brought up, and read the first time.

§ Lord James Douglas-Hamilton
I beg to move, That the clause be read a Second time.

1103

Mr. Deputy Speaker
With this it will be convenient to take Government amendments Nos. 97, 100, 101 and 113 to 115.

§ Lord James Douglas-Hamilton
New clause 22 will be welcomed by the whole House. The Bill already provides for the removal of existing statutory barriers to the formation of multinational practices. The new clause makes it clear that Scottish solicitors are entitled to enter into such practices. More significantly, it gives the council of the Law Society of Scotland powers to regulate such practices.
The House will wish to know that the amendment has been discussed with the Law Society, which indicated its support for the new clause and the policy in general. The new clause places the Council of the Law Society under a duty to maintain a register of foreign lawyers with whom Scottish lawyers are to be permitted to go into partnership. They will be lawyers whose native jurisdiction is regulated to the society's satisfaction.
The new clause is an enabling power rather than a detailed attempt to regulate multinational practices. It creates a flexible framework within which details can be worked out in the light of developments in national legal practice, and thus the Secretary of State is accorded a regulation-making power under subsection (5) to attach existing statutes and statutory instruments to foreign lawyers practising in Scotland or in partnership with Scottish solicitors where he considers that appropriate. That power is to be exercised only after consultation with the Law Society's council and is subject to affirmative resolution in both Houses of Parliament.
I believe that the new clause paves the way for the enhancement of business opportunities for the Scottish legal profession and better services for clients.
The remaining amendments in the group are primarily intended to clarify the position of multi-disciplinary practices in the regulatory framework that governs solicitors. The House will be aware that the Bill already provides for the removal of the existing statutory barriers to the formation of multi-disciplinary practices—those involving solicitors and members of other professional disciplines—and for shifting responsibility for the extent to which multi-disciplinary practices should be permitted to the council of the Law Society of Scotland. That is quite proper, as the solicitor profession in Scotland is very much a self-regulating one, and it should be for the council to decide on practising structures for its members.

§ Mr. Dewar
There is no objection from any quarter with which I have been in touch to the proposals on multinational practices in the new clause, but it would be helpful if the Minister said a little more about them.
I understand that multinational practices contain foreign lawyers who will register with the Law Society of Scotland and who are not necessarily restricted to being lawyers who qualified in another EC country—they can come from any part of the world. Amendment No. 114 defines a foreign lawyer as a person who is not a solicitor or an advocate but who is a member, and entitled to practise as such, of a legal profession regulated within a jurisdiction outwith Scotland".

§ Sir Nicholas Fairbairn
Does foreign in this case include England?

1104 6.30 pm

§ Mr. Dewar
I assumed that it does, for these purposes. No doubt the Scottish National party would take an interest in the matter if its members were present, but unfortunately their enthusiasm for law reform in Scotland ran out some hours ago and they are not here to participate in discussing this relevant point.
For these purposes it is fair to say that a foreign lawyer will be an English lawyer, so an English lawyer can become a partner in a Scottish law firm as long as he is registered with the Law Society of Scotland and it is satisfied with his qualifications and his ability to practise. I am not sure what test the society will apply—perhaps the Minister will tell us.
The English jurisdiction is fairly close to the Scottish one, but it seems that even a Spanish, Australian or Papua New Guinean—I cast no aspersions—could perfectly well become a partner. Presumably the Law Society of Scotland will apply a test of competence in the law of Scotland before such a lawyer is allowed to join a practice. No doubt those matters have been discussed with the Law Society; perhaps the Minister can tell us more.
One of the problems with the Bill, of which even Members who are not connected with the measure will have heard, is the extreme danger of reading it in terms of the words that appear within its covers. Sometimes the Government mean the opposite of what the legislation appears to do. That was exemplified in the case of the multidisciplinary practices, which we are defining in the Bill. I am delighted, incidentally, to see the hon. Member for Tayside, North (Mr. Walker) in his place. Not only does he hold the distinguished office of vice-chairman of the Conservative party in Scotland, but I note that he is acting as parliamentary private secretary to the Under-Secretary of State, a responsibility that he bears with distinction. Perhaps it is now one that substitutes for his vice-chairmanship, which dangles by the proverbial thread.
As the hon. and learned Member for Perth and Kinross (Sir N. Fairbairn) will recall, when we discussed multidisciplinary practices, we were removing the barriers to them. That was the clear message on the face of the Bill, but it emerged that that was not what we were doing at all. We were not inviting the arrival of those practices. The Government had entered into a private agreement with the Faculty of Advocates first, and thereafter rather more publicly with the Law Society of Scotland, to the effect that they would approve any regulations that would ban multi-disciplinary practices. So there were to be none at all in Scotland in the foreseeable future.
There was a moment of high comedy when we were asked not to defeat a certain part of the Bill on the ground that it prevented the Office of Fair Trading from interfering with our affairs, and because that office was being banned from the field, level or otherwise, it would be even harder for multi-disciplinary practices to enter by the side door or the back door.
So, despite the defining of multi-disciplinary practices, the Government, the Committee and everyone else have agreed not to have them. I want to find out whether the same will apply to multinational practices. Although we appear to be removing barriers and giving them the green light, perhaps there is already an agreement not to have them. Can the Minister clear up that point and say a word or two about the MDPs that we are so neatly defining in 1105 amendment No. 114, sub-paragraph (ab)? That may be something of an academic exercise, in view of the arrangements that have been reached, but although the matter was spelt out in Committee, it might be helpful if it were spelt out again on the Floor of the House.

§ Mr. Harry Ewing
I welcome the proposal to have multinational practices. I suspect that one of the great difficulties of pursuing cases on behalf of clients against the background of tragedies such as Piper Alpha and Lockerbie is our lack of experience in working on a multinational basis. But it is also important to warn the people of Scotland of what lies ahead. I look forward to the day when Ross, Harper and Murphy becomes Ross, Harper, Murphy, Ashrap, Gomez and Waleski.

§ Mr. Menzies Campbell
I should like to ask the Minister to be forthcoming about what precisely is conveyed by subsection (4), which reads: Any foreign lawyer may apply to the Council to be registered as such for the purposes of this section. Some distinguished foreign lawyers may find the prospect attractive.
The Council shall, if they are satisfied that the legal profession of which the applicant is a member is so regulated as to make it appropriate for him to be allowed to enter into a multi-national practice with solicitors or incorporated practices, enter his name on the register. One can see circumstances in which the legal profession of which the applicant is a member is so regulated as to ensure that he is a person of good character or financial probity, or that he regularly fulfils responsibilities equivalent to those in Scotland under the solicitors accounts rules. Legal professions may prudently impose such tests on these lawyers, but there appears to be no provision here requiring the council to consider whether they are sufficiently expert in and knowledgeable about Scottish law to be able to enter a professional relationship with Scottish lawyers.
It may be argued that it should not matter whether a person qualified in Spanish law is sufficiently qualified in Scottish law, but partnerships of solicitors attract joint and several liability; so it may equally be argued that before any multinational practice may be created a lawyer coming to it from a foreign jurisdiction should be shown to be well enough versed in the law of Scotland at least to understand the responsibilities of partnership in Scotland.
As I read subsection (4), it is concerned with the way in which the native or the domestic legal system of which the foreign lawyer is a member may be regulated. It is not concerned with whether any such applicant is sufficiently versed in Scottish law to understand the consequences of entering into a partnership with Scottish solicitors. That seems to me to be an omission. Perhaps it is a deliberate omission; if so, no doubt the Minister will tell us. If he accepts that it is an omission by reason of oversight, however, I hope that he will at least give some consideration to the point that I have made. At the very least, it seems to be desirable that anyone entering into a partnership with a Scottish lawyer should be aware of what the consequences may be, in terms of personal liability and what the responsibilities to the Law Society of Scotland and the provisions of the accounts rules undoubtedly are.

1106

§ Lord James Douglas-Hamilton
One of the questions that I was asked was whether the term "foreign lawyer" included English lawyers. Amendment No. 114 defines "foreign lawyer" as
a person who is not a solicitor or an advocate but who is a member, and entitled to practise as such, of a legal profession regulated within a jurisdiction outwith Scotland. The hon. and learned Member for Fife, North-East (Mr. Campbell) and the hon. Member for Glasgow, Garscadden (Mr. Dewar) asked who would decide which jurisdictions were acceptable for inclusion in the register of foreign lawyers—for example, whether the educational requirements were sufficient. That will be for the Law Society regulations to decide. The test will be the arrangements for training and fitness in the home jurisdiction of the applicant concerned.
I was also asked whether multi-disciplinary practices would exist. The answer is yes, if the Law Society wants them. The amendments provide for them to be adequately regulated. The hon. Member for Garscadden looks amused, but it is important that we secure the acceptability of the amendments. The Law Society pressed hard for the amendments on multinational practices, and I suspect that there will be more pressure in that regard. The Secretary of State and I both devilled, before being advocates to a QC who is now a European judge—that is a sign of the greater contact between European nations.
Let me say to the hon. Member for Falkirk, East (Mr. Ewing) that I am surprised that, as the shadow Secretary of State is a partner of Ross, Harper and Murphy, he did not at least mention the name of the hon. Member for Garscadden before mentioning many extra names.

§ Mr. Dewar
I wish this point to be put clearly on the record. On multi-disciplinary practices, the Minister is saying that the Government will abide by what the Law Society of Scotland wants—that they will endorse the decision. If the Law Society wants multi-disciplinary practices, so be it, and if it does not, so be it.

§ Lord James Douglas-Hamilton
That is exactly what I am saying. I have had very satisfactory meetings with the Law Society, and I can confirm that it finds the amendments acceptable.

§ Mr. Menzies Campbell
Is the Minister saying that, if the Law Society of Scotland considers it appropriate that a foreign lawyer should have some knowledge of Scottish law and the consequences and liabilities of entering into partnership with Scottish solicitors, it may impose that as a qualification before admitting any individual to the register that it will maintain?

§ Lord James Douglas-Hamilton
Yes, it could regulate multinational practices. We are at an early stage, but obviously it will become an issue in 1992, when there will be more competition between European countries. It is only right that this provision should be included in the Bill so that they can take the necessary action as required.

§ Question put and agreed to.

§ Clause read a Second time, and added to the Bill.