Communities Minister Fergus Ewing was lobbied by Law Society Chief to deliver reduction in lawyers complaints levy. REASONS why the Scottish Government’s Communities Minister Fergus Ewing threatened the ‘independence’ of the Scottish Legal Complaints Commission earlier this year over an apparent ‘bust up’ with the Law Society of Scotland regarding the annual complaints levy charged to all solicitors to fund the SLCC’s investigation of complaints have now been answered by a second disclosure of key parts of emails between the Law Society & the Scottish Government in response to a request for a review under Freedom of Information legislation.
Scottish Legal Complaints Commission Chair’s Jane Irvine was told to expect ‘a review’ by Minister if levies for solicitors were not reduced. As many observers to the bitter squabble between the two law complaints regulators & the Scottish Government suspected, simply, the Minister did exactly as the Law Society’s senior officials suggested, making it plain to the SLCC’s Chair Jane Irvine there would be problems for the SLCC if there was no reduction in the annual complaints levy for Scottish solicitors, citing the SLCC’s huge £1.5m cash surplus as a reason to reduce complaints charges. The Minister’s letter was subsequently published by the SLCC on its own website and widely reported in the media.
Law Society of Scotland’s Chief Executive Lorna Jack ‘suggested’ Minister write to Scottish Legal Complaints Commission ‘by Friday’. Lorna Jack’s now published email to the Scottish Government stated : “It was good to have the brief conversation that we did today. As promised some more info re how the SLCC might resolve their reserves/bank deposits issue. First 9 months as you know saw them end with £1.6m of reserves and £3.8m of cash [REDACTED] They tell us that they will make a deficit in year 2 of some £400k and then plan another £100k in the budget under discussion but even then if they further reduced the levy for this year alone by £50 they should still have over £0.5m in reserve .and a very healthy bank balance of over a £1m. We have left them with a proposition to do this and await their response.” However, a previously redacted part of this email, today released by the Scottish Government reveals the Law Society Chief Executive states [REDACTED]. “If Government are also minded that they are sitting on unnecessary reserves then you will need to make your views known to them by Friday when I think they plan to make any additional changes.”.
Law Society’s Chief Executive Lorna Jack wrote email to Scottish Government suggesting they pile on the pressure to the SLCC. This new information which partially lifts the veil on secret communications between the Law Society of Scotland & Scottish Government, goes a significant way to explaining why the Communities Minister Fergus Ewing sent a letter to the Scottish Legal Complaints Commission dated 22 February 2010, five working days after Lorna Jack asked the Minister to make the Law Society’s ‘his’ views known over the Law Society’s demands the SLCC should use their huge £1.5m cash surplus to, in effect, give a cash back payment to solicitors by reducing the annual complaints levy.
My initial report on Fergus Ewing’s apparent Ministerial threat to the SLCC on behalf of the Law Society can be read here : ‘Ministerial Interference’ as Fergus Ewing demands SLCC’s £1.5m reserves be handed to lawyers after Law Society lobbied Scottish Government, also reported in the Scotsman newspaper HERE, with my later report on the continuing investigation into how the Minister’s actions actually came about, where papers released in July under Freedom of information legislation portrayed the Scottish Government as siding with the Law Society, can be read here : Undue Influence : Freedom of Information reveals how Law Society used Scottish Government Ministers to reduce complaints levy for crooked lawyers.
A senior official from one of Scotland’s Consumer organisations commenting on the Scottish Government’s latest release of information said : “The Law Society’s Chief Executive writes an email to the Scottish Government suggesting it contacts the SLCC to share its remarkably similar view to the Law Society regarding a reduction in the annual complaints levy. A Minister surprisingly other than the Justice Secretary then writes to the SLCC a few days later threatening a review of the SLCC’s independence if the complaints levy is not reduced. What more evidence could anyone want the Law Society effectively controls the SLCC and is still in charge of regulation of complaints ?”
Law Society’s Director of Regulation Philip Yelland ‘calculated SLCC’s complaints levy’ over a weekend. A further document in the form of an attachment released by the Scottish Government under Freedom of Information legislation stunningly depicts Philip Yelland, the Law Society of Scotland’s ‘Director of Regulation’ making his own calculations as to how much the supposedly independent SLCC should reduce the complaints levy by. Director of Regulation Philip Yelland’s ‘suggestions’ to the Scottish Government of the complaints levy charges the Law Society would like to see :
1: Reduction in the top rate levy by £ 50 to £ 225 If you apply this across the Board and the appropriate waivers per their budget the sum to be taken from reserves to meet this would be £ 413,078 on top of the figure of £ 370,000 which they are already planning to use to keep the levy at the same level as this year. The net effect would appear to be to reduce their reserves by just over 2 months running costs (on the basis that it costs approximately £ 200,000 per month to run.
2: Reduction in top rate levy by £ 25 to £ 250 If you apply this across the Board to would cost the Commission £ 206,539 or just over one month’s running costs. It may also be worth making the point that to date evidence suggests that the number of solicitors in the pot to pay at 30th June will be higher than the number we give them in November/December. PY 14th February 2010”
A legal insider studying the full FOI releases from the Scottish Government commented : “If a member of the public writes to the Scottish Government regarding problems with the Law Society or the Scottish Legal Complaints Commission, I doubt they will receive such attentive service, accompanied by a Ministerial threat of review if difficulties were not addressed ….”
He continued : “Clearly the Law Society still pull the strings at the SLCC and it appears, the Scottish Government.”
Communities Minister Fergus Ewing’s letter in full to the Scottish Legal Complaints Commission threatening the SLCC’s independence over reductions in the complaints levy, apparently on behalf of the Law Society of Scotland :
Community Safety Fergus Ewing writes to Scottish Legal Complaints Commission, demands reduction of complaints levy for lawyers. The letter from Mr Ewing to the SLCC, recently released, states : “I note that you have used some of your reserves to offset any increase in the general levy and that is commendable, but I am strongly of the view that this does not go far enough. I understand that this financial year you have generated income of around £2.3m and that your predicted costs of £2.9m are now forecast to be £2.6m. The shortfall between income and expenditure will be met by your contingency fund should that remain untouched and in effect your budget will balance this year. However the surplus finds generated during your first 9 months of operation recorded as £1.5m are likely to remain untouched.”
Mr Ewing continued : “Whilst I recognise that during your initial year of operation the workload and consequently expenditure was difficult to predict, having built up an significant reserve fund in this financial year, it is essential that the Commission takes full account of this reserve in determining the amount of annual general levy and the complaints levy that is reasonably sufficient to meet its expenditure for the next financial year. When the Commission has existing reserves, it must ensure that, taking one financial year with another, the amount of the proposed general levy and complaints levy is reasonably sufficient to meet its expenditure, in particular, any estimated shortfall including for contingencies.”
Community Safety Minister Fergus Ewing threatens a review of Ministerial powers over the SLCC if it refuses to lower the complaints levy. Fergus Ewing continued in his letter to the SLCC’s Chair, Jane Irvine : “I do not think it is sufficient to use these reserves to merely off-set an assumed increase in the proposed amount of the annual general levy for next year. I therefore invite the Commission to give early and serious consideration to reducing the proposed amount of the annual general levy and the complaints levy to ensure that these do not, taking one financial year with another, exceed what is reasonably sufficient to meet its expenditure.“I appreciate that this is important for the SLCC to manage their financial risks and hold some contingency funding and I know that officials here would be happy to discuss how this could be achieved in ways which do no to rely on large reserves. I appreciate also that, as the legislation stands, the levy is a matter for the SLCC to determine, and that Ministers have no powers to order the SLCC to take any particular action in respect of the levy. It is for the SLCC itself to ensure that the level of charge is justifiable, in the light of the demands on it. I trust that you will exercise that discretion appropriately, having regard to the views expressed by consultees.”
Fergus Ewing ended his letter with an apparent threat : “I would wish to give fair notice that Ministers will review the situation following the setting of this year’s levies to see whether any change in the respective powers of Ministers and the Commission is desirable.”
The end result was .. the SLCC dropped the complaints levy charges as the Law Society wished, setting the figures at : Solicitors with 3 plus years experience £235, Conveyancing & Executry Practitioners with 3 plus years experience £235, Solicitors within first 3 years experience £118, Conveyancing & Executry Practitioner within first 3 years of practice £118, Practising outwith Scotland £78, In-house Conveyancing & Executry Practitioners £78, In-house Lawyers £78, Advocates £118, Association of Commercial Attorneys £78.
There is real difficulty in describing the Scottish Legal Complaints Commission as an independent regulator of complaints against the legal profession after this, and many more incidents … however, given no prosecutions or even a striking off of a solicitor have yet taken place after two years of complaints handling by the SLCC .. one may very well legitimately question why the SLCC even exists.