The Scottish Government has introduced new regulations aimed at modernising the way in which legal firms are run in Scotland. The move follows similar changes that have already taken place in England and Wales.

At the moment only solicitors can own law firms in Scotland, and only solicitors can form partnerships with other solicitors. This, according to a formal complaint issued by consumer group Which? in May 2007, is very restrictive and consumers would benefit if the profession was opened up to competition.

The Scottish Government agreed and has been pushing for reform ever since.

The debate over how best to modernise the Scottish legal profession has been fierce and controversial, but eventually resulted in the Legal Services (Scotland) Act 2010, which received Royal Assent in November of that year.

The Act, which is not yet in force, removes restrictions on solicitors entering into business relationships with non-solicitors. This means that the way in which legal practices are run will become much more flexible, and allow innovation in the market. It is not compulsory – law firms do not have to change, but will be able to do so if they wish.

The new regulations, introduced into the Scottish Parliament last week, build upon this framework. They include rules that permit the creation of an alternative business structure for legal services – a ‘licensed legal services provider’.

Licensed providers, which will be licensed and regulated by regulators approved by the Scottish Government, are a new, flexible, business model that will allow firms to offer a mixture of services – such as law, accountancy and surveying – under one roof. They will also allow the new businesses to have wider access to investment.

Subject to Parliamentary agreement, the regulations will come into force on 2nd July, 2012. The Scottish Government has not yet decided when the Act should come into force.