Welcome to the latest issue of our Parliamentary update.  

Contents 

	Treaty of Lisbon is Finally in Force
	A New Settlement for a New Decade?
	Reform of the Scottish Legal Profession
	Contact Us

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Treaty of Lisbon is Finally in Force

The long-awaited Treaty of Lisbon (Lisbon Treaty) finally entered into force on 1st December 2009 after having been ratified by all 27 Member States.  The successor to the failed "Constitutional Treaty" has been a long time coming, after being rejected by Irish voters in 2008.  Some original provisions had to be watered down to ensure all 27 Member States would ratify the Treaty.

The Lisbon Treaty has introduced changes which aim to bring the institutions of the EU closer to citizens.  It amends the Treaty on European Union (the Maastricht Treaty) and the Treaty establishing the European Community (EC Treaty).

Much has been said about the amount of power this Treaty transfers from Member States to the EU.  Whilst these allegations are not always well-founded, the Treaty does certainly change more than just terminology.  Some key changes to terminology worth noting though are that:

• the European Community will now be known as the European Union, and have one single legal personality
• the EC Treaty becomes the Treaty on the Functioning of the European Union (TFEU)
• the common market will be known as the internal market
• the numbering of the Treaty articles has changed - so for instance when Article 101 is referred to, this means the rules on anti-competitive agreements and Article 102 deals with abuse of dominance.

Click here to read the article from our earlier update outlining the main provisions of the Lisbon Treaty.

While the creation of the posts of President of the European Union and High Representative of the Union for Foreign Affairs and Social policy has caught media attention, these are largely administrative posts.  Of more substantive effect are:

• Changes in decision-making procedures, meaning that more legislation, for example in relation to budgetary matters, will effectively need the consent of the European Parliament before it can be adopted.
• National parliaments will be encouraged to comment on draft legislative acts, in relation to both the substance and the competence of the European Parliament to adopt such legislation. 
• The Treaty introduces a "citizen's initiative", whereby a group of at least 1 million citizens from a significant number of Member States can invite the Commission to submit a proposal on matters where citizens consider that legislation by the EU is needed to implement the Treaty.
• The extension of the EU's role in the energy sector, which will include promoting energy efficiency and saving.  The objective of combating climate change is referred to for the first time in relation to environmental policy. 
• References to competition policy under the TFEU have been modified, however there is some debate as to whether this will have any practical impact.

Those behind the Lisbon Treaty may have hoped its ratification would end discussion over the future of the EU following rejection of earlier versions given by French, Dutch and Irish voters in referendums. Whilst differences of opinion will continue to exist, the TFEU as it now stands seems better equipped to deal with a Union of 27 Member States. 

A New Settlement for a New Decade?
More than 10 years after the modern Scottish Parliament first sat, the process of devolution in Scotland is entering a new phase.  The desire to see more powers transferred to the Scottish Parliament is gathering momentum, amongst most political parties and the public.

In June 2009, the Commission on Scottish Devolution chaired by Sir Kenneth Calman published its report reviewing the devolution settlement established by the Scotland Act 1998.  The Calman Commission, as it is known, was set up to conduct an independent review and recommend how Scotland's constitutional position within the UK should be reformed in light of experience.

The Commission noted that devolution has been a real success and is here to stay, but had several recommendations:

• Part of the Scottish Parliament's budget should come from devolved taxation under its control.  UK income tax in Scotland should be reduced by 10 pence in the pound with the block grant being similarly reduced.  A Scottish rate of income tax, applying to both basic and higher tax rates, should then be collected by HMRC. 
• Certain other taxes, including Stamp Duty Land Tax and Air Passenger Duty, should also be devolved to the Scottish Parliament. 
• Additional matters should be devolved to the Scottish Parliament, including the regulation of air guns, drink-driving limits and the running of elections to the Scottish Parliament.  
• New measures should be introduced and existing mechanisms strengthened for cooperation between the Scottish Parliament and the UK Parliament.  The House of Commons should hold a regular "state of Scotland" debate and there should be new mechanisms for communication between the Parliaments and their committees.

Click here to read the final report from the Calman Commission. 

The UK Government published its response to the Commission's report in November, in the White Paper titled "Scotland's Future in the UK".  The Government will implement most of the Commission's recommendations on tax powers, although it will not devolve air passenger duty and will maintain the existing borrowing power of the Scottish Ministers.  It has agreed in principle to devolve several powers as recommended by the Commission, although it will only "consider" how the power to run elections "might be devolved".  This is despite much criticism of the running of the 2007 Scottish Parliament elections.  Although several recommendations are not for the Government to consider, it has noted its support for them.  It will introduce legislation "as soon as possible in the next Parliament" to deal with these changes.  However, with a general election this year implementation of this proposal is not certain.  The Conservative party has said it would examine the financial implications of the Calman recommendations before making any commitments. 
 
Click here to read the UK Government White Paper. 

The Scottish Government has also responded to the Commission's report, publishing its White Paper "Your Scotland, Your Voice" on St Andrew's Day.  It presents four possible scenarios: the status quo; the reforms proposed by the Calman Commission; "devolution max", which involves broad fiscal autonomy and the transfer of all powers other than defence and foreign affairs, and independence.

The Scottish Government intends to publish their Referendum Bill early this year, which, if passed, would lead to a national referendum.  What is clear is that the new decade will see changes in Scotland's constitutional settlement.

Click here to read the Scottish Government White Paper.

Reform of the Scottish Legal Profession
2009 saw the publication of the Legal Services (Scotland) Bill, marking an important step forward in the reform of the Scottish legal profession.  The Bill is currently making its way through the committee stages at the Scottish Parliament and is likely to be on the statute books this year.

There have been several investigations and consultations into the legal services market in recent years, both in England and Wales and Scotland, by consumer bodies, Governments and the professional bodies themselves. They have concluded that the current structure of the Scottish legal services market restricts choice for consumers and prevents the formation of alternative business structures.  The need for reform has been supported by the Law Society of Scotland (LSS).  With reform already having become law in England and Wales, this Bill seeks to bring Scotland up to speed.

The Bill provides for the creation of a new regulatory regime, allowing non-solicitors to become members of legal partnerships and share in profits.  New regulatory bodies will be approved by the Scottish Ministers, and be able to authorise the establishment of licensed legal services providers.  There must be at least one solicitor holding a practising certificate in the business.  Outside investment in licensed legal practices will be allowed, with the investors subject to an assessment of whether they are fit to have an interest.  Consumers will be protected under either regime.

The new regime would be in stark contrast to the current rules which prohibit solicitors from setting up business with any unqualified person.  At present solicitors cannot share fees with any unqualified person, and unqualified persons can only be employed by legal partnerships and not be members of them.  The present regulatory regime will continue to apply to legal practices that do not choose to alter their structure as a result of the reform.  However, the structure of the LSS will be changed, with the regulatory and representative functions being split.  20% of the Council (governing body) of the LSS will be non-solicitors, and half of the new regulatory committee that will take on the current regulatory functions of the Council will be non-lawyers.  This should satisfy critics who feel there is a need for input from outside the profession on the regulation of solicitors.

Scotland's commercial law firms have welcomed the reforms as they will permit legal services providers to respond flexibly to clients' needs. 



Contact Us
For more information on our services, please contact:

Michael Dean
Partner
0141 303 2415
michael.dean@mms.co.uk

Catriona Munro 
Partner
0141 303 2385
catriona.munro@mms.co.uk