By Steve Bargeton, political editor

THERE WERE fears last night that a shake-up of the legal system could lead to banks and supermarkets “cherry picking” profitable legal work and damaging local law firms.

Proposals from the Office of Fair Trading published yesterday call for more competition and also call on Scottish ministers to take action.

The consumer group Which? had complained to the OFT that the legal set-up, under which lawyers cannot go into partnership with non-lawyers, hinders market innovation.

“We’re saying that we do agree there are unnecessary restrictions in the ways in which law firms are allowed to organise themselves and the way that advocates set up their business structures,” said Kyla Brand of the OFT in Scotland

“This is an issue for the Scottish Executive and legal bodies to consider and take steps to lift.”

The OFT wants to see changes that would allow banks and supermarkets to operate in a more deregulated legal market and has given Scottish ministers three months to respond.

Similar moves are already under way in England.

Justice secretary Kenny MacAskill has made it clear that change is necessary.

“The justice secretary has already made clear that the status quo is not an option,” said an Executive spokesman.

“However, he is equally insistent that he does not see any point in the profession blindly following the approach of the profession south of the border.

“We are looking for the Faculty of Advocates and the Law Society to help design distinctively Scottish solutions—solutions that allow our top law firms to compete internationally, while ensuring that our smaller firms can continue to provide an excellent service to domestic consumers and businesses.”

But the Scottish Tories warned that the proposals could lead to big business “muscling in” on smaller local Scottish legal firms, which would lead to less choice.

“I am concerned that these proposals would result in big businesses muscling their way on to our high streets and cherry-picking the most profitable legal work,” said justice spokesman Bill Aitken.

“Smaller, local law firms offering a wide range of services are a vital part of many communities.

“These changes would exacerbate the effect the supermarkets have already had on our high streets with the closure of so many local shops.

“When similar proposals were brought forward in England, there were moves to restrict the amount of legal aid cases available to smaller firms, by offering block contracts to larger firms, thus dealing out a double whammy.

“These measures will cost more, reduce rather than increase choice and result in a loss of legal expertise.

“I urge the new Scottish government to resist these plans.”

Which? welcomed the OFT’s recommendations, claiming that changes would lead to more choice.

“In Scotland so far we’ve not had any competition introduced to legal services,” said spokesman Julia Clark.