European transparency initiative
European Transparency Initiative - 30 April 2009
Contents
- 1. Introduction
- 2. Should my firm consider registration?
- 3. What constitutes Interest representation?
- 4. What is not Interest Representation?
- 5. Disclosure and compliance with the Solicitors Code of Conduct
- 6 Compliance with the Commission's Code of Conduct
- 7. Letter of engagement: model text
- 8 More Information
1. Introduction
1.1 Who should read this practice note?
Solicitors' firms whose activities bring them into contact with the European Institutions.
1.2 What is the issue?
The European Commission has established a framework for its relations with interest representatives - organisations who "lobby" the EU. The framework includes a voluntary Register and Code of Conduct entitled the European Transparency Initiative or ETI. The aim is to bring more transparency to interest representation activities and those involved.
This practice note provides advice to solicitors' firms considering registration, by clarifying the definition of interest representation and highlighting areas of potential conflict with the Solicitors Code of Conduct of England and Wales 2007. It also highlights potential conflicts with rules regulating solicitors registered in other jurisdictions and multi-jurisdictional law firms.
2. Should my firm consider registration?
Registration is voluntary. You may consider registration if your firm's activities fall within the definition of IR (see section 3 ). You do not need to consider registration if none of the activities of your firm falls within this scope.
Registration conveys no privileges, accreditation or official recognition by the Commission. However, in public consultations, the Commission will list contributions from unregistered contributors separately. Those that register will receive optional communications from the Commission detailing developments in areas of interest.
The Commission is working with its staff to ensure that they are aware of the ETI when interacting with organisations undertaking interest representation work.
2.1 What does registration require?
Firms that register will be listed on a web-site. Registration involves making public:
- information on your firm
- its IR activities and related turnover
- the identity of clients for whom such activities are conducted and
- related turnover per client
2.2 Are you able to register?
The primary duty of solicitors and law firms is to comply with the professional and ethical rules and obligations that govern their activities. ETI registration can only take place if it would not breach or be likely to breach professional obligations.
A potential conflict lies in the register's requirement for disclosure of client information. Disclosure will constitute a breach of the SCC unless all clients concerned have given informed consent. Refusal of one client to give consent would make registration impossible.
A firm that does not register will not be in breach of ethical or professional practice standards under the SCC .
2.2.1 Multi-jurisdictional practice obligations
The rules of professional conduct in some EU Member States place restrictions or prohibitions on lawyers disclosing the identities of their clients, even when clients give consent. Such rules may prevent firms from registering.
Solicitors registered to practise in another jurisdiction must observe that jurisdiction's professional conduct rules.
Multi-jurisdictional law firms must consider the possible conflict of obligations under different sets of professional conduct rules. Such firms must observe all of the professional and ethical rules in both:
- the jurisdictions where they are established and
- the jurisdictions where their lawyers are registered to practise.
Firms may also be regulated by non-EU rules of professional conduct. This practice note offers advice only on the application of professional obligations relating to the SCC .
2.3 Other considerations
There is currently no legal requirement to register. The Commission has stated the register is in a one-year pilot phase and that it will be reviewed in June 2009. If it is not deemed successful, a mandatory system may be considered at a later date.
2.3.1 Exposure to potential complaint
Those working in any organisation that registers must observe the Commission's Code of Conduct and will be subject to the associated complaints process. Any declaration should be complete and truthful. Information given in the Register must be full and correct to the best of the firm's knowledge.
The register is online and open to scrutiny. You may be asked by the Commission to provide evidence either to substantiate information declared in the Register or to disprove allegations of non-compliance with its Code. Any complaints upheld by the Commission could lead to removal from the Register.
2.3.2 Registration renewal
You will be reminded to update your details on an annual basis. Registration will be suspended if updates lapse within a given time frame.
3. What constitutes Interest representation?
Interest representation (IR) is defined by the Commission as being ?activities carried out with the objective of influencing the policy formulation and decision-making processes of the European Institutions'. This definition is not clear.
The vast majority of work undertaken by law firms is not IR. Firms should principally bear in mind the intended purpose of the activity when considering whether or not it constitutes IR.
The activities covered are those directed towards three of the European Institutions. These are:
- The European Parliament: Members, their staff and officials of the Institution.
- The Council of the European Union: officials of the Institution. IR activities directed towards representatives of the government of a Member State should be subject to transparency requirements as may be imposed under the law of the Member State or recommended in relevant guidance, rather than the Commission's Code.
- The European Commission: Commissioners and officials of the Institution.
Activities directed towards the remaining two European Institutions i.e. the Court of Justice and the Court of Auditors, will not constitute IR.
3.1 Specific activities
The following are examples of the types of activity which may be considered to be IR, by solicitors or law firms, when such activities are directed towards a European Institution and not covered by section 4:
- Participating on behalf of a client in a meeting or on a call with officials of a European Institution in order to influence a policy or proposed legislation.
- Organising on behalf of a client an event to which officials of an EU institution are invited in order to discuss a public policy issue which the officials are handling.
- Writing an e-mail or letter on behalf of a client to officials of a European Institution in order to influence a policy or proposed legislation.
3.2 Declaring related turnover
If your firm registers, the financial information declared should be based on the turnover generated by such activities.
If clients of your firm have also registered, you should avoid double counting. You should agree with registered clients who will disclose particular IR expenses.
In general you should declare turnover related to IR activities that your firm has carried out on the client's behalf. This may be contrasted to the situation where your firm has provided legal advice but the client has carried out the IR activities.
Your firm may note in the register that turnover declared by clients has been excluded from the declaration.
The structure of the register will not allow your firm to disclose IR activities carried out on the firm's own behalf alongside those conducted for clients. You may wish to note such activities in the register.4. What is not Interest Representation?
4.1 Legal advice
Legal advice remains outside the scope of the ETI and is not IR when the addressee of the advice is the client.
Legal advice entails:
- giving an analysis of the client's legal position or position under the law as it would be if a suggested policy or proposal is adopted; or
- advice in relation to matters of procedure.
Legal advice to the client may also include advice on the steps that should be taken to protect his or her legal position, particularly where this is ancillary to advice on the client's legal position.
4.2 Litigation
The Commission's Code provides that activities concerning legal and professional advice that relate to the exercise of the fundamental right to a fair trial of a client are excluded from IR. This includes:
- Legal work conducted by a solicitor in relation to litigation before a court and/or tribunal or arbitration including representation and advice in relation to cases before the European Courts. This also includes courts or tribunals within the Member States.
- Legal work conducted for a client in relation to matters that are subject to alternative dispute resolution, such as arbitration or mediation.
- Activities aimed at ensuring the protection of a client's interests through international judicial and quasi-judicial forums, such as WTO dispute resolution when the EU is concerned.
4.2.1 Pre-litigation
Informal attempts to resolve an issue with the European Institutions on behalf of a client should not be considered IR if there is a reasonable prospect that such preparatory activity may lead to proceedings before any of the following:
- a court
- international judicial or quasi-judicial forum
- alternative dispute resolution
4.3 Other representation of a client
4.3.1 Competition cases
Activities carried out on behalf of a client in relation to a specific competition law matter are excluded. Competition law includes both:
- matters relating to the application and enforcement of Articles 81, 82 and 86 of the EC Treaty and the EC rules on merger control and State aid, and
- matters relating to the carrying out of a competition law sector inquiry.
4.3.2 Access to document requests and subsequent issues
Access to documents requests made to any of the European Institutions are excluded from the definition of IR. The exclusion extends to activities related to:
- subsequent complaints to the European Ombudsman or
- actions brought before the European Courts
4.3.3 Other examples
The rights of defence may extend to certain other administrative proceedings as has been noted in the case law of the European Court of Justice. Legal advice and representation in relation to activities, such as the following, may be justifiably excluded from being considered IR:
- Representation of a complainant, directly affected third-party or the addressee or potential addressee of a decision in relation to the application of trade-defence mechanisms, such as anti-dumping and anti-subsidy rules or complaints under the Trade Barriers Regulation.
- Representation of a client in relation to administrative proceedings conducted by one or more of the European Institutions, such as with regards to the authorisation of products.
- Complaints made to the European Commission in relation to the conduct of public authorities under the EU rules on public procurement. Assistance concerning tenders for the award by the EU Institutions and bodies of contracts for works or services, including research and studies.
- Matters concerning the granting of individual intellectual property rights, such as patents, trade marks, design rights.
- Complaints made on behalf of a client to the European Commission, European Ombudsman or a petition lodged with the European Parliament concerning a breach of, for instance, EU law or the European Code of Good Administrative Behaviour. For instance, a complaint about the incorrect application of EU law by a Member State should not constitute IR.
- Any other administrative matter where the purpose of the lawyer's activities is to protect the legal and procedural rights of the client.
4.4 Seeking information or clarification
Activities carried out by a law firm to clarify the meaning of the law or of proposed legislation (or policy) is not IR. This will usually be carried out with a view to advising a client on his or her legal position and would not normally involve an attempt to influence the policy objectives of decision-makers.
4.5 Direct request by the Commission
Responding to a direct request by the Commission does not constitute IR.
4.6 IR conducted by a client
When the client carries out IR activities in his or her own right, the client may register and disclose the relevant information. Legal advice to the client in this context does not constitute IR. See section 3.2 on double counting.
4.7 Involvement in other organisations engaging in IR
Contributions to the IR work of another organisation, such as the Law Society do not need to be registered. The organisation to which your contribution is made may consider registration.
5. Disclosure and compliance with the Solicitors Code of Conduct
Registration requires you to disclose details of:
- your IR activities in the previous financial year,
- the clients for whom you conducted IR activities and
- the related turnover.
You should be aware of how this may conflict with your professional duties.
The SCC allows clients to give informed consent to the disclosure of information required by the register. Legal professional rules in other jurisdictions often do not allow clients to consent to such disclosures.
5.1 Client consent requirements
Every client concerned must give informed consent. Disclosing the clients concerned or the turnover related to IR activities carried out for a client without consent would constitute a breach of rule 4.01 of the SCC on client confidentiality.
Your firm will not be in a position to register until you have obtained client consent to disclose IR activities carried out in the previous financial year and those that are ongoing. It is legitimate for a client to refuse to give such consent without explanation. The consequence of such a refusal will vary depending on whether the firm is already registered or not.
5.1.1 Where the client refuses to consent pre-registration
Clients may legitimately refuse to give consent. In this case you will not be able to register fully without breaching rule 4. As a result you may not be in a position to register for some time after the process of obtaining client consent has started or current IR work is completed.
You should not make a partial disclosure relating only to the clients who have given consent. To do so would not be appropriate or in the spirit of the register and would expose you to the possibility of complaints.
You should not register if you are unable to make a full declaration because of ongoing confidentiality duties.
5.1.2 Where the client refuses, post-registration
Firms that register will only be able to carry out IR work for clients who have given the necessary consent to disclosure.
You may refuse to carry out IR work for an existing or potential client who withholds consent in respect of a new engagement. This would not put you in breach of your obligations under the SCC . You would be able to continue acting for the client in relation to all other non-IR work while registered.
You may withdraw from the register, by removing your profile, if your firm is no longer in a position to comply with its requirements.5.2 Informing your clients
Firms that are planning to register, or that expect to do so in the future, should inform clients of which activities constitute IR and thus require disclosure. You should also inform clients of the obligations that would be incumbent on your firm, when carrying out IR activities on their behalf, as a result of registration (see section 6.1).
You must ensure that your client understands what he or she is consenting to. Registration means that:
- the name of the client on whose behalf you conduct IR activities will be listed on a public web-site.
- the firm's turnover with respect to IR activities for each client, either as an absolute amount or a percentage of the total within 10% ranges, will be listed.
5.3 Obtaining consent
You should write consent to disclosure into your terms of engagement for all clients for whom IR work is foreseen. You may include a provision to this effect in all letters of engagement to clients for whom IR work may be done.
You may alternatively draft specific letters of engagement for IR activities. The content of letters of engagement may vary between firms, depending on factors such as:
- the professional and ethical rules that bind the lawyers and the firm
- other legal rules regulating the firm and its activities
- the jurisdiction in which a client is engaged
6. Compliance with the Commission's Code of Conduct
Your firm must observe a code of conduct by virtue of your registration. You must declare a commitment to observe either:
- the Commission's Code of Conduct
- an alternative code, which contains, in substance, the same commitments as those in the Commission's Code of Conduct (see section 5.2).
Alternative codes must be made available for examination by the Commission to ensure adequate compliance.
You should consider that the registration requirement applies to the law firm as a whole.
6.1 The Commission's code
The rules of the Commission's code of conduct state that interest representatives should always:
- identify themselves by name and by the entity(ies) they work for or represent;
- not misrepresent themselves as to the effect of registration to mislead third parties and/or EU staff;
- declare the interests, and where applicable the clients or the members, which they represent;
- ensure that, to the best of their knowledge, information which they provide is unbiased, complete, up-to-date and not misleading;
- not obtain or try to obtain information, or any decision, dishonestly;
- not induce EU staff to contravene rules and standards of behaviour applicable to them;
- if employing former EU staff, respect their obligation to abide by the rules and confidentiality requirements which apply to them.
The use of ?unbiased' in rule 4 should not be interpreted as preventing you from fulfilling the duty under the SCC always to act in the client's best interests. Rule 4 should be interpreted as discouraging dishonest practice but it should not prevent a solicitor from strategically presenting information that is favourable to a client's position.
6.2 The Solicitor's Code of Conduct
The Solicitors' Code of Conduct is not equivalent to the Commission's code, in particular respect to rules 1 and 3 in the Commission's Code.
6.3 Other codes
Your firm may already have an internal code of conduct for IR work. Where this is this case you should examine whether the duties under it are equivalent to the Commission's Code or whether revision is necessary.
You should also be aware of whether you or other members of your firm who are carrying out IR work are required to abide by the code of another external body, such as the Society of European Affairs Professionals.7. Letter of engagement - model text
The following text may be used in respect to client consent and confidentiality:
"We have agreed to represent you in connection with (type of matter) [or] [in which we discussed (type of problem)], and we agreed to (insert appropriate details).
We will hold in confidence all information concerning you or your affairs that we acquire during the course of acting for you. We will not disclose any of this information to any other person except:
- to the extent necessary or desirable to enable us to carry out your instructions;
- to the extent required by law or by the Solicitors' Code of Conduct 2007;
- to the extent necessary for the purposes of registration under the European Commission's Code of Conduct for Interest Representatives.
During the course of our engagement, should it prove to be necessary or advisable to carry out interest representation work, as defined by the European Commission's Code of Conduct for Interest Representatives, on your behalf, acceptance of this letter constitutes consent to the disclosure of your name and an indication of the turnover related to the interest representation work carried out on your behalf in the previous financial year. Consent is also taken to be given in so far as is necessary for the firm to comply with the European Commission's Code of Conduct for Interest Representatives."
8. More information
8.1 Professional Conduct
The following section of the Solicitors' Code of Conduct 2007 is relevant to this practise note:
8.2 Legal and other requirements
- The ETI is currently a voluntary initiative.
8.3 Status of this note
Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.
Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.
For queries or comments on this practice note contact the Law Society's Practice Advice Service .
8.4 Terminology in this advice
Must - a specific requirement in the code or legislation. You must comply, unless there are specific exemptions or defences provided for in the code or relevant legislation.
Should - good practice for most situations in the Law Society's view. If you do not follow this, you must be able to justify to oversight bodies why this is appropriate, either for your practice, or in the particular retainer.
May - a non-exhaustive list of options for meeting your obligations. Which option you choose is determined by the risk profile of the individual practice, client or retainer. You must be able to justify why this was an appropriate option to oversight bodies.
8.5 Further products and support
8.5.1 Law Society Practice Advice Line
The Law Society provides support for solicitors on a wide range of areas of practice. Practice Advice can be contacted on 0870 606 2522 from 09.00 to 17.00 on weekdays.
8.5.2 The European Commission
The following resources are available:
8.5.3 Law Society publications
- Solicitors' Code of Conduct 2007, 2009 edition
- Companion to the Solicitors' Code of Conduct 2007, 2009 edition
8.5.4 Training and events
8.6 Acknowledgements
This practice note has been drafted in consultation with the Society's EU Committee and approved by its Regulatory Affairs Board.