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Brexit and the end of transition: a 10-step checklist for law firms
The government’s advice is changing constantly following the end of the transition period negotiations and the publication of the UK-EU Trade and Cooperation Agreement. We’ll review this checklist regularly.
1. Check your data transfers
Make sure you appoint someone to take lead responsibility for data protection if you have not already. This will be particularly important while the UK waits for a data adequacy decision.
The person responsible for data protection should review the data flows and transfer mechanisms in your firm.
If you do not process any personal data from contacts or clients in the European Economic Area (EEA), you do not have to take any further action.
If you do receive personal data from contacts or clients in the EEA, and you’re a small or medium-sized firm, you should use the Information Commissioner’s Office (ICO) interactive tool to decide what action to take.
If you do receive personal data from contacts or clients in the EEA, and are a data protection specialist or a large law firm, you may already be familiar with the ICO’s guidance on transfers, however they advise revisiting it.
You may also wish to:
- review your data transfer mechanisms:
- if you use standard contractual clauses (SCCs), you should revise their use in light of the recent Court of Justice of the EU judgment in Schrems II. See the initial statement from the ICO and the FAQs from the European Data Protection Board (EDPB)
- if you use binding corporate rules (BCRs) with the ICO as lead supervisory authority, consult the EDPB’s guidance
- if you use SCCs, conduct a risk assessment to determine whether these provide sufficient protection within the local legal framework, whether you’re transferring to the United States or elsewhere
- review the consent language used around your data collection processes or obtain consent again if you rely on this mechanism to process EU personal data. It’s unclear whether UK businesses relying on consent (obtained while the UK is still a member of the EU) can continue to do at the end of the transition period
- review your privacy policies so that clients understand the movements of their personal data in and outside of the EU
- appoint an EU representative (if you do not have an office in an EU/EEA country) and update your privacy notices to include their contact details
- need to nominate another EU regulator as your lead supervisory authority if you have offices in other EU states and have nominated the Information Commissioner Office as authority
2. Check your website, domains and technology providers
If your firm use websites or technology services hosted in Europe, you’ll need to contact them to enquire about the continuity of their services. You should also review the terms and conditions of your contract with them.
If your firm holds a registered .eu web domain, you should consult the government's guidance on domain names.
3. Review intellectual property (IP) rights held by the firm
Firms are recommended to verify that any IP rights registered with the EU Intellectual Property Office (IPO) before the end of the transitional period have been translated into comparable UK rights by the UK IPO. This should have occurred automatically without the need for application.
Firms have nine months from the end of the transitional period to register in the UK any trade mark applications that are pending before the EU IPO if they wish to ensure that the original EU filing date is recognised in the UK.
With IP rights created after the end of the transitional period, you'll need to review how to ensure protection across the EU, subject to the ongoing UK-EU negotiations.
4. Check whether your staff requires a visa
Firms will have to make sure that solicitors or support staff travelling to work in EU member states have the correct visas.
The EU and UK have announced that they will adopt visa exemptions for short-term tourism stays and business visits. This was confirmed in the EU-UK Trade and Cooperation Agreement.
With this regime, when going to the EU, check how many days the visits will last and whether there are any further requirements, for example: if employees engage in paid activities.
In these cases, employees may need a visa and accompanying documents before travelling.
Ensure that any eligible EEA/Swiss employees living in the UK prior to 31 December 2020 has registered with the EU Settlement Scheme before the deadline of 30 June 2021.
5. Check your employees ’s ability to work and live in Europe
If your firm has an EU presence and you have employees currently working in the EU, the EEA or Switzerland:
- check that your employees are already registered to work and live abroad with the relevant member state authorities. Member states have adopted legislation with respect to the rights of UK citizens, aiming to allow the UK citizens already residing in the country to continue to do so for a transitional period. Information about national arrangements is available on the European Commission, national authorities and UK Embassies’ websites
- any new employees who are UK nationals travelling to Europe from 31 December 2020 will be considered third-country nationals. They’ll need to get the right permits to enter, stay and work in that member state. Information about these permits is available from the relevant national authorities
- contact the relevant EU social security institution to check if your employee needs to start paying social security contributions in that country, as well as in the UK. See the government’s guidance on paying employees working abroad
- your employees may also need to exchange their UK driving licence for a locally issued licence or obtain an international one. The UK government’s country-by-country guide explains what your UK employees need to do. Check the information provided by the relevant national authorities and the UK embassies
6. Check your contracts on goods or services received by the firm
Check with suppliers of European goods or services if they have introduced measures following the end of the transition period to ensure timely delivery/performance and, if so, how these measures are reflected in the contractual agreement.
7. Check your VAT invoicing
The VAT treatment of business-to-consumer (non-land related) supplies by UK lawyers to EU clients have changed. These have moved outside of the scope of VAT rather than being subject to full VAT.
You should adjust your client billing system to reflect the changes on VAT when invoicing individual clients.
There has been no change to business-to-business (non-land related) supplies by UK lawyers to EU clients, which remain outside the scope of UK VAT.
The liability to account for VAT is instead shifted to the EU client under the reverse charge rules, which ensure that tax is charged in the member state where the services are received.
8. Check jurisdiction points in court proceedings
Any action before the EU courts pending at the end of the transition period will remain with the court for adjudication under the terms of the Withdrawal Agreement.
It’s advisable for firms to re-issue any choice of court agreements.
9. Check practice rights and insurance
Under the UK-EU Trade and Cooperation Agreement, solicitors may be entitled to provide services in EU member states on a temporary basis using their home state qualification.
Individual solicitors and firms will need to make sure that they’re compliant with the national law in each jurisdiction, including having appropriate professional indemnity insurance.
UK lawyers do not have rights of audience in courts within EU/EFTA states without holding another qualification from an EU country.
Firms should check to make sure that solicitors hold the appropriate documentation and qualifications to practice in EU/EFTA courts.
10. Check your business model to ensure it's fit for purpose
Law firms with operations in the EU/EFTA should review their structures and check they are in keeping with national company law and professional rules for legal practice in that country for third-country lawyers.
Branches of UK LLPs or other entities should have reviewed whether they can continue operating in the relevant EU/EFTA state, or restructure to become a national structure/branch of a firm headquartered in another EU/EFTA state.
When reviewing firm structures, consider whether national rules authorise local (EU/EFTA) lawyers to practise together with third-country lawyers, as well as the potential impact on equity, profit sharing, limitations of liability and taxation.
Law firms that are set up as incorporated companies in the UK, or where the parent company is incorporated in the UK, need to comply with UK accounting and reporting requirements from 2021.
All companies will need to use ‘UK adopted IAS’ instead of ‘EU adopted IAS’ for financial years beginning after the 1 January 2021.
Both sets of standards will be the same on 1 January 2021. There may be differences later if the UK adopts or amends standards and the EU does not.
Law firms with a presence in an EEA country (with a branch or a subsidiary), need to check the reporting requirements in that country.