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End of transition period guidance: trade in legal services

This guidance sets out the implications for UK-EU trade in legal services from the expiry of the transitional period. It’s relevant:

  • for UK lawyers seeking to practise in the EEA who have not sought to requalify in any EEA jurisdiction, and vice versa
  • only in the event that a future relationship agreement between the UK and EU is not agreed or that the terms of such an agreement do not encompass provisions on legal services
Notes

In the event that a future relationship agreement is reached between the UK and EU, we will issue new guidance.

Scottish regulatory arrangements for EEA and third country lawyers are different to those in England and Wales or Northern Ireland. For more information, consult the Law Society of Scotland and Law Society of Northern Ireland websites.

Introduction

Under the terms of the Withdrawal Agreement, the EU regime on legal services continues to apply until the end of the transition period (31 December 2020).

This means that UK lawyers are free to provide legal services across the EU and EFTA under the framework set out in the Lawyers Directives:

From 1 January 2021, UK qualified solicitors will no longer be able to practise as EU lawyers in EU/EEA member countries.

UK-qualified lawyers will lose their rights of audience before the EU courts and communications between UK qualified lawyers and their clients will lose the protection of the legal professional privilege (LPP) in front of EU courts and EU institutions.

Likewise, the UK government confirmed in its guidance that EEA lawyers will no longer be able to provide legal activities normally reserved to advocates, barristers or solicitors under their home state professional title in England/Wales and Northern Ireland.

Registered European lawyer status will no longer apply after 31 December 2020.

Transitional period

Until the end of the transitional period, UK lawyers who can prove three years of “effective and regular pursuit of a professional activity” in the member state post-establishment are continued to be urged to consider requalifying into the host state’s legal profession under Article 10 of the Establishment Directive.

In most EU/EEA states, UK lawyers will need to meet the three years’ requirement by the end of the transition period in order to be eligible for requalification through the directive.

Some EU/EEA national bars are considering introducing a 12- to 18-month grace period for UK lawyers who are close to meeting the three-year requirement at the end of 2020.

You’re advised to check with the national bar in the relevant EU/EEA member state.

Law firms with existing operations in the EU/EFTA should also use the transitional period to review whether their existing structures are in keeping with national company law and professional rules for legal practice in that country for third-country lawyers.

UK LLPs (or branches thereof) and other entities should review 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, consideration should be given as to 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.

The UK and Switzerland have agreed a separate transition agreement: for details, see UK solicitors practising in Switzerland.

If no future relationship agreement is reached between the EU and UK

In the event that a new partnership agreement between the EU and UK is not agreed, there will be a significant impact on the trade in professional services, including legal services.

This is because anything less than full access to the single market (or equivalent) will not provide the same level of access for professional service firms.

Indeed, law firms and lawyers will not have the same rights to operate across borders and will face additional restrictions on their activities.

In such a scenario, the UK and EU will fall back on the international rules governing trade in services, such as the General Agreement on Trade in Services (GATS) under the World Trade Organisation (WTO).

This will represent a serious limitation of the current benefits and rights for lawyers and their firms.

Despite the fact that GATS covers legal services, this coverage is limited and in practice means that UK solicitors will only be entitled to those rights granted by the national regulators of EU member states to third-country (non-EU) lawyers.

We’ve prepared an extensive overview of the national regulations that apply in each jurisdiction in the EU/EFTA. Law Society members can request these by emailing international@lawsociety.org.uk

Examples of restrictions on the legal practice of third country lawyers include:

  • restrictions on fly-in, fly-out and/or establishment rights for those lawyers
  • limiting practice areas to international public law and home country law (when a lawyer practises on a permanent basis under their own home title), such as in France, Luxembourg or Germany
  • nationality requirements, meaning one can only be an EU/EEA/Swiss national to requalify in/practise host state law (such as in Austria)
  • local content requirements, where one also has to be qualified in local law (such as in France)
  • strict rules prohibiting local lawyers from partnering with non-EU lawyers (such as in Spain and Sweden)
  • compulsory membership of professional bodies in relation to commercial presence, (such as in France, Germany and Luxembourg) or
  • restrictions relating to company structure or commercial presence, such as restrictions on foreign investment in law firms (such as in France, Spain or Portugal)

In a number of EU jurisdictions, requalification into the local legal profession is subject to a nationality requirement, meaning that the candidate must be an EU/EEA or Swiss citizen to do so.

The nationality requirement is the case, for example, in Luxembourg although it accept waivers to this requirement if the jurisdiction of the candidate would allow the same treatment of their lawyers as the candidate is asking for (reciprocity).

Under the terms of the Withdrawal Agreement, a host state title obtained as a result of a requalification procedure and that was completed before the end of the transition period will remain valid after the end of the transition period, provided the title holder is resident in the EU/EEA at the end of the transition period.

This means that the host state qualification obtained by a UK national in EU/EEA member states will remain valid, even if that member state requires a lawyer to be an EEA national – in other words, the EEA nationality requirement will not apply to UK nationals who requalify in a EU/EEA member state by the end of the transition period.

Importantly, rules on temporary provision of services in person (on a fly-in, fly-out basis, or FIFO, and on longer-term placements) will change and will largely depend on host state policies. Moreover, for all services provided in person, there may be new immigration controls.

In particular, without EU or EEA membership, English and Welsh solicitors will lose their rights of audience before EU courts. This would mean they would be unable to represent their clients at EU-level.

The loss of rights of audience could have a significant impact on numerous practice areas including competition law and intellectual property law.

Similarly, UK lawyers will be subject to national rules regarding pleading before national courts, as opposed to the current rules set out in the Lawyers Directives, which allow EU lawyers representation in the host country courts (subject to local rules but excluding the prohibition of such representations).

Finally, UK lawyers’ communications with clients will lose the protection of legal professional privilege (LPP) before EU courts and EU institutions. Regarding the protection of LPP at national level, this will depend on national rules and practice in each EU jurisdiction.

Bilateral engagement with EU/EFTA member states

We have a long experience of engaging with foreign governments, bar associations and law societies over the world to improve the practice rights of our members overseas on issues such as temporary and permanent presence as well as the condition for joint practice with local lawyers.

Once the UK exits the EU, the EU will view the UK as a third country. EU member states are represented by the EU Commission in all international trade negotiations and member states cannot negotiate their own trade arrangements with third countries.

Under the WTO agreements, countries cannot normally discriminate between their trading partners.

Grant someone a special favour (such as lower customs duty rate for one of their products) and you must do the same for all other WTO members. This principle is known as ‘most-favoured-nation’ (MFN) treatment.

Improvements over market access for foreign lawyers can still be agreed at national level but these would not be specific to UK lawyers only due to the MFN provisions.

However, professional bodies have the capacity to engage in negotiations on agreements regarding the mutual recognition of qualifications and other regulatory matters (MRAs).

Should a no-deal scenario arise, we’ll continue engaging with EU/EFTA stakeholders making the case for open legal services market.

We’ll also explore the possibility of engaging with bars and law societies in EU/EFTA states (and, if applicable, with the SRA and other professional bodies in England and Wales and the rest of the UK) in order to conclude reciprocal agreements on:

  • the mutual recognition of professional qualifications
  • certain conditions of practice such as authorisation of structures or where partnership with local lawyers requires a specific agreement between the competent authorities

UK solicitors practising in Switzerland

The UK and Switzerland agreed a separate transition agreement which include provisions on the position of UK lawyers in Switzerland and Swiss lawyers in the UK.

UK lawyers registered and working in Switzerland, on a permanent basis under their home professional title before the end of the transition period, will continue to be able practice as they do now, while they remain registered in Switzerland.

UK lawyers who have transferred to the Swiss professional title before the end of the transition period will continue to be recognised and will continue to be able to practise as they do now, provided they remain registered in Switzerland.

UK lawyers have a four-year period from the end of the transition period to register, or to start their application to register, to work in Switzerland under their UK professional title on a permanent basis.

UK law firms can continue to serve existing Swiss clients for up to 90 days in each calendar year for at least five years following the end of the transition period where written contracts have been signed and started before the end of the transition period. An extension to the five-year limit is possible through the agreement of a UK-Switzerland joint committee.

Where written contracts have not been signed and commenced by the end of the transition period, and/or for services going beyond the scope of the contracts in place, UK lawyers wishing to service Swiss clients for between eight and 90 days in each calendar year will need to secure a work permit (L permit) and a visa.

Restructuring may be required if a law firm in Switzerland intends to benefit from rights of audience and represent its clients before the Swiss courts.

If not – for example, if the law firm is solely interested in providing English law advice and has no need to appear in front of Swiss courts – firms may be able to continue operating as LLPs.

Resources

UK government guidance

Recognition of professional qualifications

UK lawyers practising in the EU, Norway, Iceland or Liechtenstein from 1 January 2021

Provision of services regulations: guidance for UK service providers and competent authorities

SOLVIT problem solving service

EU, EEA-EFTA and Swiss lawyers in the UK from 1 January 2021

Solicitors Regulation Authority guidance

UK's exit from EU – Possible non-negotiated outcome at end of transition period