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Legal services in the EU-UK trade and cooperation agreement: an initial analysis
Mickaël Laurans, Head of International at the Law Society, gives his initial assessment of the impact of the Trade and Cooperation Agreement on trade in legal services.
The full text of the Trade and Cooperation Agreement (TCA) between the EU and the UK has been published. The representatives of the EU27 have agreed its provisional application from 1 January 2021 and it will now be subject to ratification by the Council of the European Union, the European Parliament and the UK Parliament.
The analysis below is an initial assessment of the impact of the TCA on trade in legal services. Further analysis will be developed in the coming days and weeks.
A section specifically dedicated to legal services…
A full section of the agreement (Part Two [Trade, Transport, Fisheries and other arrangements], Heading One [Trade], Title II [Services and Investment], Chapter 5 [Regulatory Framework], Section 7 [Legal Services] pp. 113–117) is devoted to legal services. It sets the general principle of market access for UK lawyers in the EU (and EU lawyers in the UK) under their home title practice, including advice on home country and public international law, as well as arbitration, conciliation and mediation.
This is welcome news for our sector as it reflects its importance, in itself and as an enabler of cross-border trade in other sectors. It also recognises the specificities of home title practice in international legal practice, without the need for (heavy) mutual recognition procedures and/or requalification in the host title.
Last but not least, it sets a useful and important precedent for specific provisions for legal services in future FTAs: it puts legal services on the map in international trade negotiations.
This is what the UK government means when it states that “in a few areas – most notably legal services – the agreement breaks new ground” (UK Government Summary Explainer).
Our Brexit campaign and the support of the UK Ministry of Justice were key in securing this outcome.
…Which does not ultimately result in much increased market access for UK lawyers
However, the TCA does not result in much increased market access for UK lawyers.
Access is not even comparable to the market access and practice rights afforded to our members as part of the now defunct UK membership of the EU, with the two EU lawyers’ directives on temporary practice and establishment, the mutual recognition of professional qualifications directive and the general single market rules which helped with the setting up of international law firms’ offices across the EU and EFTA.
This is comparable with the situation of non-EU, third-country lawyers seeking to practice in the EU.
This is because Section 7 on legal services needs to be read in conjunction with Annex SERVIN-I (Existing Measures, pp. 530–555 (for general provisions and measures specific to legal services and patent work)) which lists at EU and the 27 member states level the “non-conforming measures”, i.e. the restrictions and exemptions which UK lawyers will face in their practice in the EU.
These measures can effectively cancel or limit the general principle of home title practice in some jurisdictions. They also impact on joint practice with local lawyers and may reflect existing restrictions non-EU lawyers face in relation to partnership, profit-sharing as well as management and ownership in law firms.
An FTA could have achieved preferential treatment for UK lawyers in the EU, compared to other third-country lawyers and subject to the more recent “forward most-favoured nations” provisions in the new generations of EU FTAs, but that is not the case in the TCA.
What has been achieved in the TCA is rather more clarity and transparency as to what these restrictions are, with the EU and the 27 member states having updated their listing of ‘reservations’/‘non-confirming measures’ in the General Agreement on Trade in Services (GATS) and/or previous FTAs to reflect current market access as of 2020 as well as a clearer definition of legal services.
As predicted, as of 1 January 2021 our members face 27 different regulatory regimes, each with its own rights, obligations and restrictions.
Our International department remains available to support our members in understanding these new rules and constraints. You can contact us at firstname.lastname@example.org.
There is however one exception where the deal makes an immediate difference on market access. This is about establishment as a non-EU lawyer in France, as access to France’s new foreign legal consultant scheme was always dependent on the EU having a trade agreement in place with another jurisdiction. The Law Society is in contact with the National Council of French Bars to seek implementation as early as January 2021.
Understanding the new mobility provisions will be key
Having the right to practise as a non-EU lawyer under your home title is one thing. Having the ability to cross a border to provide services to clients and/or to establish on a longer basis in another jurisdiction is also a crucial aspect of our new trade relationship with the EU, with the end of free movement rights and however much COVID-19 has currently put a brake on international travel.
Compared to the GATS, which would have applied in the event of a no deal, the EU-UK TCA has several gains.
First of all, as is the case in other recent EU FTAs, under movement of natural persons (Title II, Chapter 4) the agreement covers several categories of personnel that are not included in GATS:
- independent professionals (IPs)
- short-term business visitors (STBVs)
- graduate trainees (under intra-corporate transferees – ICTs)
These are alongside more traditional categories such as business visitors for establishment purposes (BVEPs) and contractual service suppliers (CSSs). UK lawyers (and other service providers into the EU) will need to become a lot more familiar with these acronyms.
Again, the TCA established general rights and principles which would need to be cross-referenced with the list of “non-conforming measures” in Annexes SERVIN-III and SERVIN-IV which may introduce requirements such as visas, working permits or even economic tests, depending on the jurisdictions.
In a nutshell, there is:
- 90-day visa free presence in a six-month period for STBVs
- good provision for ICTs, giving the right to establish for up to three years for managers or specialists and up to one year as trainee lawyers if your law firm already has offices in the EU
- more concern over the category of IPs with, for example, a six-year professional experience requirement before mobility can be exercised and economic needs tests required in 14 out of 27 member states
We will further develop our analysis of mobility arrangements and complement our understanding of practice rights with the country-by-country provisions on mobility contained in the agreement.
What's lacking for legal services?
The last sections of this preliminary analysis list what is potentially lacking in the TCA as far as legal services are concerned.
The digital trade section of the TCA is seen as best in class and the current COVID-19 crisis has shown us that a lot more can be done digitally, without the need to cross borders and meet physically, including for legal services.
The agreement includes a guarantee that neither the UK nor the EU will discriminate against electronic signatures or electronic documents on the basis that they are in digital form.
The agreement also ensures that contracts can be completed digitally (Article DIGIT-10, pp. 119), with a small number of exceptions which include, however, legal representation services, contracts that require witnessing in person and various contracts that establish or transfer rights in real estate or are governed by family law or by the law of succession.
We will liaise with the UK government to understand the full implications of these exceptions.
Mutual recognition of professional qualifications
Mutual recognition of professional qualifications (MRPQ) is another disappointing feature of the TCA. The UK government was seeking a path to requalification for all regulated professions, including the legal professions, but the EU successfully insisted on the EU-Canada CETA model, with competent authorities and professional bodies invited to submit MRPQ/MRA proposals for approval by the new Partnership Council. This institutional setup is yet to deliver a single MRA between the EU and Canada more than three years after it came into force.
MRPQ is obviously relevant to UK lawyers who wish to start or continue with their EU law practice. A requalification path will continue to exist in some jurisdictions (Ireland; France) but will not be available in most jurisdictions or would effectively mean a return to university in the host states.
We will continue to explore with the Council of European Bars and Law Societies (CCBE) and/or individual bars and law societies what agreement, if any, could be achieved in order to facilitate mutual recognition of UK legal qualifications in the EU.
(Lack of) judicial cooperation in civil and commercial matters
Last but not least, the TCA does not include any provisions on judicial cooperation in civil and commercial matters. This was to be expected, as outside the mandate of the negotiations.
The UK government has now applied to join the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This application has received the support of Norway, Iceland and Switzerland while the EU26 and Denmark (a contracting party by itself due to the Danish opt-out on justice matters) are still to decide.
The Lugano convention is not a single market instrument. Securing the TCA hopefully provides the right context and framework for all parties to progress on Lugano.