In Industry Insights

On 22 February the Ministry of Justice (MOJ) published new No-deal Brexit guidance for lawyers. Although it is nothing that was not known before, this document is a must-read for:

  • European lawyers practising in the UK
  • Solicitors and other legal professionals practising in the EU (including EFTA countries)
  • Law firms operating across European jurisdictions

It’s probably fair to say that we have taken the freedom to practice law across Member States for granted. But with ‘No-deal ‘being talked up as a real possibility, we have now reached a point where legal professionals are having to face up to what happens next. When the 2-year clock started, this all seemed like a remote possibility.

Scary stuff, if your practice relies on cross-border practising rights.

We are no longer talking about hypothetical situations, but proper contingency planning. And the clock is quickly running down.

Background

This new guidance adds to the 2018 technical notices published by the UK government, which was swiftly followed by guidance from the SRA and Law Society. If ‘No-deal’ is an issue for you or your firm, you should already be familiar with these documents.

The Lawyers Establishment Directive, Lawyers Services Directive and Mutual Recognition of Professional Qualifications Directive currently put in place a framework through which UK lawyers can practice law in the EU and vice versa.

These Directives give European lawyers the legal right to practise under their home title in another Member State, and even to cross qualify as a lawyer of another Member State without needing to go through qualification (subject to eligibility).

In the UK, there are around 700 Registered European Lawyers (RELs) practising under SRA regulation. RELs are subject to the same rules of conduct as solicitors, and in return are entitled to undertake reserved legal work and own SRA-regulated practices. Some RELs go one further and cross qualify as solicitors under the Directives. This whole system will come to an end in a ‘No-deal’ Brexit.

It is these same Directives which have allowed many UK lawyers to cross qualify as Irish solicitors (as well as other jurisdictions), in the hope of ‘Brexit-proofing’ their businesses. The thinking is that cross qualification gives a lawyer a permanent foothold into the EU/UK in the event that the Directive rights fall away. The FT reported that 1,000 applications were made to the Irish regulator in the first 12 months following the referendum.

The headlines

In a ‘No-deal’ situation:

  1. The legal basis for cross-border practise will cease in its current format. You therefore cannot rely on the Directives remaining in place, or indeed being honoured by local regulators.
  2. Legal professionals may therefore have to rely on bilateral agreements between UK and local regulators (we understand that negotiations are taking place), or indeed unilateral arrangements.
  3. UK lawyers will have to take into account general ‘freedom of movement’ restrictions post-Brexit, including the right to live and work in other jurisdictions. ‘Fly in, Fly out’ legal services may be disrupted or unavailable altogether.
  4. UK lawyers practising in the EU should consider registering with their host jurisdiction, or another EU ‘passport’ jurisdiction, under the current framework before it falls away. In a ‘No-deal’ Brexit, UK lawyers are likely to be treated as any other ‘third country’ lawyer by EU jurisdictions. You should check with local regulators in your host jurisdiction how this will affect you.
  5. UK lawyers who have cross-qualified to an EU legal profession under the Lawyers Establishment Directive should check with their host regulator that their qualification will continue after a ‘No-deal’ Brexit. (It should).
  6. UK lawyers who have ownership interests in EU law firms need to take advice from local regulators. There is no guarantee that EU jurisdictions will permit ownership from ‘third country’ lawyers. Each Member State has its own rules regarding ownership.
  7. EU lawyers practising in the UK need to be aware that the Registered European Lawyer (REL) status will fall away in a ‘No-deal’ scenario. However, the UK government has committed to a transition period until the end of 2020. This means that:
    • RELs will be able to continue to practise as RELs during the transition period
    • RELs will be entitled to apply to qualify as solicitors during the transition period
    • The SRA will continue to process REL applications, so long as they were received before the UK leaves the EU
    • EU lawyers who have already qualified as UK solicitors under the current Directives will continue to be recognised.
  8. After the end of the transition period, EU lawyers will continue to be able to practise the law of their home jurisdiction in the UK under their EU professional title. They will not however be able to:
    • Provide reserved activities (those that only UK lawyers and RELs can provide)
    • Own a regulated legal business, unless it is an alternative business structure (ABS)
    • Provide legal services in a regulated law firm, unless under the direct supervision and control of a UK lawyer
  9. The other routes to UK qualification after the end of the transition period will include the Qualified Lawyers Transfer Scheme and the new Solicitors Qualification Exam.
  10. All lawyers and firms operating across borders should consider:
    • Whether visas or other permissions will be required once ‘freedom of movement’ rights come to an end.
    • To what extent the loss of rights of audience and Legal Professional Privilege before European/UK courts will affect their practice.
    • Whether law firm structures will need to be amended to comply with local laws. A key consideration will be whether local laws allow for shared ownership structures with non-lawyers of the jurisdiction.

So what are we likely to see?

Some last-minute scrambling around, unless the politicians provide some certainty sharpish.

UK lawyers who rely on cross-border practising rights in the EU should have already made contingency arrangements for the ‘No deal’ scenario. If you have left it until now, you should urgently take advice from your host regulator and the Law Society.

European lawyers practising in the UK likewise need to ensure that they have taken steps to protect their practising status, by:

  • Registering as RELs before the 29 March 2019
  • Considering cross qualification as a solicitor where they can demonstrate 3 years practising as an REL. You should be able to do this during the transition period (i.e. up to the end of 2020).

For those ineligible for the above (or who miss the boat), they may need to rely on Registered Foreign Lawyer status, which broadly allows overseas lawyers to set up in practice with UK lawyers (with limited practising rights). Or simply not practise any English law or reserved work.

We may also see an uptick in ABS applications for those ineligible to take advantage of the current arrangements. An ABS allows ‘non lawyers’ (including an individual qualified in another jurisdiction, but without RFL status or without formal practising rights in the UK) to own and manage law firms.
Of course, this is a very fluid situation and may all be academic if something changes…

If you have any specific concerns about how this will affect you, please contact us on +442920 660160 or [email protected]

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