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Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2020

Volume 807: debated on Thursday 29 October 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2020.

My Lords, these regulations relate to the recognition of legal qualifications and European lawyers’ practice rights and form part of the Government’s preparations for the end of the transition period.

This instrument will revoke and replace our existing legislation made in 2019 in preparation for the UK leaving the EU without a withdrawal agreement. It will remove from our domestic legislation in England, Wales and Northern Ireland any preferential practice rights for EU, EEA and Swiss lawyers, so that they are treated in the same way as third-country lawyers after the transition period. These regulations remedy the deficiency in retained EU law as such law makes provision for reciprocal arrangements with the EU which will no longer exist. However, EU and EEA EFTA-qualified lawyers who have already successfully become solicitors or barristers before the end of the transition period will be able to retain their qualification and related practice rights.

Noble Lords will be aware that the Government have signed agreements with the EU, the EEA EFTA states and Switzerland, which contain arrangements regarding the UK’s withdrawal from the EU. This instrument will give effect to provisions in those agreements relating to lawyers’ practice rights and the recognition of legal qualifications for those within scope of the agreements. Scotland will be taking forward its own legislation on this matter.

Before I turn to the detail of the instrument, I will briefly set out the background. EU law currently enables UK, EU and EFTA lawyers from one state to establish and practise in another state under their home-state professional title without necessarily having to requalify in the other state. In 2019, the Government made legislation which removed the preferential practice rights of EU and EEA EFTA lawyers in England, Wales and Northern Ireland to come into force on exit day, which I will refer to as the 2019 regulations. A further amending instrument was made, again in 2019, to implement parts of the Swiss citizens’ rights agreement.

The 2019 regulations and the 2019 amendment regulations were not designed to come into force at the end of the transition period under a withdrawal agreement. Given that the UK secured a withdrawal agreement and a separation agreement with the EEA EFTA states, as well as the citizens’ rights agreement with Switzerland, there are provisions in the 2019 regulations which are either no longer needed or will not function correctly. Furthermore, additional provisions are needed to implement the relevant provisions of the agreements relating to lawyers.

This draft instrument will therefore revoke the 2019 regulations and the 2019 amended regulations. Subject to transitional provisions, it will also revoke the domestic legislation that implemented the lawyer-related EU directives—the European Communities (Services of Lawyers) Order 1978 and the European Communities (Lawyer’s Practice) Regulations 2000.

The lawyers’ services directive and lawyers’ establishment directive will no longer apply to the UK, and there will be no system of reciprocal arrangements under which EU and EFTA lawyers can provide regulated legal services and establish themselves on a permanent basis in the UK and, likewise, UK lawyers in the EU.

This instrument will implement provisions in the EU withdrawal agreement and the EEA EFTA separation agreement which allow applications to join one of the legal professions in England and Wales or Northern Ireland made before the end of the transition period to be completed under the current rules.

This instrument will also implement a transition period of four years from the end of the transition period for Swiss lawyers within scope of the Swiss citizens’ rights agreement to register as a registered European lawyer and to practise under their Swiss professional title or to apply to join one of the legal professions in England, Wales or Northern Ireland. Additionally, it will implement provisions which allow lawyers established and employed in Switzerland to continue to provide temporary services under the lawyers’ services directive for up to 90 days in a year, for at least five years, where this is under a contract agreed and started before the end of the transition period.

Finally, this instrument will implement provisions in the agreements to facilitate regulator-to-regulator co-operation and will make further provision to enable regulators in England, Wales and Northern Ireland to complete any ongoing disciplinary proceedings against EU or EEA EFTA lawyers which commenced before the end of the transition period. By aligning the rights of EU and EFTA lawyers with those of third-country lawyers, we will still allow them to continue to access our world-leading legal services market, while ensuring that the UK complies with its international obligations. I beg to move.

My Lords, I declare my interest as a practising solicitor and a member of the Law Society of England and Wales. These measures are part of a plethora of instruments brought about by our exit from the European Union, an exit that makes us a third country in relation to EU provisions and regulations of all kinds.

Some of my particular interests in this House are in the fields of security and justice and in those areas our new status as a third country is particularly problematic, especially where, in order to protect our citizens, we need to carry on a strong co-operation to defend us from terrorism and major criminality by the exchange in real time of information and data. Inevitably, our new status will diminish our rights in that regard and, unless we can find a way to avoid the third-country category, the challenges ahead are difficult to meet and solve.

Here before us are some regulations that are inevitable because of that new status. They are no doubt necessary, but regrettable nevertheless. Over many years, the reputation and strength of our legal services has grown and through calm and constant negotiations, in which I and many others had the privilege to be involved, we have established the rights of our lawyers and lawyers from other European nations to practise law in each other’s jurisdictions, so that until this time the free flow in both directions has become reasonably straightforward.

Of course, the journey has not always been easy because in law, as in other professions, there have been the residual elements of market protection or closed-shop mentality in a number of countries. However, recently we have seen a lessening of boundaries that has resulted in the growth of services which, while being of general benefit, has been particularly important to this country, to our financial services industries and the City of London and our national legal practices in particular. Therefore, noble Lords will understand why I have some regret for these measures.

Effectively, from 1 January 2021 UK-qualified solicitors will no longer be able to practise as EU lawyers in EU and EEA member countries. They will lose their rights of audience before EU courts and all communications between UK-qualified lawyers and their clients will lose the protection of legal professional privilege in EU courts and institutions—one of the most important elements of that relationship. Similarly, the same will apply in reverse to European-qualified lawyers.

UK lawyers, if they wish to continue European practice, will be obliged to requalify in a host state under article 10 of the establishment directive. This will be time consuming, costly and uncertain of outcome. UK law firms might have to cease activities in other European countries if professional rules or company law are inconsistent with ours. Also, some national rules on the continent do not allow a mix in a single legal firm of domestic and third-country lawyers. This means that the complications I have stated, plus differences in the limited liability of such entities, will force the termination of many international firms.

Of course, the Government have stated, which is welcome, that they are seeking a future relationship agreement with the EU. We do not know how that is going, but without it, and comprehensive provisions related to services as opposed to trade, lawyers and the vital services that they provide will suffer badly. Without it, the UK and the EU will fall back on the General Agreement on Trade in Services—GATS—under the umbrella of the WTO. If so, lawyers cannot guarantee that they will receive the protection of EU regulations, which would be universally applied. Instead, they will be at the mercy of individual states’ treatment of third-country lawyers, which, of course, varies between states. There are limitations; these usually include certain areas of practice, such as only permitting in the fields of international public law and home country law from the lawyer’s perspective. Unfortunately, some nationality requirements even block UK lawyers from requalifying and prevent new partnerships being formed or continued between EU and non-EU citizens.

As I suggested, being outside the EU, our solicitors will lose all rights of audience in front of EU courts, which is most important in some practice areas, such as competition law and intellectual property law—fields in which our practitioners are particularly needed and successful, and on which the economic advancement of the UK in the post-Brexit world surely partly depends. How we and our European neighbours allow market access to foreign lawyers in future, in the event of reliance on WTO rules, also limits our choice based on historical associations. As noble Lords will know, the most favoured nation provisions do not allow discrimination, even positive discrimination, between trading partners.

I have highlighted some of the areas of difficulty and disadvantage to United Kingdom lawyers in coming months. I accept that, of course, our Government can alleviate these problems to some extent by incorporating in their current negotiations with the EU a clear mutual recognition of professional qualifications provision, but history demonstrates the problems in re-achieving what we are now losing. Mutual recognition agreements between specific nations could follow if such arrangements were in a trade agreement and given sufficient prominence.

In the provisions before us, I am pleased that one of the welcome items is in respect of RELs, or registered European lawyers. They currently have only until the end of this year to meet the UK registration requirement for re-qualification. It would be very helpful and a positive gesture if a grace period could be afforded to those who need more time to requalify, even if they reach three years of being first registered after 31 December.

At the end of the day, there is an inevitability to measures such as these, but we have it in our power to ensure that implementation leaves us with minimum damage to vital parts of our service industries and maximum good will with our European neighbours, with which we will need to co-operate in these and so many other areas in future.

I welcome the experienced speech from the noble Lord, Lord Kirkhope, who obviously has a great deal of experience in this field. I was interested in the debate in the House of Commons, when this statutory instrument was before its Delegated Legislation Committee. Mr Alex Chalk, the Parliamentary Under-Secretary, claimed that we are an open society, particularly when it comes to legal practice. He said:

“We want to be a country that continues to attract the brightest and best lawyers from around the world, as long as they are … properly qualified and this is the appropriate place for them to practise.”—[Official Report, Commons, Eighth Delegated Legislation Committee, 22/9/20; col. 6.]

This was a curious thing to say while introducing a statutory instrument which abolishes reciprocity between lawyers in Europe and our own legal profession. There are transitional provisions to protect European lawyers who currently work in this country. They have a limited time, as the noble Lord, Lord Kirkhope, pointed out, in which to seek qualification with United Kingdom legal regulating bodies; after that, they must take their chance with lawyers from all over the world.

Will the Minister explain clearly what routes there are for qualification or permission to practise in the United Kingdom for worldwide lawyers, other of course, than by applying to become members of the Law Society or the Bar and taking the necessary professional examinations? When I wanted to appear to conduct a case in Scotland, the noble Lord, Lord Forsyth, had he been here, would have been pleased to know that I was completely intimidated to find the barriers put in the way of a Queen’s Counsel from Wales. It was easier to be admitted to the Bar in Hong Kong or Malaysia or Singapore or, indeed, in the Caribbean.

The noble and learned Lord, Lord Keen of Elie, said on 15 January 2019:

“In the event of us exiting without any deal, there will be no reciprocal rights”

and that the regulations

“are necessary in order that we can establish a position in which all third-party country lawyers will be on the same standing in the absence of a free trade agreement or other agreement with a third-party country.”

He said that it was clearly

“a matter that we would wish to address in future negotiations consequent on our exit from the European Union. This is dealing with the position in the United Kingdom in light of the existing regulatory regime under EU law. Clearly, and quite patently, you could not address the question of how the EU 27 are going to treat our lawyers going forward”.—[Official Report, 15/1/19; col. 177.]

Well, 22 months have gone by since he spoke and we do not seem to have gone forward at all. Can the Minister confirm that, as from the end of the transitional period, UK lawyers will gain no opportunity in future to have rights of audience or rights to practise in EU member states? Are there negotiations for a deal about reciprocity for legal services? If so, what are they?

The noble Lord, Lord Kirkhope, referred to the costly and uncertain outcome of the current position and the blocks placed on qualifications overseas by various countries. The noble Baroness, Lady McIntosh of Pickering, pointed out in a debate on the precursor to these regulations that

“when the regulations were passed … Ireland’s professional body has taken the opportunity to increase the cost of qualifying as an Irish lawyer to practise there from £300 to £3,000.”—[Official Report, 30/1/19; col. 1141.]

Those are some of the blocks to which, no doubt, the noble Lord, Lord Kirkhope, referred.

Mr Chalk asserted blithely on 22 September that:

“We will continue to remain an attractive part of the world, because we believe in upholding the rule of law. Long may that continue.”—[Official Report, Commons, Eighth Delegated Legislation Committee, 22/9/20; col. 6.]

This was only six days after the resignation of the noble and learned Lord, Lord Keen of Elie, so he can hardly have been unaware of what he was saying. Mr Chalk—who is a very personable and skilled Queen’s Counsel currently working his passage through the Tory ranks—was, I am afraid, somewhat bravely off message. I fear for his future career under the present Administration, who, as we know, have complete disregard for the rule of law, as exemplified not merely by Mr Dominic Cummings’s jaunt to Barnard Castle—now the stuff of legend—but by the provisions of the United Kingdom Internal Market Bill, which it is the duty of this House to excise. I am sure that Mr Chalk is busy reflecting on his position; a good resignation would see him reconciled to his professional colleagues and likely to flourish in a more sensible future Administration, if the Tories are ever forgiven for this one.

My Lords, the purpose of this instrument is to implement into domestic law the provisions relevant to lawyers’ practice rights and the recognition of legal qualifications in the EU withdrawal agreement, the EEA and EFTA separation agreement and the Swiss citizens’ rights agreement. It ensures that EU lawyers who apply to practise law across England, Wales and Northern Ireland before the end of the transition period can have their applications properly considered. The instrument also protects Swiss lawyers who have been practising in England, Wales and Northern Ireland and implements a four-year transition after Brexit for Swiss lawyers to register and practise law across those three UK countries.

The instrument also allows cross-border co-operation between legal regulators in the jurisdictions of England, Wales and Northern Ireland and the EU regulators. Importantly, this instrument will enable regulators to complete ongoing disciplinary proceedings, as we have heard from the Minister, against EEA, EFTA and Swiss lawyers, which had commenced before the end of the transition period.

In the Explanatory Memorandum, the Government state that:

“The impact of this instrument on business, charities or voluntary bodies is not … quantifiable”,

because it is not known what the individual lawyers will choose to do. Will they continue with unregulated activities, will they undertake regulated activities under supervision, or will they transfer to the domestic legal professions? Having looked at the Explanatory Memorandum, it does not seem to me that there are that many RELs—registered European lawyers—in the country. Can the Minister say whether the RELs themselves have in fact been asked what they plan to do with their activities post Brexit? Have they been directly consulted?

It is clearly right that we should meet all our obligations under the withdrawal agreement and that we should also facilitate and help the lawyers concerned to continue practising law here. Britain’s legal landscape needs to be outward-looking and welcoming. Colleagues with similar qualifications should be welcome to practise here. As has been pointed by the noble Lord, Lord Thomas, this point was made by the Minister in the other place; it is surely the purpose to keep the UK outward-looking and as a destination for legal and financial expertise. So I have another question for the Minister: how will the principles outlined in this statutory instrument be applied to lawyers from the rest of the world—from America and areas outside of those we are discussing today? Of course, they too may wish to come here to practise their professions on some sort of reciprocal basis.

Speaking on behalf of the Opposition, we will not oppose these regulations, but the two speakers before me raised some very pertinent points. The noble Lord, Lord Kirkhope, described the instrument as necessary but regrettable, and he highlighted very effectively the difficulties before us and before the Government. He asked a good question about giving a grace period to the registered European lawyers in their application process. The noble Lord, Lord Thomas, also made some important points about the reciprocity of legal services. I look forward to the Minister’s answers to those questions. Underlying all the points that have been made is the benefit to the UK of keeping the legal profession as open and welcoming as possible while maintaining the high standards that have led us to the strong position that we hope to maintain.

I thank all noble Lords for their valuable contributions. I will start with my noble friend Lord Kirkhope. I listened to everything he said. I do not have very much to say, other than that we have left the European Union and we need to make these SIs to protect our UK lawyers through the transition period and give a clear understanding to our European and Swiss lawyers about how they can remain in this country if they wish to do so. I have taken note of the idea of a grace period. I will certainly go back to the MoJ and say that that has been brought up and that we perhaps should consider it.

All three speakers spoke about third-country lawyers. Quite rightly, our legal services market is already one of the most open in the world. I say to the noble Lord, Lord Ponsonby, that we are not changing that at all. All we are doing is saying that, after the transition period, EU lawyers will have the same rights as those third-country lawyers. We regulate only certain legal services. Many foreign law firms provide services to clients without needing to be regulated in the UK.

Third-country lawyers also have significant opportunities to pursue careers in legal services in the regulated sector of the UK. This includes accelerated routes to seek admission as solicitors or barristers through transfer examinations, and to hold ownership and management interests in legal businesses alongside our UK lawyers in a regulated market. There is a public interest risk in retaining the current framework for EU and EFTA lawyers without the benefit of existing EU rules on the regulatory co-operation and oversight that we have had. There is a good and very exciting opportunity for EU lawyers to join third-country lawyers in this market.

My noble friend Lord Kirkhope brought up what the withdrawal agreement means for lawyers. Under the withdrawal agreement, during the transition period existing rights, including lawyers’ home state professional title practice rights across the UK and the EU, will continue.

The withdrawal agreement allows UK lawyers resident in the EU 27 at the end of the transition period who have transferred to the host state profession to continue to practise in the member state in which they reside, subject to the regulatory rules in that member state. This means, for example, that where a UK lawyer is living in Germany and has been successful in joining the German legal profession, that will continue to be recognised. Similarly, EU lawyers who are resident in the UK at the end of the transition period and who have transferred to one of the UK’s professions will be able to continue to practise in the relevant part of the UK, subject to the relevant regulatory rules. Those are the matters that will be dealt with soon after the withdrawal agreement comes into force.

A number of noble Lords asked what impact the outcome of the negotiations with the EU will have on this instrument. I assure them that the outcome of the negotiations should have no effect at all on this instrument.

The noble Lord, Lord Thomas, asked what we were going to do to protect the rights of UK lawyers in the EU and EFTA countries. As EU and EFTA lawyers will be subject to domestic rules in the UK, UK lawyers wishing to practise in the EU and EFTA states will be subject to the national rules and regulations of those individual EU and EFTA member states. This will vary between member states and may vary within member states where they have multiple regulators. This instrument does not and cannot address the issues of the rights of UK lawyers in the EU and EFTA states. However, we continue to work closely with UK regulators and professional bodies as they develop guidance for EU and EFTA lawyers in the UK and UK lawyers working in the EU and EFTA states. Continued information sharing and joint efforts to secure arrangements for UK lawyers through regulator-level agreements will be important to protect future market access. For UK lawyers working in the EU and in EFTA states, given the range of regulatory arrangements that may apply, we have advised them to contact their EU or EFTA member state regulator for guidance. The Government are doing everything they can to support lawyers through this change.

The noble Lord, Lord Ponsonby, asked me how many lawyers will be affected by these regulations at the end of the transition period. Estimating the total number of lawyers exercising rights under the lawyer-related EU directives in England and Wales and Northern Ireland or UK lawyers exercising such rights in an EU or EFTA state is difficult, as lawyers providing services on a temporary basis do not need to register with a regulator in the other state, so no data exists to quantify their activity. In terms of EU or EFTA lawyers exercising their rights to establish in England and Wales permanently, the Solicitors Regulation Authority data shows that there are 783 registered European lawyers registered with the SRA in England and Wales as of August 2020, while there are 301 English and Welsh solicitors practising as RELs in the EU. That will give the noble Lord an idea of the numbers that we are talking about.

The noble Lord, Lord Ponsonby, also asked if we have done any consultation with those RELs. The draft regulations remedy a deficiency in retained EU law, but also ensure compliance with international obligations. As such, we could not conduct a meaningful consultation on the approach we have taken.

I think that I have answered all the questions. However, I will look at Hansard early next week and if I have missed any questions I will certainly come back to noble Lords. The UK Government are committed to protecting the citizens who benefit from rights under the agreements—many of whom make valuable contributions to the UK legal profession. It is also important that this instrument makes other changes to ensure that we remove the EU frameworks, as we can no longer provide preferential rights to EEA countries unless provided for under a comprehensive FTA, except the transitional provisions to give effect to the relevant provisions of the agreements. Aligning the rights of EU and EFTA lawyers with those of third-country lawyers will allow them to continue to access our world-leading legal services market while ensuring that the UK complies with its international obligations.

The rights of UK lawyers in EU EFTA countries cannot fall under the scope of this instrument. The rights of practice, ownership and establishment of UK nationals or those with a UK qualification in the EU will be governed by the national policies and rules of individual member states. We continue to work closely with the UK regulators and professional bodies as they develop guidance for EU and EFTA lawyers in the UK, and UK lawyers working in the EU and EFTA.

The UK legal services sector is one of the leading and most attractive in the world. The Government are committed to championing the sector both through promoting legal services overseas and maintaining its competitiveness. I underline once more that this instrument is a vital part of the Government’s preparations for the end of the transition period and enables us to comply with our international obligations.

Motion agreed.

My Lords, the Grand Committee stands adjourned until 6.30 pm. I remind Members to sanitise their desks and chairs before leaving the Room.

Sitting suspended.