Services of Lawyers and Lawyer’s Practice (Amendment) (EU Exit) Regulations 2019

Lord Keen of Elie Excerpts

Monday 18th March 2019 Lords Chamber

Moved by

[Lord Keen of Elie]

That the draft Regulations laid before the House on 12 February be approved.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, this draft amending instrument forms part of our ongoing work to ensure that, if the UK leaves the EU without a deal, our legal system will continue to work effectively. Your Lordships will be aware that, in preparation for leaving the EU, the Government have signed a UK-Switzerland citizens’ rights agreement, as they have done with the EEA states that are outside the EU. This instrument will modify the way in which relevant retained EU law is revoked in order to retain regulatory provisions for those in scope of the UK-Switzerland citizens’ rights agreement if a withdrawal agreement with the EU is not agreed and implemented before the UK’s exit from the EU. This draft instrument makes changes to the relevant legislation in England and Wales and in Northern Ireland. Scotland is legislating separately with the same policy intention.

Noble Lords will be aware that the UK, as an EU member state, is required to implement two European directives for legal services which are extended to Swiss nationals under the EU-Switzerland free movement of persons agreement. As part of preparations to leave the EU, the Government laid a statutory instrument to amend the domestic legislation implementing these two directives. The original statutory instrument revokes the relevant provisions in the event that the UK leaves the EU without a deal.

This draft instrument amends the way in which the domestic legislation is revoked, retaining some provisions for Swiss lawyers and those in scope of the UK-Switzerland citizens’ rights agreement. This is to ensure that retained EU law operates effectively in the event that the UK leaves the EU without a deal, and that deficiencies in retained EU law are remedied in a way that reflects our agreement with Switzerland.

The UK-Switzerland citizens’ rights agreement grandfathers recognition and establishment rights for UK and Swiss lawyers, provided that they have transferred into a legal profession of the other state before exit day. It also protects the rights of UK and Swiss lawyers who are established, registered and providing services under their home title. So long as they remain registered, they will be able to continue to provide services as they do now. It also provides a transition period of four years for lawyers to register as registered European lawyers or to transfer into a legal profession of the other state under these arrangements. These arrangements include citizens who have started but not finished studying for professional legal qualifications.

Finally, it allows lawyers and law firms to continue to provide up to 90 days’ temporary services a year for at least five years, where a contract to provide such services was agreed and started before exit. Swiss lawyers will also be able to apply within four years of exit day to join an English and Welsh or Northern Irish profession on the basis of three years’ qualifying experience as a registered European lawyer, in addition to routes available to foreign-qualified lawyers. For Swiss lawyers and law firms with interests in the UK, this instrument will bring legal certainty. It will effectively implement in domestic law the obligations that we have undertaken at the level of international law pursuant to the UK-Switzerland citizens’ rights agreement, which is why it is necessary to bring forward this instrument at this time. I beg to move.

[Lord Thomas of Gresford (LD)]

My Lords, I congratulate the Ministry of Justice team on producing an impact assessment which would meet the deepest desires of the noble Lords, Lord Adonis and Lord Foulkes. It is excellent. It fully covers the material and, combined with the evidence base, must have involved a great deal of work. The tragedy is that it refers only to 10 Swiss lawyers in this country—and not only that but it has no effect unless we leave the EU without a deal, which looks increasingly unlikely, having regard to the Motions passed in the House below. However, in itself this instrument contains nothing objectionable.

[Lord Beecham (Lab)]

My Lords, it is ironic that our departure from the EU, if it occurs, will necessitate an agreement with Switzerland, which of course is not a member. Can the Minister indicate the extent of the problem that the regulations seek to address? How many Swiss lawyers currently practise in the UK—my understanding is that there might be as few as 10—compared with EU lawyers, and how many UK lawyers do so in Switzerland? How do these figures compare with those of other EU states?

The regulations are described as resulting “in the short term” with parties avoiding,

“the costs of adjusting their business models”.

How long is this short term expected to be, and what is the estimate of the cost of adjusting business models?

Paragraph 12 of the Explanatory Memorandum avers that there are all of 10 Swiss registered European lawyers in England and Wales. How many is it estimated will be here after Brexit? The impact assessment states that clients seeking legal services from them will not be allowed to obtain them unless the lawyers are “permanently established in the UK”. How is that status to be established? How many are deemed to fit that description now—presumably there are 10—and how will that be judged in the future? What is the rationale of the provision that Swiss lawyers will have only four years after Brexit to apply for REL status? Why will Swiss lawyers with contracts be able to serve clients for 90 days a year for up to five years? Why just 90 days? Will they have to abandon their clients in the midst of cases, for example?

The impact assessment fails to live up to its title when it explicitly states that:

“The cost of this change cannot be quantified as no data exists showing the number of Swiss lawyers providing regulated services in the UK on a temporary basis”,


and that the,

“cost to regulators is not quantifiable”.

Can the Minister indicate which provisions of these regulations, if any, are quantifiable? What is the anticipated impact on UK lawyers practising, or seeking to practise, in Switzerland, given that they will have a four-year period to register or, if not yet in Switzerland, to apply to transfer to Swiss professional status? UK law firms will be able to continue to serve existing Swiss clients for up to 90 days a year for five years after Brexit subject to written contracts being in place before exit day. What is the estimate of the number, and proportion of the existing number, that Her Majesty’s Government envisage will do so?

The Law Society points out that there is no provision to allow UK law firms to operate in Switzerland under their current structures. What, if any, estimate have the Government made of the impact of this position? The society suggests that some firms will have to amend their corporate structure and that a future trade agreement with Switzerland will have to be negotiated. What, if any, plans do the Government have to deal with this eventuality? What estimate have the Government made of the impact of the changes on the international standing of UK legal services and the contribution they make to the standing of our legal services and to our economy?

[Lord Keen of Elie]

I am obliged to noble Lords. I think the answer to the question posed by the noble Lord, Lord Beecham, is that we are implementing an international treaty, and that is why these steps have been taken. However, to respond to the point made by the noble Lord, Lord Thomas of Gresford, no Swiss lawyers are registered with the Bar Standards Board. We understand that 10 are registered with the SRA, and that is where that figure comes from.

It is not necessary for Swiss lawyers coming into the United Kingdom to carry out temporary work to register and therefore it is not possible to monitor the number, because they are entitled to come in on a temporary basis to provide legal services. The period of four years reflects the fact that it is possible for a Swiss lawyer to transition into membership of the relevant professional body in the United Kingdom in under four years—I understand that at present it is three years—and therefore there is full allowance for that.

With regard to English lawyers practising in Switzerland, at the last count, which I think goes up to 2015-16, in the region of 236 lawyers practising in Switzerland full-time were English-qualified.

With regard to the future corporate structure of English firms operating in Switzerland, I would not venture a view as to what the precise structure would be in the future. However, from engagement with the major legal firms in England and Wales over the last year or so, it is quite clear that they have made provision in anticipation of our leaving the EU, with the consequent effect that that will have on the EU-Swiss agreements on which we rely. We can therefore be reasonably confident that their structures will be compliant with the requirements of Swiss law.

On the question of the international standing of our legal profession, we see no reason to doubt that it will be maintained after Brexit, nor any reason why the terms of the UK/Switzerland citizens’ rights agreement as implemented by this SI should in any way derogate or detract from the standing of our legal profession in England and Wales, and indeed in the UK as a whole.

In these circumstances, we consider that this is a relatively technical amendment to the existing provision that is being made in anticipation of our departing from the EU without a deal. Of course, in the event that the deal is implemented and we go into a transition period, the application of this instrument will be deferred until the end of that period. We will then determine at that time whether in fact we have in place the relevant free trade agreements with both the EU and Switzerland.

[Lord Beecham]

Before the Minister sits down, obviously I was throwing questions at him that he may not have been able to answer, so will he perhaps cover those that have not been answered in a letter to me in due course?

[Lord Keen of Elie]

I will consult Hansard. If it appears that there is a question that the noble Lord posed that is relevant to this instrument then I will respond.

Motion agreed.