Draft Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019

Lucy Frazer Excerpts

Wednesday 16th January 2019 General Committees

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

I beg to move,

That the Committee has considered the draft Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Bailey. The draft statutory instrument forms part of the Government’s preparations should we leave the EU without a deal. The Committee should be aware that the Government have been hoping for a deal, but preparing at the same time for no deal, and, as part of those preparations, publishing a number of technical notices to outline the implications of a no-deal exit for citizens and businesses.

On 12 October the Government published a technical notice titled “Providing services including those of a qualified professional if there’s no Brexit deal”. That notice set out the implications of a no-deal exit for professionals in scope of the two EU directives on lawyers’ services and lawyers’ establishment. The draft instrument makes changes to the arrangements in England, Wales and Northern Ireland relating to those directives, and it remedies deficiencies in the relevant retained EU law arising from our withdrawal from the EU. Scotland will introduce its own legislation on the matter.

It is important to set out the current application of the EU directives. The lawyers’ services directive allows specified lawyers to provide regulated services in a member state other than the one in which they qualified—termed a host state—without the need to register with a host state regulator. Lawyers provide services under their existing professional title, which is otherwise termed their home state professional title. The directive clarifies the regulatory rules that are applicable and the conditions for providing those services in a host state.

The lawyers’ establishment directive allows specified lawyers in one member state to practise reserved legal activities on a permanent basis in another member state under their home state professional title, and the conditions for doing so. It also allows lawyers who are practising in another member state to be admitted to the profession in that member state after three years of practice in the law of that member state, without having to go through the usual qualification routes. European lawyers practising in the UK under the establishment directive must be registered with a UK regulator as registered European lawyers. As registered European lawyers, they have the right to own legal businesses without a UK-qualified lawyer.

The question that therefore arises is: what will change if we leave the EU without a deal? The answer is that the lawyers’ services directive and the lawyers’ establishment directive will no longer apply to the UK, and there will be no system of reciprocal arrangements under which EU and European Free Trade Association lawyers, including UK nationals holding EU and EFTA qualifications, can provide regulated legal services and establish on a permanent basis in the UK, and likewise for UK lawyers in the EU. It is the deficiency in the retained EU law caused by that lack of reciprocity that we are seeking to remedy.

First, I should say that EU and EFTA-qualified lawyers who have already successfully transferred into the English, Welsh or Northern Irish qualification will be able to retain their qualification and practice rights, but arrangements will be different in the future. In the event that the UK leaves the EU without a deal, our services trading relationship with the EU will be governed by World Trade Organisation rules. The general agreement on trade in services prohibits signatory states from giving preferential market access to any other signatory state in the absence of a comprehensive free trade or recognition agreement between them.

We therefore need to fix the deficiencies in the relevant retained EU law caused by the lack of reciprocal arrangements with the EU, while meeting our international obligations. As such, we will revoke the legislation that currently implements the EU framework, and EU and EFTA lawyers will be treated in the same way as other third-country lawyers.

The draft statutory instrument will helpfully provide a transition period to allow registered European lawyers time to comply with the new regulatory position. The transition period will run from exit day until 31 December 2020. It will allow registered European lawyers and those in the process of achieving registered European lawyer status by exit day to practise in the same way as they do now, but with time to adjust. The arrangement will also allow EU and EFTA lawyers with ownership interests in regulated legal businesses in England, Wales or Northern Ireland to adjust their regulatory status.

In conclusion, if we leave the EU without a deal, there will be a deficiency in retained EU law implementing the two lawyers’ directives, because of a lack of reciprocity. This statutory instrument fixes that deficiency. We take the upholding of international obligations very seriously, and it is our international duty to comply with such rules. In the event of no deal, aligning the rights of EU and EFTA lawyers with those of third-country lawyers will allow them to continue to access our world-leading services market, while ensuring that the UK complies with its international obligations.

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[Lucy Frazer]

I thank the hon. Lady for the comments that she made at the beginning of her speech. It is always a pleasure to liaise with her, on these matters as on so many others. She was right to identify the importance of the legal services sector to our country, in terms of not only the amount that the sector brings to the economy, but the number of jobs that it provides. It is one of our country’s most successful industries, providing jobs up and down the country, and we in the Government and the Ministry of Justice absolutely recognise that.

We absolutely agree with the hon. Lady that it would be beneficial to have a future partnership with the EU, with continued reciprocal rights. That is why my Department and the Government more broadly have spent a considerable amount of time negotiating those matters in a future partnership with the EU over the previous months; that is why the Government put the deal that would have enabled a future relationship with reciprocal rights before the House last night; and that is why I voted for it. I hope that hon. Members will see that in the absence of a deal we need this statutory instrument to allow us to comply with our international obligations, including aligning and adhering to rules on reciprocal arrangements, while preserving the ability to promote the attractiveness of our leading legal services market.

[Clive Efford (Eltham) (Lab)]

I wonder what the Minister thinks about the situation in the House at the moment. Does she believe that there is a majority among Members of Parliament to leave the European Union with no deal? Rather than passing all this legislation, does she not think it would be more beneficial for the country if the Government were just to rule out using the option to leave with no deal? That would put the minds of a lot of businesses and industries at rest—

[The Chair]

Order. The hon. Gentleman is straying rather a long way from the detail of these particular regulations. I applaud him for his initiative and ingenuity, but I call the Minister.

[Lucy Frazer]

I, too, applaud the hon. Gentleman. I will end by saying that I commend the draft regulations to the Committee.

Question put and agreed to.