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

Yasmin Qureshi Excerpts

Wednesday 16th January 2019 General Committees

[Yasmin Qureshi (Bolton South East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bailey. I have indicated to the Minister, the Government Whip and the Chair that we will not be pressing this statutory instrument to a vote. I thank the Minister for her courtesy in ringing me to talk about it last week.

The Opposition have some observations about the statutory instrument and its effects. The legal services sector is in a unique position in the European Union. It is widely established that a series of European directives have created a single market in legal services, unlike in other service sectors. Lawyers and law firms benefit from a simple, predictable and uniform system that allows them a temporary or permanent presence in other EU member states, with little scope to introduce national variations. This allows United Kingdom lawyers to service the cross-border needs of businesses and individuals, both from satellite offices in the European Union and through fly-in, fly-out services from their London offices. That is a daily business practice for many firms.

Since this liberalisation, the UK legal sector has become a major exporter to the European Union, with 36 of the top 50 UK law firms having at least one office in another country in the European Union or European economic area, or Switzerland. UK law firms have a presence in 26 of those 31 countries. That has meant that the legal sector has contributed significantly to our economy. In 2017 alone it was worth more than £26 billion to the UK economy—equivalent to 1.5% of UK GDP—and it employed in excess of 380,000 people. The latest statistics show that the legal services sector was responsible for a net export of £4 billion. There is no precise figure for how much of that trade is to the EU, but we are aware that 55% of the UK’s business services exports go to the European Union, and legal services make up a significant amount of UK business services.

A no-deal Brexit would have a significant impact on the ability of UK lawyers to operate in the European Union, and it would lead to World Trade Organisation rules being applied. Progress in developing rules on services at the World Trade Organisation has been very slow. Although it is outside the scope of the statutory instrument, I remind Members that there is a concern that a no-deal situation will have the following consequences for UK law firms and lawyers. Without a future partnership agreement, world-leading law firms in the UK could face significant restrictive regulations on the provision of temporary and permanent services in the European Union 27 countries. Lawyers would face more than 30 different regimes, depending on each European Union and EFTA member state, many of which impose restrictions and limit practice rights for third-country lawyers and law firms.

For example, there are restrictions on practice areas. In most European member states, it is not possible to practise local state law as a third-country lawyer without holding local qualifications. The WTO schedules of commitments under legal services include only home country and public international law. Crucially, European Union law is not treated as a type of public international law, and so is excluded from the scope of the schedules. UK lawyers will therefore not be able to advise on areas such as competition, internal markets and trade. In most member states, it would not be possible, save for a few exceptions, for a third-country lawyer to represent their client in the domestic courts.

Another big consequence is a restriction of modes of practice. Most European Union member states do not permit fly-in, fly-out services by third-country lawyers. If those services are lost, the profession’s ability to continue to advise European clients, represent those with cases involving more than one European Union member state and continue to play a leading role in global investigations will be jeopardised. Fly in, fly out is excluded from the WTO commitments, and each member state imposes its own rules and regulations. For example, France, Germany and Luxembourg require compulsory membership of professional bodies in relation to commercial presence. There are strict rules prohibiting local lawyers from partnering with non-EU lawyers in, for example, Spain and Sweden. There are restrictions on company structure or commercial presence, such as restrictions on foreign investment in law firms or an imposition of a certain legal form on third-country law firms, in, for example, France, Spain, Portugal and Poland.

One of the main issues is that most member states do not allow third-country nationals even to re-qualify in their national legal profession, as that is available only to EU, EEA or Swiss nationals. Again, that will have a big impact on UK lawyers and legal services, and our economy. Our world-leading services, which are rightly recognised across the world, will be seriously impacted.

Those are just some of the consequences. There have been at least two Westminster Hall debates on those and other issues relating to legal matters arising from Brexit. One was on 29 March last year and the other was on 21 November, and I had the pleasure of responding to both from the Opposition Front Bench. The issues I mentioned today were spoken about in detail or alluded to in those debates, and we asked the Government a number of questions. What are the Ministry of Justice and the Government doing to deal with the problems that we will have if we leave the European Union? So far, it seems that no protocols, no agreements, no treaties and no memorandums—no nothing—have been negotiated by the Ministry of Justice or the Government for legal services. There is a grace period until 2020, but nobody knows what will happen after that. Our legal services will be impacted.

This is not new. I am sure these issues have been raised by other hon. Members prior to 2018—I have been dealing with them since last year. I and other hon. Members who were present in the Westminster Hall debates that I have mentioned raised these points then. The Ministry of Justice has had to introduce a statutory instrument to deal with the revocation of all the previous legislation and the things that allowed essentially seamless movement of legal services across borders.

Although lawyers who have already qualified will keep their rights, that is not a great concession because if someone is already qualified in a particular country, it will be difficult to take that back. I know—as does the Minister, who was a practising lawyer as well—that at some point we are going to require another country’s legal jurisdiction. Different countries have different rules. Europe has what we call the continental system, which is a statutory-based codification, and that is a different ball game from trying to practise in common-law jurisdictions, which are very different. It can be an absolute nightmare, and a difficult and lengthy process, to re-qualify in other jurisdictions—and that leaves aside the fact that in some jurisdictions, someone who is not an EU, EEA or Swiss national cannot practise at all. Once we are out of the European Union, we will not be a member of any of those, so we will not be able to practise in many European countries. I do not know why the Department has not grasped the impact of that particular provision on our legal services.

I hope that the Minister and others in the Department are listening. I wish they would get together and sort something out, so that our lawyers can practise across the European Union, the EEA and Switzerland.