The Great Repeal Bill and the regulation of law firms

30 March 2017

We are still a long way from the finish line, but at least with the publication of the Great Repeal Bill: White Paper (“the White Paper”) we have some clarity about the future course of UK domestic law.  This blog is directed at the position in relation to the regulation of law firms.

The EU wide regulation of law firms is primarily to be found in the two directives.  The Lawyers’ Services Directive 77/249/EC permits EU lawyers to provide temporary cross-border services within the EU, without prior notification or registration with the host Member State’s Bar.  The Establishment of Lawyers Directive 98/5/EC, enables lawyers to practise on a permanent basis in a Member State other than that in which their qualifications were obtained and to obtain qualification in the host state after 3 years of practice.   

The White Paper provides that the existing EU directives will become part of UK law post Brexit. It must follow that the UK Government’s intention is that EU lawyers will continue to enjoy the right to practise in the UK under the Lawyers Services Directive and the Establishment Directive.  This is clearly good news for EU law firms who currently have London offices or those that wish to establish London offices in the future.  Of course the UK’s position may change depending upon the negotiations between the UK and the EU.  So, for example, if the ultimate agreement between the EU and the UK imposes restriction on UK law firms practising in the EU beyond the current directives then it may be that the then UK domestic law will impose similar regulatory restrictions.

However, even if this scenario arises, then EU law firms are unlikely to face significant regulatory restrictions in operating in England and Wales (Scotland and Northern Ireland are separate legal jurisdictions) because of the current statutory framework and the proposed SRA reforms.   The Legal Services Act 2007 generally only regulates six reserved legal activities (advocacy, litigation, probate, reserved instruments, notaries and oaths) along with immigration advice.  Legal advice including advice on commercial transactions is not regulated and this is more likely to be the area in which overseas law firms operate.  In addition, the SRA’s proposed reforms to its regulatory framework will allow solicitors to work in unregulated law firm and hold themselves out as solicitors provided they do not undertake any of the reserved legal activities.  These reforms are likely to come into effect in late 2018.  When this happens, it would be perfectly possible for an EU based law firm to operate in England and Wales without any need to engage with the domestic regulatory framework unless it wished to undertake the reserved legal activities.  This would still be the case if the EU based firm employed domestically qualified solicitors who held themselves out as such.  Of course immigration issues may still affect this.

The position is still uncertain for firms based in the UK that operate across the EU.  This would include both domestic firms and those non-EU law firms who have located in London partly because it enables access to the single market.  These firms may still need to establish an EU based entity to preserve access but the nature and extent of their difficulties are still bound up with the negotiations between the EU and the UK.

Further information 

If you have any questions about the issues raised in this blog, please contact Iain Miller or a member of our Regulatory team.

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