The Brexit deal that was reached just before Christmas 2020 comes as a major relief to EU and UK businesses who feared chaos and uncertainty after a possible no-deal. Change will come however and consequences for businesses on both sides are inevitable. The legal industry is no exception. The consequences for law firms and lawyers remain, however, to a large extent unclear.
A brief section in the Trade Agreement is dedicated to legal services and presents the basis for UK lawyers providing services in the EU and vice versa. Key element is that EU Law (i.e. the law system produced by the EU Institutions and overruling the national law of each Member State in case of conflict) is a forbidden area for UK lawyers providing services in one of the EU Member States. They are allowed, subject to local registration requirements, to provide services in relation to UK law and to public international law, excluding EU law. On the other hand, lawyers qualified in one of the EU Member States are allowed to provide services in the UK, but only in relation to their home jurisdiction and in relation to public international law (again, EU law excluded).
This restricts the room to manoeuvre when offering legal services overseas. Now UK lawyers are excluded from practicing EU law, they are de facto denied access to the European market. One of the solutions is to comply with the respective regulatory frameworks of EU Member States and to qualify as a lawyer in one of the EU jurisdictions. A qualified UK lawyer who also qualifies in Belgium can count Belgium as his or her home jurisdiction (the jurisdiction in which the professional title is acquired) and would be able to offer full legal services in Belgium, including EU law. (NB: Several firms have already registered some of their lawyers in Ireland and with the Brussels Bar in Belgium).
The amount of UK lawyers qualifying in EU Member States will probably be limited. A more likely consequence is an increase in local counsel instructions coming from UK-based firms. This constitutes opportunities for EU firms and increases the relevance of a well-designed referral system for EU-based firms to be rolled out in the direction of their British counterparts.
It should be noted in this respect that nothing prevents UK firms not yet present in the EU Member States’ jurisdictions to establish a branch in the EU through which services can be provided. However, the services provided can only be in relation to UK law and public international law (excl. EU law). Establishment of a branch and the delivery of legal services remain subject to local requirements, such as Bar registration and other applicable regulations.
Another consequence is likely to be felt in the legal disputes sector. There is uncertainty to what extent judgments of the British courts will be recognised in the EU. This will have an effect on the number of cases in the UK as it is potentially no longer the preferred jurisdiction to solve legal disputes.
Although the deal is on the table, and many economic sectors are relieved that a worse-case scenario has been avoided, it may feel like a hard Brexit to the legal sector – especially in the UK. On the other hand, law firms have been anticipating for a long time and are prepared for what is to come. Ways will be found to create a stronger basis for non-EU lawyers operating in the EU. Uncertainty remains, but the future might be brighter than many had believed. After all, isn’t uncertainty the one of the most fertile grounds for the legal industry?