Our Legal sector : an economic phenomenon which Brexit must not undermine

Brexit has been repeatedly portrayed as either a massive opportunity – or a massive risk.

The truth is – more likely – somewhere in between and much hangs on the negotiations to come.

The one thing we know right now is that for the next two years – up until 29 March 2019, two years after Article 50 was triggered – the rights and agreements we currently have remain in place.

In that time the UK government – and their EU counterparts – will enter into a complex negotiation.

Only then will it become clear to many people how complicated the task ahead is, as we attempt to unravel and then replace the legal, commercial and professional ties created during the past 40 years and more.

In the legal sector there are diverse matters to be resolved. Most of them are founded on reciprocity. Our main issues include recognition and enforcement of judgments, from civil and commercial law;  replacing the EU-wide arrest warrant, a vital tool in fighting crime; disposing of property and agreeing terms of custody in family proceedings when a couple from two different countries decide to separate.

These areas, founded on European conceptions of mutual trust, cut across people’s lives and also affect businesses large and small. It is to be hoped that where we have integrated the economies and communities in such a large scale, our political leaders will recognise the mutual advantage to continuing or replicating these frameworks. I refer to these as infrastructure issues, required to enable the economy of Europe as a whole to function, to the benefit of businesses, large and small, consumers and individuals.

The legal profession faces losing the mutual recognition of qualifications, which enable us to practise in another EU state without the need to requalify. Free movement also allows us to relocate in Europe without needing to obtain work visas or residence permits.

At present, a large amount of EU internal market legislation creates rights and obligations so all states ensure equality of treatment to businesses and individuals.

Mutual recognition, which means EU states recognise qualifications from each others’ countries, also means they automatically recognise and enforce judgments reached by each others’ courts.

This allows UK lawyers to service the cross-border needs of both businesses and individuals whether from satellite offices in the EU, or via ‘fly-in, fly-out’ (FIFO) services.

EU membership also means that UK lawyers can appear before EU courts and – vitally – their clients are entitled to confidentiality. If we lose these rights UK lawyers would potentially lose successful practice areas.

In addition, firms, including law firms, have been able to set up and operate subsidiaries in different EU countries where they are treated the same as “home” companies for the purposes of taxation and enjoy the same benefits and treatment as local firms.

These arrangements have supported the growth of networks established by “English” firms across the EU, and firms from other EU jurisdictions to open and practice in and via London. This has helped to create the biggest and most diverse legal communities in Europe – 200 foreign firms from more than 40 jurisdictions.

The benefits of this open approach to practice, promoting a community of professionals from different jurisdictions,  promoting the interests of our respective clients has served us all well. We will need to work hard to ensure that these mutual benefits are recognised by those engaged in any negotiation, but also by colleagues from other Bars and professions working across the EU and beyond.

Having worked so hard to ensure recognition of our collective and shared values as professionals serving our clients, subject to the rule of law and independent from the executive, our achievements should not be derailed.

If the negotiations end up “locking” our legal practitioners outside of the common European system – not allowing for free movement – that would be a great shame for the generations to come.

In our own sector, we know it will inevitably impact the number of UK qualified lawyers working in the EU, particularly in major law firms. But remember, there are also more than 40 firms from the EU and European Economic Area (EEA) based in London.

It maybe that for larger law firms the answer lies with the way their ownership is structured. Many firms with offices in other EU countries already have recruited substantially from the local population. Post-Brexit it could be possible to see structuring that would allow new EU entities to carry on with the benefit of EU directives.

Other firms, without an established network, but with significant income from advising in the EU may face greater difficulty, as may individual lawyers – whose movement and working rights may not transition so easily. Barristers may be particularly affected.

Together the abolition of barriers, with the ability to settle disputes easily, has benefited businesses, individuals and firms, both ‘English’ and those from other Bars within the EU.

Any sudden loss of these reciprocal legal frameworks has far-reaching consequences. The impact will be felt both in the UK and in the remaining EU states.

For example, if an agreement on cross border dispute settlement mechanisms is not reached, it becomes more difficult and costly for individuals or businesses to recover payments if they are let down by a company or individual as there will no longer be an automatic right to recover assets.

There are some areas where there are multilaterally agreed international alternatives for reciprocity. For example, in family law there are alternative international frameworks, which would ensure that child abduction cases can be dealt with by the national courts.

However, our members say these alternatives are often less effective, cost more and are comparatively time consuming.

And, of course, the weakest in society would be the ones to suffer, particularly children, poorer families and vulnerable adults, as the processes become more costly.

It also would jeopardise the operation of the English and Welsh justice system. The judgments reached would not be recognised and enforced anymore, nor it would be possible to recognise and enforce judgments from the EU countries. Well resourced people will be able to pursue cases – but if only the wealthy can do this, this threatens equality before the law.

Furthermore, if the dispute settlement processes become overly complex, then the parties will end up expending a lot of resources settling preliminary questions, such as jurisdiction or enforceability of claims, rather than on the case.

This may end up exhausting the capacity of the justice system itself. Current EU processes provide modern and streamlined solutions for cross border litigation.

The law of England and Wales underpins a vast number of global transactions. Its relative certainty, an expert judiciary and professional environment renowned the world over for its competence and independence – both of judges and practitioners – all add to the appeal of our law and this jurisdiction. All of these have contributed to a sector worth least £25.7 billion annually.

There are no fewer than 380,000 people employed in legal services – and we know a 1% growth in our sector creates 8,000 jobs.

England and Wales is also considered the jurisdiction of choice for dispute resolution due to expert judges as well as thorough, and proportionate court procedures. In 2015, more than 22,000 commercial and civil disputes were resolved through arbitration, mediation and adjudication in the UK

We are an economic phenomenon. An international beacon of good practice  and professional independence. Our professions and the infrastructure of provision we have built underpins fairness and justice.

So over the next 21 months – and in the years that follow – we lawyers have to play our part in ensuring the successful conclusion of the negotiations as the UK and EU seek to forge a new future, separately, but with ongoing trade links.

There are enormous opportunities ahead – both solicitors and barristers must work together to promote the value of our professions (beyond simplistic reference to price) and secure them for the future.

Robert Bourns, president of the Law Society of England and Wales

                           


 

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