A report was published by the European Commission this week, keenly awaited by dedicated followers of European legal fashion. It gives important insights into lawyer cross-border mobility in Europe.
By way of background, lawyers are the only profession, and one of the few sectors, which have their own sectoral directives at European level. Most others are covered by what are called horizontal directives, covering various professions and other groups lumped together. The lawyers’ directives (services: 77/249/EEC and establishment: 98/5/EC) were coming up for review, and questions had been asked as to whether lawyers should continue to have such special treatment, and, if so, what - if any - changes should be made to the directives. This report gives some answers.
In response to the big question as to whether the framework of specific lawyers’ directives should continue, the study (prepared by a consortium composed of a consultancy called Panteia, together with Maastricht University) concludes clearly: ‘The researchers think it is still necessary. Abolishing the separate legal framework for lawyers (the Lawyers’ Directives) would either lead to a less liberal regime for lawyers, or, if the system is to retain its liberal character, it would make necessary the adoption of many lawyer-specific articles in the Professional Qualifications Directive, with the result not of simplifying but rather of complicating things.’
As for specific changes, my opinion is that nothing very serious could be found to change. This is confirmed by the following sentence: ‘At EU level, the study has provided no indications that the needs of clients of cross-border legal services are not being met as a result of flaws in the legal framework or a lack of mobility of lawyers.’ As a result, the authors have pursued many smaller matters. To save you having to read all 305 pages, I will give you a brief flavour of some of them.
From the perspective of solicitors, maybe the most interesting refers to the regulation of law firms. The directives currently cover individual lawyers only, but ‘the researchers conclude that it would be good to broaden the scope of the Directives so that law firms (at least those without non-lawyer managers/owners) are recognised by them so that they can make use of the freedoms provided by them. When the Directives would include firms, it can be made clear under what conditions who/what can be refused and who/what should be allowed.’ This would be a large step, which might raise questions on whether non-EU nationals could take advantage of the directives through an EU law firm, something currently not allowed.
And so we come to the title of this piece: the issue of alternative business structures (pay attention, Legal Services Board). Article 11(5) of the Establishment Directive is the clause which currently allows a member state to keep an ABS from moving into its territory. However, ‘the researchers conclude that there is no compelling reason to change the general approach of article 11(5) of the Lawyers’ Establishment Directive’. If the Commission follows this advice, it will have a negative impact on the exportability of the ABS model.
Regarding ethics, the position is very broadly that there is a rule that both home and host state rules apply (there are variations, such as that host rules prevail where temporary services are being provided before a court). This is called ‘double deontology’ in EU parlance. There has been much discussion about whether double deontology causes irresoluble conflicts, but little hard evidence. ‘The researchers think that dismissing double deontology in favour of single deontology (home country rules for temporary services; host country rules for established lawyers) will likely be the most effective in removing the difficulties in the area of deontology.’ We will see whether national bars will be happy with this, because it means loss of control over member lawyers in one or other situation.
Regarding professional indemnity insurance, there are current problems about coverage in another member state, which are believed to arise out of the risks the insurance industry is prepared to take and the absence of true cross-border insurance. This is being looked at, among other things, by a new expert group on insurance at EU level. However, ‘the researchers suggest changing the Directive so that it states that when a lawyer renders temporary cross-border services these must be covered by his home country insurance’.
There is much more. We shall be dealing with it over the coming months. I opened with the Kinks, and so close with them, too: ‘Oh yeah, you really got me now, You got me so I can't sleep at night’.
Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs