EU single market upgrade – implications for lawyers

There is a leaked document widely circulating in Brussels, with lobbyists competing to see who can obtain the latest version.

It is called ‘Upgrading the single market’, and is a signature initiative of the Juncker commission. It is due to be launched soon, and although it is in the last stages of internal consultations, I think the sections on which I will focus are unlikely to change. The overall topic is one on which everyone, even eurosceptics, can generally agree: that the single market is a good thing, and needs improvement.

There are two items of particular interest to lawyers. The first is the part which actually names us as a target. This is an honour we might have preferred to avoid. But we are listed as one of the professions in the priority sector in the section entitled ‘Making the market without borders for services a practical reality’. There is a study to be published soon which will show how reforms to open the regulated professions has led to job creation and better prices, including in the legal profession.

The leaked draft report says that a more competitive and efficient professional services sector would help the economy as a whole.

In the first phase of the upgrade to the single market, scheduled to begin next year, those issues relating to access and exercise of regulated professions will be targeted for concrete reforms in specific member states. There will be an analytical framework issued by the commission to help member states when reviewing existing professional regulations or proposing new ones. Member states will then have to show that the public interest cannot be achieved by anything other than limiting access or what they call ‘constricting conduct’.

There will also be special effort devoted to opening up structures related to their legal form, shareholding requirements and multidisciplinary restrictions.

This part may not have a direct impact on English solicitors within our own jurisdiction, since the work undertaken over the last few years - after the Legal Services Act 2007 - is the model which the commission seeks to emulate, to the extent it has a say over national member states’ legal systems. However, it may well in due course change the way legal services are able to be provided across Europe’s internal borders, in terms of permitted vehicles.

But there is another section of the document which is equally important. It refers to a topic which I have raised only recently. Its importance is shown by the fact that it crops up again in this document, as the first action point. The section is headed ‘Enabling the balanced development of the collaborative economy’.

We are told that the commission will develop a European agenda for the collaborative economy, including guidance on how EU law applies to it. The commission will assess possible regulatory gaps and monitor developments closely.

The collaborative economy in legal services is another name for our old friend, online platforms, which definitely operate in the legal services market. According to the report, the collaborative economy leads to greater choice and lower prices, provides growth opportunities for start-ups and existing companies, increases employment and allows for more flexible working times. (It all sounds so positive, since there is no mention of the alleged working conditions at maybe the greatest online platform of them all, Amazon, which were recently heavily criticised in an article in the New York Times.)

As a starter for the European Commission, I can tell them that there is a range of EU law in our sector which is directly undermined - almost made useless - by the operations of unregulated online platforms. For decades, the lawyers’ directives have governed the legal framework, trouble-free and acceptable to all, for how lawyers can cross borders in Europe (if you want details, the principal ones are Services 77/249/EEC and Establishment 98/5/EC).

For many years, too, the rules as to who can practise in the EU from outside it have been governed by the EU’s commitments in legal services in its GATS schedule, through the process run by the World Trade Organisation. These laws and commitments balance liberal market principles with the requirements of consumer protection, hard fought and agreed over many years. Well, goodbye to all that.

With the click of a mouse, unregulated online providers can do what they like where they like, regardless of qualification, notification or regulation. What will be the point of anyone being governed by any of these requirements any longer if they can be so simply ignored?

In other words, there is a good deal at stake in the coming upgrade of the single market. We lawyers need to pay particular attention.

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs