Damage limitation

The low down

A prominent namecheck for legal services in the Brexit free trade agreement was a welcome surprise for the profession, which widely expected to finish behind fishing rights in negotiations. But the UK’s £60bn legal sector has quickly discovered that the government’s praise for its contribution masks many practical difficulties. A patchwork of country-by-country agreements is the reality, as will become clear when pandemic restrictions lift. An initial rebuff to the UK’s application to accede to the Lugano Convention has made matters worse. Indeed, across broad areas of law – litigation, family, crime, immigration – practitioners are braced for years of frustration and uncertainty.

In the last days of 2020, solicitors and barristers in England and Wales, Scotland and Northern Ireland could heave a sigh of relief: agreement with the EU had been reached and the document containing the detail included a sizeable chunk of text devoted to legal services.

‘The agreement includes ground-breaking provisions on legal services that go beyond what the EU has included in any other FTA [Free Trade Agreement] to date,’ the government announced. ‘The agreement will give UK solicitors, barristers and advocates the right to advise their clients across the EU on UK and public international law using their home professional titles, except where EU member states have placed specific limits on this activity.’

English and Welsh courts take an expansive view of jurisdiction and their ability to take proceedings, which Lugano might restrict

David Greene, Edwin Coe

The profession’s fears of being ignored in the Trade and Cooperation Agreement (TCA) were allayed. The TCA also allowed advice in connection with dispute resolution.

But for all the talk of breaking ground, it soon became clear the TCA was pretty thin gruel. It does not provide for UK lawyers to advise on EU law, leaving this to the domestic regulation of each member state. Neither do non-EU lawyers have rights of audience in the European Court of Justice. Qualification as an EU lawyer is needed for advice to attract legal professional privilege. An annex to the main TCA also makes clear that many of the provisions in the main body of the agreement are subject to local rules.

Under EU membership UK lawyers had enjoyed mutual recognition of their qualifications; the single market rules had allowed international firms to set up offices across the area; and EU directives allowed temporary practice and establishment in member states.

NI-Protocol-protest

Any hopes of some aspects of this regime continuing in a preferential treatment scenario after January were dashed: UK solicitors faced a new world in which they were just like any other non-EU, ‘third country’ lawyer, which means dealing with each member state’s regulatory regime on its own terms.

Mickaël Laurans, the Law Society’s head of international, says France, Belgium, the Netherlands and – despite initial concerns – Germany, are now relatively open to UK lawyers while other member states are more or less closed shops. ‘Luxembourg is a large financial services jurisdiction and UK lawyers cannot establish there without requalifying,’ he notes. ‘Greece is important for shipping and at the moment the default position in Greece is that people who are not EU nationals cannot practise as lawyers.’

Firms looking to set up new branch offices in Europe need to consider whether they can partner with local lawyers, share profits and hold equity in a local law firm. ‘There are 27 different responses to these questions as every country is different,’ Laurans explains. Law firms with a presence in the EU before Brexit all took contingency measures prior to the 1 January deadline, in some cases converting from a UK LLP to a local entity, he added.

Patchwork of rights

Recognition of qualifications is another stumbling block. Previously, UK-qualified lawyers had the right to qualify in a different member state by sitting an exam or practising in the country for a set amount of time. ‘Those paths have gone,’ Laurans says. ‘Since 1 January there are only two paths to requalification for UK lawyers wanting to practise in the EU – or France.’

In May French authorities confirmed UK lawyers registered as foreign legal consultants may practise under ‘home title’ and advise on UK and public international law. And earlier this year the Republic of Ireland introduced a statutory instrument allowing the Law Society of Ireland to reinstate direct admission of English and Welsh solicitors. They can now requalify in the Republic of Ireland again without sitting extra exams or any kind of assessment, as was the situation before Brexit. However, this will primarily affect UK lawyers and firms based in the Republic of Ireland or the EU. For those based in England and Wales hoping to requalify in order to gain legal professional privilege, the situation is less positive. The Irish law society has said it will not issue practising certificates to lawyers based outside its borders.

Thanks to pandemic-related border closures, the impact of Brexit on cross-border movement in the EU has not fully emerged. What is clear is that when things open up again, lawyers will face another patchwork of national regulations. ‘For some types of engagement, people will be able to travel visa-free while others will require a visa or longer-term permit and possibly be subject to an economic-needs test showing that a local lawyer cannot do the same work,’ says Laurans. It is likely to mean the end of most short-notice trips. ‘People will have to plan well ahead as they do for non-EU countries.’

For European lawyers who want to practise in the UK, things are easier, says Law Society past president David Greene, senior partner at Edwin Coe Solicitors. ‘We are the most open of the European jurisdictions – a lawyer can come here from the EU or anywhere else and practise under their home title,’ he says. Overseas lawyers are allowed to practise England and Wales law so long as they do not venture into ‘reserved activities’, which include conducting litigation and advising on probate matters. ‘That’s continuing,’ Greene explains. ‘There is no change as a result of our departure from the EU and this is an important element of our success as a global legal centre.’

But for lawyers working with EU clients the applicability of rules on legal privilege is creating headaches, particularly with regard to advice given remotely. ‘The law hasn’t really caught up with the concept of the telephone, let alone Zoom,’ Greene says. Yet again the answer may depend on the patchwork of domestic law of the EU jurisdictions.

‘Bitter’ family law disputes

In the family law arena Brexit has meant the return of forum disputes for divorcing couples. Under EU regulation, now repealed by the UK government, the forum for divorce is decided according to who files their application first, and where. Future divorces involving an EU and UK party are likely to involve bitter disputes over jurisdiction as well as duplicated proceedings and potentially irreconcilable decisions, says Russell Bywater, partner at family specialist Dawson Cornwell.

Bywater is also concerned that UK courts may no longer have jurisdiction over certain decisions involving assets in the UK. EU law allows post-divorce applications in the UK with permission, if the assets have not been dealt with elsewhere. Some EU countries do not have a concept of alimony for example, and others will only rule on assets within their jurisdiction. EU law creates a forum which allows these matters to be settled post-divorce in the UK. With the law no longer applicable, Bywater says certain disputes will be left with no forum for resolution.

He gives the example of a married couple, both US citizens, who may have lived in the UK for many years with one accruing a substantial pension. On returning to the US and divorcing, EU law allowed the UK to make a decision on pension-sharing because no other country had jurisdiction over the pension assets. ‘These sorts of issues are very common in an international hub like London, where many foreign nationals live and work,’ he says. ‘There may need to be a change to primary legislation.’

Maintenance enforcement is another area of concern. ‘The regulations governing cross-border enforcement have gone,’ he notes. The EU and UK have agreed that the Hague Maintenance Regulations will apply but enforcement in EU states is likely to be much more problematic than before 1 January.

Lugano rebuff

The Law Society and the government have been lobbying hard to avoid that same patchwork applying to recognition and enforceability of court judgments. But after initially positive signs the European Commission announced its opposition to the UK’s accession to the Lugano Convention (see p20), which provides for mutual enforceability. The Council of Europe will now decide the UK’s fate.

‘The decision is being affected by the political climate over Northern Ireland and fishing,’ Greene says. The council has not provided a timetable for a decision and, in Greene’s view, ‘the longer it takes the better’.

Lugano does not affect arbitration and, while short-term reputational damage is a possibility if the decision goes against the UK, there may be some advantages to offset this, he adds. ‘The English and Welsh courts take an expansive view of jurisdiction and their ability to take proceedings, which Lugano might restrict,’ Greene explains.

In the event of a negative decision, large international firms are likely to be able to find solutions, with small businesses more likely to be affected. Anecdotally, Greene says, lawyers are making sure their clients’ commercial contracts contain clauses specifying arbitration or exclusive jurisdiction of the courts of England and Wales.

Criminally inadequate

Criminal justice is another area in which post-Brexit provisions are much less comprehensive than those they replaced. As Kingsley Napley associate Áine Kervick points out, under the TCA, EU member states can now refuse to extradite their own nationals to the UK. ‘Germany, Austria and Slovenia had already exercised the nationality bar during the transition period,’ she says. In March the Home Office confirmed that Croatia, Finland, France, Germany, Greece, Latvia, Poland, Slovakia, Slovenia and Sweden had signalled an intention to refuse extradition, while Austria and the Czech Republic would only do so with the person’s consent.

The full practical and political consequences of this are not yet clear, Kervick says. But she warns that EU citizens may be incentivised to return to their home country after committing crimes in the UK. This is likely to affect bail requests and lead to a corresponding increase in the UK prison population.

A fallback position in the TCA allows the UK to ask an EU member state to prosecute its national for an offence committed in the UK – the UK would then facilitate this through Eurojust, the Hague-based European Union Agency for Criminal Justice Cooperation.

But Tim O’Sullivan, chair of the Law Society’s EU committee, fears member states will prioritise their own cases, particularly given that most countries, like the UK, have trial backlogs due to Covid-19 restrictions. ‘There is a risk that people responsible for serious offences will escape justice because of that,’ he says. ‘Safe havens for organised criminals are in nobody’s interest. We all remember the Costa del Crime,’ he adds, referring to Spain’s reputation for harbouring British criminals in the 1970s and 1980s when the country had no extradition treaty with the UK.

As a ‘liaison member’, UK influence in EuroJust, which coordinates responses to serious criminal activity across EU borders, has also been ‘seriously downgraded’, Sullivan points out, given the UK was previously involved in setting the organisation’s strategic direction. ‘It’s not a disaster,’ he says. ‘We could have left with no substitute arrangement at all – but the UK will have nothing like the influence it previously had.’

The situation with Europol is similar and UK police will no longer have real-time access to Schengen information systems. ‘Previously when a police officer in Kent stopped a car it could find out immediately if the occupants were fleeing from justice in Europe,’ Sullivan says. ‘Now a request has to be made by email and the answer will be conveyed within 21 days. If the police have no grounds to detain, the people concerned will have to be sent on their way.’

Right-to-work obligations force businesses to operate as de facto immigration officers. Brexit has only added to the administrative burden

Chetal Patel, Bates Wells

Immigration

Turning to immigration, 1 July will see firms required to conduct right-to-work checks on employees who are EEA nationals. ‘Right-to-work obligations force businesses to operate as de facto immigration officers. Brexit has only added to the administrative burden,’ says Chetal Patel, partner in Bates Wells’ immigration department.

The situation has been complicated by the impact of Covid-19, which saw many offices close and staff returning to their home countries. In some instances this has resulted in an EEA national being absent from the UK for more than the permitted six months required for continuous residence. In June the Home Office confirmed that pandemic-related absences from the UK will not be considered to have broken the EEA national’s continuous residence in the UK and path to settled status.

Patel said employers had also feared retrospective right-to-work checks would be imposed on people employed on or before 30 June. While these fears have not been realised, there are still troubled waters ahead.

‘The Home Office has made clear in guidance that employers aren’t expected to differentiate between EEA nationals who arrived before 11pm on 31 December 2020 (the end of the transition period) and those arriving during the grace period between 1 January to 30 June 2021,’ Patel explains. ‘Employers will have to tread a fine line when they speak to employees. Any probing questions about their status could leave them open to claims that they are discriminating against the employee on the basis of their nationality.’

New guidance was released by the Home Office in June setting out how employers can check the right-to-work status of EU, EEA and Swiss nationals from 1 July 2021. Employers will be able to check immigration status online or using an individual’s original documents. Irish citizens can continue to prove their right to work in the UK by way of their passport and national identity cards. ‘Many law firms will be preparing for vacation schemes, summer placements and the next cohort of trainees and they’ll need to take stock of the new guidance,’ Patel says.

‘We’re still waiting for guidance from the Home Office on late applications to the EU Settlement Scheme – this is expected to cover what employers can do if they employed an individual before 31 December 2020 and they haven’t applied to the EU Settlement Scheme by the 30 June deadline.’

As organisations are currently unable to demand that employees provide them with evidence that they have applied to the scheme, the guidance needs to be published as soon as possible to ensure that organisations can manage the risks appropriately, she explains.

Businesses hoping to hire individuals from the EU may be left with no option but to apply for a licence as a sponsor. However sponsorship is eye-wateringly expensive, with a five-year skilled-worker visa costing up to £20,000 for a family of four.

‘Many organisations might still be facing budgetary constraints so may not be in a position to afford sponsorship,’ Patel says.

While the government ‘got Brexit done’, the fallout is only just becoming clear.