Law Society of England and Wales – Written Evidence (UST0022)

 

  1. The Law Society of England and Wales (The Law Society) is the independent professional body that works globally to support and represent 200,000 solicitors, promoting the highest professional standards and the rule of law.

 

  1. Services, and in particular legal services, play an important role in facilitating the globalised market, both directly and indirectly. Latest figures show that legal services contributed £60bn to the economy in 2018 and has the highest balance of trade among professional services in the UK. The concentration of legal and financial services in the City is a key factor to the UK's economic prosperity. 
  2. Our legal services market is the second largest in the world, and the largest in Europe. Legal services support around 552,000 full time employees, and the sector was worth almost £60bn (GVA) in 2018. England and Wales remains an open jurisdiction and the proud home of over 200 foreign firms and over 2700 registered foreign lawyers from nearly 100 separate legal jurisdictions. Our members make a net contribution of £4.29 billion to the UK balance of trade and play a vital faciliatory role in wider international trade.
  3. Our objectives for improved market access in the USA are explicit rules in all US states and jurisdictions (e.g. District of Colombia) regarding:

 

 

 

 

 

Does the Department for International Trade (DIT)’s strategic approach, published on 2 March 2020, set out the right objectives for negotiations? How effectively does that strategic approach represent the interests of different groups and regions across the country, including the devolved nations, businesses, civil society, and individuals?

 

  1. DIT’s strategic approach paper does not go into detail on its rationale, objectives or strategy for improving trade in legal services between the UK and US. However, the Department of International Trade and the Ministry of Justice have been liaising closely with the Law Society for a number of years about how best to improve access for UK lawyers across the USA, and how the free trade agreement negotiations could support this. DIT and the Ministry of Justice (MOJ) have consulted frequently and widely with legal regulators and representative bodies including our counterparts at the Bar Council and the equivalent bodies in Scotland and NI.

 

  1. As legal services regulation is not a federal matter, the US Federal Government cannot bind the state judiciaries to any international trade deal. Thus it is unlikely that any free trade agreement will address legal services directly. The UK government is aware of these issues and of the challenges of securing progress on legal services in a trade agreement with the US federal government as a result. Despite this, they remain very supportive of our ambitions and have been working with us to explore options and support a range of activities that would help ensure progress on the priority issues for UK legal services. This includes supporting regulatory dialogues between the UK and US legal professions.

The United States Congress will scrutinise the US Government’s negotiations with the UK and any final deal. What do you think will be the key issues for Congress and legislators in the US? How will the influence of US legislators be felt in the course of these negotiations?

 

  1. As legal services is a primarily a matter reserved to the judicial branch of government under the American constitutional system, the Law Society’s lobbying efforts on legal services primarily target bar associations, regulators and state supreme courts across the USA rather than on Congress. We have therefore not discussed relevant issues directly with members of Congress.

 

  1. However, from conversations with our members and stakeholders based in the US, we understand that there is broad general support in Congress for a deal with the United Kingdom, which is seen as a close political, economic and security ally. Potential stumbling blocks remain, however, and anecdotally we understand that many of these relate to the UK’s ultimate relationship with the European Union post-Brexit, and how much the UK will seek continued alignment with EU rules in areas such as data protection and agriculture. Democrats in Congress have also highlighted that they will not support an FTA with the UK if the UK’s approach to Brexit is seen to undermine the Good Friday Agreement.

Impact on the devolved nations and UK regions - do the devolved nations of the UK have any specific interests that need to be protected as part of the negotiation of a UK-wide trade deal with the US?

 

  1. It is vital that all four Governments within the United Kingdom work together in open and transparent ways to deliver the best outcomes on matters of mutual interest and that they all recognise the importance of co-operation across a range of policy areas.

 

  1.                     We would encourage each administration to ensure they:

 

 

 

 

  1.                     As a general principle we believe that the devolved Governments should receive appropriate levels of funding, and have appropriate autonomy in utilising this funding.

 

  1.                     In the specific case of the legal sector in Wales, a significant number of non-urban solicitor firms mainly represent agricultural clients and practice in areas pertinent to farming and agriculture. It should be recognised that any FTA that negatively impacts UK agriculture will have a knock-on effect to the sectors which facilitate this industry, including solicitors.

The UK Government is seeking “ambitious commitments” from the US regarding trade in services. What general or sector-specific rules, including on financial and aviation services, should the UK be seeking to support the UK’s service exporters?

 

  1.                     The Law Society has been liaising closely with the Department of International Trade and the Ministry of Justice for a number of years about how to improve access for UK lawyers across the USA, and how the free trade agreement negotiations could support this.

 

  1.                     The US market is relatively open, yet there remain some barriers to trade in legal services. This generally means engaging on a state-by-state basis in order to ensure market access since legal services regulation takes place at the state level and in most cases is carried out by the judiciary itself, i.e. the respective state supreme court. As legal services regulation is not a federal matter, the US Federal Government cannot bind the state judiciaries to any international trade deal.

 

  1.                     Therefore, any negotiations need to include a mechanism to include the state supreme courts - represented by the Conference of Chief Justices (CCJ) - for US commitments on legal services to be binding. The government is aware of these issues and of the challenges of securing progress on legal services in a trade agreement with the federal government as a result. Despite this, they remain very supportive of our ambitions and have been working with us to explore options and support a range of activities, that would help ensure progress on the issues for UK legal services.

Foreign legal consultants

 

  1.                     Currently the ability of UK lawyers (and all foreign lawyers) to practise in the USA varies from state to state. Most US states have explicit rules allowing for foreign legal consultants to establish and to practise their home jurisdiction law, based on the American Bar Association model rules on foreign legal consultants. This means that English and Welsh solicitors can practise English and Welsh law and advise on international law (but not appear in court). However:

 

 

 

 

 

  1.                     No such restrictions exist for US attorneys/law firms (from any state) from establishing in England and Wales.

Requalification

 

  1.                     No foreign lawyer can practise the law of a US state without becoming qualified in that state. As a result, the only route for UK lawyers to practise in the USA, is to dual-qualify in the relevant US jurisdiction, most commonly in New York or California. This would allow them to provide all the legal services as lawyers from that jurisdiction.

 

  1.                     The rules and procedures for re-qualifying in the US are different in every state:

 

 

 

 

  1.                     In England and Wales, all US states are recognised jurisdictions for the Qualified Lawyers Transfer Scheme (QLTS), which is administered by the Solicitors Regulation Authority (SRA).  The QLTS is a fast-track route for foreign lawyers from recognised jurisdictions to requalify as a solicitor of England and Wales.  From September 2021, US attorneys (and most foreign lawyers) will be able to take the new Solicitors Qualifying Exam (SQE)[1]. This qualification replaces the QLTS, offering a new independent and centralised assessment and aims to make the process of qualification easier for overseas lawyers (including those from the US).[2]

 

  1.                     The Law Society would like every jurisdiction in the USA to recognise the solicitor of England and Wales qualification (regardless of the route to qualification), and to allow our solicitors to requalify in all US states by taking their bar exam directly without the need for formal study at US law schools.

Alternative Business Structures (ABS)

 

  1.                     In the UK, the Legal Services Act 2007 sought to liberalise the legal market by, among other things, introducing the concept of the Alternative Business Structure (ABS). This allowed law firms to diversify their management structures, and made it possible for non-lawyers to own a commercial stake in a law firm. This was a radical step and remains controversial, particularly overseas where concerns over lawyer impartiality and potential conflict of interest remain. Currently there are over 1000 ABS in the England and Wales.

 

  1.                     In the US, ABS’ are known as 'non-lawyer ownership', and the issue remains very controversial. No US state currently allows ABS in the form that is allowed here in the UK, and that is unlikely to change in the near future given the nature of the debate and the conservative approach taken by most states.

 

  1.                     This means any UK firm wishing to establish itself as an ABS in the UK needs to take into account the potential impact on any plans they may have to expand into the US market or any existing US offices they may have. They would face significant regulatory barriers to their practice in the US and may even be prevented from establishing there. The law society would therefore ideally like to see movement from the US side on this issue, however it is unlikely that the negotiations on a potential Free Trade Agreement would be able to adequately address this issue.

 

  1.                     In summary, our objectives for improved market access in the USA are explicit rules in all US states and jurisdictions (e.g. District of Colombia) regarding:

 

 

26 June 2020

 

 

[1] Subject to final approval from the Legal Services Board (LSB). The SQE is currently in its second trial phase and a final decision from the LSB is expected in late 2020.

[2] Source: https://www.sra.org.uk/sra/policy/sqe/