European law firms to be exempt from SRA oversight despite competition concerns

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8 July 2014

SRA: simple registration process

The Solicitors Regulation Authority (SRA) has decided to press ahead with plans that would allow European law firms that do not conduct reserved work to set up in England and Wales outside of the regulatory regime, despite Law Society concerns that they will enjoy a competitive advantage over domestic practices.

The reforms mean that such firms will become ‘exempt European practices’ (EEPs) and able to be in a form that would not otherwise comply with the SRA’s rules. Only practising solicitors working for them will be subject to SRA oversight.

Such firms will only have to undergo a simple registration process with the SRA so that the regulator can keep in contact with them.

The SRA said it made the proposal “because it was clear to us that the application of entity regulation to European firms practising predominantly in the law of their home jurisdictions was disproportionate and an unintended consequence of the requirement for individual European lawyers to be registered”.

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In their responses to the consultation, both the Law Society and the City of London Law Society (CLLS) argued that EEPs should be prohibited from practising ‘solicitor like activities’ as well as reserved activities, on the grounds that this would result in unfair competition. They should just be allowed to practise home country and European law, they said.

However, the SRA report on the consultation said: “We felt that there was no justification for restricting EEPs beyond reserved areas of work, not least because this restriction does not apply to solicitors who are employed in foreign firms.

“We also felt that the issue raised by the CLLS was more about restrictions on solicitors’ practices and this is being addressed through other consultations.”

The SRA also rejected Law Society concerns about the proposed exclusion of the clients of registered European lawyers in EEPs from the Legal Ombudsman’s complaints regime, saying that as they would not be authorised to conduct reserved legal activities, they will fall outside of the ombudsman’s jurisdiction.

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