The UK has been “dependent on the EU” for the liberalisation of legal services around the world and will struggle to match this post-Brexit, MPs have been warned.
Hook Tangaza, the leading legal consultancy specialising in international markets, also said that although it was “politically unwelcome” to mention it, the movement of people across different jurisdictions was “absolutely critical” to the ability of UK professional services firms to expand internationally.
Hook Tangaza is run by Alison Hook and Nankunda Katangaza, both former heads of international at the Law Society.
In a submission to the House of Commons international trade committee’s inquiry on trade in services, they said that, “despite the reluctance of a significant number” of EU states to open their legal services markets to third countries, EU free trade agreements (FTAs) had produced results which were “at least as good, if not far better, than the UK could expect to produce on its own”.
They explained that, as with the EU-South Korea FTA, negotiating access to another country’s legal services markets “will usually need to be traded off against other sectors, given the lower interest elsewhere in exporting legal services”.
The EU had offered an “effective mechanism” for doing this, given the large size of the single market.
“Nonetheless, despite the negotiating power of the EU, preferential trade agreements have been very limited in their success in opening up legal services markets, as the International Bar Association’s analysis of global legal market access illustrates.
“This does not necessarily mean that the UK should not attempt to include legal services in future bilateral FTAs, it simply means that we need to be realistic about their potential results.”
Hook Tangaza said it would be “particularly important” post-Brexit for the UK to find “appropriate successor arrangements” on mutual recognition within the EU.
“The loss of applicability of the EU Lawyers’ Directives, once the UK is outside the EU, will cause immense damage to the ability of UK lawyers to work across the EU, and unless future mutual recognition arrangements match single market provisions, UK lawyers will be shut out of EU markets by nationality provisions, language requirements and procedural requirements.”
The submission said that although it was “politically unwelcome to say so, policies around the movement of people are absolutely critical to the ability of UK service industries to grow their international business” and “a much smarter approach” to the issue was required.
Hook Tangaza said it had come across “numerous examples” of foreign lawyers being unable to obtain UK visas in time for their cases.
“Legal services, especially in the area of dispute resolution, may need to be provided within deadlines that are incompatible with visa application systems.
“We have come across numerous examples in our work of foreign lawyers being unable to obtain UK visas on the timescales required, even if there was no suggestion that they would not be granted in due course.
“When this happens, the lawyer involved will think twice before recommending to their clients again that the UK should be used as the location for an international arbitration.”
Hook Tangaza said traditional law firms faced “barriers in many jurisdictions” which prevented them from opening branch offices or subsidiaries abroad, or from forming partnerships with locally qualified lawyers.
Where foreign legal practices were permitted, in countries such as Japan and South Africa, UK law firms could face restrictions on the number of branch offices, the number of foreign lawyers or on company form or name.
Alternative legal services providers faced “the greatest range of barriers” and could not easily establish themselves in many jurisdictions, including the EU.
Hook Tangaza added that at present there was no “well-developed mechanism” for bringing together all of the regulatory and representatives in the three legal jurisdictions within the UK.
“Creating a mechanism to bring together all parties with an interest in regulated sectors will therefore be an important tool for the UK to develop in future.
“This will enable it to avoid the difficulties faced by the US legal services sector, which cannot effectively engage in international negotiations, because the issue of legal regulation is reserved to the state level.”