How UK law firms could lead in Europe

Iain Miller considers the restrictive regulatory environments of EU member states

On the face of it, the decision to Brexit
and leave the EU casts a shadow over the ambitions
of UK law firms wanting to expand into Europe. But,
it could also prove to be
a golden opportunity.

A big part of the UK's economic success is its strength in professional services. Our
law firms are world leaders, with turnover of more than £31bn a year, 20 per cent of the European legal market, and 7 per cent of the market globally.

This has been underpinned by the EU Establishment of Lawyers Directive, which recognises
our right to practice in other member states. But how can UK lawyers maintain and grow this market share when we are not
in the EU, and as we potentially find our free movement across Europe restricted?

England and Wales have the advantage of leading the world in the way we regulate lawyers. Our framework is one of the most open, and one of the few that permits external ownership. This has encouraged innovative
firms to set up and grow, and
has attracted forward-thinking legal providers from other jurisdictions.

By contrast, the EU legal services market is still dogged by restrictions. In particular, some jurisdictions limit the type of business structure that can be used to provide legal services.

For example, many EU jurisdictions require services
to be provided through a partnership. In addition, there are restrictions in member states relating to multi-disciplinary practices (MDPs) and legal practices that have external ownership (ABSs).

This is a matter of concern at EU level and the issue is likely
to be addressed in due course. However, the UK is at the forefront of modernising the legal services market, and this
has provoked debate within various European bars as to
how their regulatory frameworks need to change to deal with
the creation of ABSs here.

Lawyers and the legal market are no longer the same thing,
and lawyers in other countries will not be able to hold back the competition. How could they hope to do so when so much law will be delivered via websites or through innovative technology-led providers?

The UK has led the way in supporting those international clients who demand better analytics and management information to support decision-making and manage risk, through new operating models, artificial intelligence systems, and IT.

The current concern is
that even if we end up with European Economic Area (EEA)- type arrangement with the EU, it is unlikely that UK
firms will be allowed to operate in exactly the same way on
the continent in the future.

However, it is unsustainable that legal services in Europe continue to be controlled
mostly by lawyers.

English law is already
the most widely used legal system in the world. The UK's decision to leave Europe
could allow the country to
go on modernising its processes in line with global legal systems without the need to build agreements with European partners that lag behind.

So Brexit could, in fact,
be an opportunity for the
UK to further dominate the international legal sector, because we have created a better environment than
other countries when it comes
to allowing firms to grow and compete worldwide.

Iain Miller is head of regulation at Bevan Brittan @BevanBrittanLLP www.bevanbrittan.com