Leaving the EU: Legal Services

John Howell Excerpts

Wednesday 28th March 2018 Westminster Hall

[Robert Neill (Bromley and Chislehurst) (Con)]

I beg to move,

That this House has considered promotion of legal services after the UK leaves the EU.

It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful for the opportunity to raise the important issue of the future of UK legal services and how they are promoted after we leave the European Union.

The best way to set out the significance of this matter is to recite some facts about the legal service sector’s contribution to the UK economy and beyond. In 2016, legal activities added £24.4 billion to the UK’s national accounts. That is around 1.4% of the UK’s total gross value added. The UK legal services sector employs about 344,000 people. Most of those jobs are outside London, but of course the City of London has a huge hub of specialist lawyers who support the financial services sector. English law is the most widely used in the world, covering some 27% of the world’s 320 legal jurisdictions. More than 200 foreign law firms from more than 40 jurisdictions—all the EU jurisdictions but also, obviously, some beyond the EU—have offices in the UK. In 2016, the UK legal services sector generated £31.5 billion in revenue, £4.9 billion in total exports and net trade of £4 billion. It is forecast to produce turnover of £30.82 billion and net exports of £4.25 billion by 2020.

I say all those things as a lawyer—I refer Members to my entry in the Register of Members’ Financial Interests—but this matter goes well beyond the law and is inextricably linked to the United Kingdom’s financial and professional services sectors. Our economy is of course overwhelmingly service-based.

[John Howell (Henley) (Con)]

My hon. Friend described the contribution of legal services as a whole, but commercial law contributes a large amount to that annual income. I wonder whether he is happy with the arrangements for mutual recognition and enforcement of judgments after we leave the EU.

[Robert Neill]

My hon. Friend makes a very important point. At the moment, the UK is the jurisdiction of choice for the majority of commercial law contracts, litigation that follows from them, and commercial law arbitration, but we cannot take that for granted. A number of English language commercial courts that apply UK law have already been established elsewhere in the world. As I understand it, another is proposed in Amsterdam, which would clearly have an impact once we leave the EU. Mutual recognition of judgments is one of the UK legal sector’s key asks, and he anticipated with great timeliness that I was about to move on to what the Law Society, the Bar Council, the City of London Corporation, TheCityUK and others in the sector are looking for from the Government to maintain the position of UK legal services once we leave the EU.

The legal services sector’s key priorities are as follows. First, EU27 legal providers should be permitted to provide services in the UK, and vice versa—UK legal providers should be able to provide services in the EU27—on the basis of mutual recognition of regulatory regimes. That would enable European lawyers based in London firms and UK lawyers based in the EU27 to continue to advise and represent their clients.

Secondly, the UK and the EU27 should continue automatic mutual recognition of legal qualifications gained before and during—and after, I submit—the UK’s exit from the EU. That ought to be part of the agreement we seek. Otherwise, we would be in the perverse position that an English lawyer who, like me, is also qualified in the Republic of Ireland—I am a member of the Irish Bar—was able to continue to practise in the EU27 using their Irish qualification but not their English qualification. That is why there has been a considerable increase in the number of English solicitors being admitted to the Law Society of Ireland and English barristers seeking to be called to the Irish Bar. It would be much more sensible to retain those people in the UK as part of a mutual deal with our EU partners.

Thirdly, as my hon. Friend said, it is critical that UK court judgments can continue to be enforced in the courts of the EU27. That obviously applies to commercial law, but it also impacts maintenance payments, for example. Let us say that the partner from whom a UK national is having difficulty getting support for their child is an EU national who is living back in the EU27. Maintenance payments, like a judgment in the largest commercial litigation, can currently be enforced in any EU27 court and implemented by the authorities of any EU27 member state by virtue of our membership of the EU. One regulation covers the whole lot. It is important that we seek to preserve that arrangement. It would be extremely complicated if we had to enter into arrangements with individual EU member states, so we must try to do it en bloc.

It is also to the benefit of the EU27 to have the judgments of their courts recognised and enforced in the UK. There would be mutual advantage to preserving that arrangement, and it is most important that that is done without any break in continuity. Contracts of all manners are being entered into that, in all likelihood, will run beyond the date on which we leave the European Union. It is essential that people can enter into such contracts with sufficient certainty that they will be enforceable throughout the transition period and in the end state after we leave.

It is suggested that, as well as seeking the broadest possible deal with the European Union on that, the UK should consider re-signing The Hague convention as an independent party. I suggest that the two are complementary—it is not either/or. We are currently a party to that convention by virtue of our membership of the EU, but that will no longer be the case once we leave. I ask the Minister to take on board the concern that, in the negotiations, we should seek a waiver from the EU to allow us to re-sign as an independent party prior to Brexit so that there is no delay in ratification.