Report of the Review of the Regulatory Framework for Legal Services in England and Wales
Appendix 2
Slaughter and May advice
The Application of EU and Other International
Norms to the Regulation of the Legal Profession
INTRODUCTION
1. In its response to the consultation paper issued by the Review of the
Regulatory Framework for the Legal Services in England and Wales
the Bar Council concluded at paragraph B6.10 of its paper:
“Although the Consultation Paper proposes that a new Legal
Services Authority would be an independent statutory body, we
do not believe that this would be sufficient to comply with
internationally recognised norms respecting the independence
of the legal profession. UN Basic Principle 26 and other
international standards for lawyers, as well as prevailing
expectations within the European Union, emphasise the
importance of the involvement of the profession in regulating its
own members.”
We are asked to advise whether that conclusion is sustainable. For the
reasons set out below, we believe that it is not. We believe that both
Model A and Model B+ are compatible with Community law,
international norms and the European Convention on Human Rights.
2. We are also asked to consider the likely impact of the judgments in
Wouters and Arduino on the assumption that the promotion of
competition was one of the objectives which could underpin the
regulatory regime
GROUNDS FOR CHALLENGING STATUTES
3. Whatever system of regulation is ultimately adopted, it will have to be
introduced by statute because the current regulatory framework is
largely statutory and would have to be repealed.
4. Under English law primary legislation can only be challenged in UK
courts on two grounds: (1) because it infringes European Community
law which has supremacy; or (2) because it offends against the Human
Rights Act. Unlike subordinate legislation there is no form of judicial
review on grounds of irrationality, illegality or procedural impropriety.
COMMUNITY LAW
5. The Bar Council refers to a number of provisions of Community Law
and a resolution of the European Parliament. It argues that the
Establishment Directive (Dir. 98/5/EC) is predicated on the legal
profession in the Member States being self-regulating. That, however,
falls a long way short of saying that the Directive requires selfregulation.
We can find nothing whatever in the Directive that
establishes such a requirement, let alone one which would result in any
of the proposed models in the consultation paper infringing Community
law.
6. Reference is also made to the CCBE Code of Conduct. This only
applies to lawyers in respect of their European cross-border activities,
if any. It is made binding by virtue of the Solicitors‘ Practice Rules and
the Bar Council‘s Code of Conduct. The CCBE Code of Conduct
contains a number of general principles including a requirement that
lawyers remain independent. It does not, however, make any
prescription as to how conduct should be regulated or disciplinary rules
enforced. On the contrary, paragraph 1.2.2 stipulates expressly that
traditions vary as between Member States:
“The particular rules of each Bar or Law Society arise from its
own traditions. They are adapted to the organisation and sphere
of activity of the profession in the Member State concerned and
to its judicial and administrative procedures and to its national
legislation”(emphasis added)
7. Finally reference is made to a resolution of the European Parliament of
11 December 2023 which stated:
“... the importance of ethical conduct, of the maintenance of
confidentiality with clients and of a high level of specialised
knowledge necessitates the organisation of self-regulation
systems such as those run today by professional bodies and
orders ...”
That has no binding force and it is far from clear why the conclusion
flows from the premise.
8. Indeed, recent case law of the Court of Justice if anything confirms that
Member States retain the power to regulate the legal profession to a
very considerable degree, even down to setting fee rates. In Case C-
35/99 Arduino the Court confirmed that the Italian system for regulating
the legal profession was not an agreement between undertakings -
which would fall within the purview of Article 81 which prohibits
agreements which appreciably restrict competition - but a state
measure, given that the Government retained substantial decisionmaking
power and controls. Although the Italian Government was
bound under Article 3(1)(g) of the Treaty not to introduce measures
which would distort competition, it was entitled to take proportionate
measures for regulating the profession in the public interest, including
setting fee levels for the Italian Bar. There was no suggestion that
Government intervention of this kind infringed Community principles.
Commissioner Monti, commenting on that judgment in a speech to the
Bundesanwaltskammer in March 2003, said:
“The Arduino judgment clarifies that Member States have the
right to regulate a profession. This is no surprise as in the
absence of harmonisation at European level, Member States
have the primary responsibility for defining the framework in
which professions operate. It went on to say that Member
States can associate professional bodies in this task as long as
they retain the decision-making powers and establish sufficient
control mechanisms. They must not abdicate their powers to
professional bodies without clear instruction and control.”(emphasis
added)
COMMUNITY PRACTICE
9. The legal position - that Member States may play a substantial, direct
role in regulating the legal profession - is confirmed by the practice.
We have reviewed the position in France, Germany, Italy and Spain
with local lawyers and in each case the state has very substantial,
direct involvement in the regulation of the profession. The results of
our review are summarised here.
10. In Germany, the profession is governed by statute, principally the
Bundesrechtsanwaltsordnung (“BRO”) and the Berufsordnung für
Rechtsanwälte. This is far from being merely an enabling regime. Part
III of the BRO sets out in detail the rules of ethics and conduct of
lawyers, as well as the manner in which they may organise themselves
and practise. Disciplinary procedures are admittedly delegated to the
profession, but can ultimately come before the federal courts.
11. In France law 71-1130 and decree 91-1197 set out in some detail the
principles applicable to the legal profession, including most of the rules
on professional conduct, the conditions for entering the profession, the
powers of the various bar councils, the regulation of fees and
incompatible occupations. Whilst local bar councils are empowered to
adopt their own internal rules, these must be compatible with the law
and decree. The administration of the rules laid down by legislation is
largely in the hands of the bar councils, subject to control by the Court
of Appeal.
12. The regulation of the legal profession in Italy combines statutory and
self regulatory elements: the main rules are set forth in legislative
instruments, whereas the enactment of more detailed provisions, their
enforcement and, more generally, the supervision on the profession is
largely left to self-regulation. Legislative instruments set out the rules
governing the legal profession, including the conditions for exercising
the profession, some general principles on professional conduct and
the sanctions for their breaches, the election and powers of the local
and national bar councils and the regulation of fees and incompatible
occupations. On the other hand, the bar councils (which are elected by
the profession) are empowered to apply and enforce many of such
statutory provisions, and have laid down a code of conduct drawn from
the general principles set forth by law; in particular, disciplinary
procedures are delegated to the bar councils, but can ultimately come
before the Court of Cassation through appeals based on points of law,
jurisdiction objections or abuse of powers.
13. In Spain, it is only very recently that provisions have been adopted
regulating the legal profession, namely by Royal Decree 658/2001 of 2
June 2001. These were proposed by the National Bar Council but
adopted by the government. The Royal Decree covers the conditions
for admission to the profession, the governing bodies of the profession
and disciplinary regulations. Disciplinary matters are enforced by the
Bar Council but subject to the control of the courts.
HUMAN RIGHTS
14. There is no express right to be a non-state-regulated lawyer provided
for by the European Convention on Human Rights. However the
independence of lawyers is generally regarded as a fundamental
principle and one that would be likely to be upheld by the European
Court of Human Rights. State involvement and regulation of the legal
profession seems to have been accepted to some degree and
therefore it is really the detail of the system which would determine
whether human rights were violated. Provided that the regulatory body
was demonstrably independent of government and the system
provided robust safeguards to prevent executive interference with the
regulatory body's functions so that lawyers were objectively free
to carry on their profession regardless of governmental influence, we
do not foresee any viable human rights challenge.
OTHER INTERNATIONAL PRINCIPLES
15. The Bar Council relies on a number of other principles in the 1990 UN
Basic Principles on the Role of Lawyers, in particular:
Recital 10:
“professional associations of lawyers have a vital role to play in
upholding professional standards and ethics, protecting their
members from ... improper restrictions and infringements ... and
cooperating with governmental and other institutions in
furthering the ends of justice and public interest”.
Basic Principles:
“24. Lawyers shall be entitled to form and join self-governing
professional associations to represent their interests,
promote their continuing education and training and
protect their professional integrity. The executive body of
the professional associations shall be elected by its
members and shall exercise its functions without external
interference.
26. Codes of professional conduct for lawyers shall be
established by the legal profession through its appropriate
organs, or by legislation, in accordance with national law
and custom and recognised international standards and
norms.
28. Disciplinary proceedings against lawyers shall be brought
before an impartial disciplinary committee established by
the legal profession, before an independent statutory
authority, or before a court and shall be subject to an
independent judicial review.”
16. First, none of these principles is binding or fetters the UK Government
in terms of the primary legislation it can introduce. Secondly, Principle
24 is concerned with the right of free association: it does not prescribe
self-regulation. Thirdly, principle 28 relates to disciplinary proceedings
and the need for the authority hearing such proceedings to be
independent: it does not prescribe self-regulation. Fourthly, principle 26
clearly envisages (as is the case in Germany and France) that codes of
professional conduct may be “established ... by legislation.” The Bar
Council is unable to point to any “recognised international standards or
norms” that require a regulatory body to comprise primarily the
profession for fear that the independence of the profession is
jeopardised. The CCBE Code of Conduct insists on the independence
of lawyers, but is not prescriptive as to how this should be achieved.
Nor is there any reason in principle why a regulatory body which did
not comprise mainly the profession should jeopardise the
independence of lawyers from government, provided it is independent,
enforces objective standards of conduct and is required to uphold the
independence of lawyers. This can be done just as easily by
legislation as by the legal profession, as principle 26 clearly
recognises.
COMPETITION ISSUES
17. We are asked to consider, on the assumption that the promotion of
competition was one of the objectives which could underpin the
regulatory regime, what impact the judgments of the European Court of
Justice in Case C-309/99 Wouters and Case C-35/99 Arduino might
have on the implementation of that objective.
18. In those two cases the Court distinguished between cases where rules
of professional conduct were to be considered as State measures and
where they were to be considered as decisions of associations of
undertakings. In the former case (the rules for setting legal fees in Italy
considered in Arduino), the Court found that they were State measures
and consequently that the competition rules for undertakings (Articles
81 and 82 of the EC Treaty) did not apply. This was on the basis that
the State laid down the general principles and retained substantial
decision-making powers and powers of control. In the latter case (the
rules of the Dutch Bar considered in Wouters), the Court found that the
rules were subject to the competition rules applicable to undertakings.
19. The distinction is not clear-cut, as can be seen by comparing the two
sets of facts in the two cases. If the competition aspect of the
regulatory regime adopted is covered by the principles set out by
Wouters, the competition principle would apply automatically by virtue
of the application of Article 81 or the Chapter I prohibition of the
Competition Act 1998 to the relevant rules. If, however, the competition
aspect of the regime is covered by the principles of Arduino, it would
be perfectly possible to enshrine the objective of the promotion of
effective competition by requiring the rules to be scrutinised by the
Office of Fair Trading prior to their adoption with that objective in mind.
Slaughter and May
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