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Legal Services Review



Review Report cover

© Crown Copyright 2004

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


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


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have to be introduced by statute because the current regulatory framework is largely statutory and would have to be repealed.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.


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)


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.


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.


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.


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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