Leaving the EU: Legal Services

Part of the debate – in Westminster Hall at 5:17 pm on 21st November 2018.

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Photo of Lucy Frazer Lucy Frazer The Parliamentary Under-Secretary of State for Justice 5:17 pm, 21st November 2018

It is a pleasure to serve under your chairmanship, Sir Christopher.

I congratulate my hon. Friend Mr Djanogly on securing this debate. I am grateful for the opportunity to take part in it, as the future of UK legal services and their promotion after we leave the EU is important. I am particularly delighted to respond to a debate of my hon. Friend, who not only has extremely ably occupied my role as a former Justice Minister, but is knowledgeable on this issue as a non-practising solicitor, the co-chair of the APPG on legal and constitutional affairs and a member of the Exiting the European Union Committee. I am also grateful to him and to his APPG for their thorough and helpful report.

In that report, the APPG and my hon. Friend recognise the significance of our legal sector. As he rightly said, it is a great success story. The sector is worth at least—it varies—£24 billion a year. The UK’s trade surplus in legal services has nearly doubled over the past 10 years and now accounts for about 10% of global legal services fee revenue. Importantly, the sector provides jobs—it drives employment by employing well over 300,000 people. Those jobs are found throughout the UK, although we also have a huge hub of specialist lawyers, many of whom support our vital financial services sector.

English law, as many people have said today, is the most widely used in the world, with 27% of the world’s jurisdictions using it. International firms want to operate in this country, which is why more than 200 foreign law firms have offices in the UK. UK-based firms also operate around the world, and nearly 7,000 practising solicitors from the UK work abroad. My hon. Friend is right to identify that people come here for their legal disputes because of the integrity of our judges, the professionalism of our lawyers and our respect for the rule of law.

My hon. Friend highlighted that the report recognises that

“Brexit will be the largest ever change to the UK’s legal framework and it presents both opportunities and risks for the legal sector.”

It also recognises that the ability of solicitors, barristers and chartered legal executives to practice as lawyers in the EU is important to lawyers and, as my hon. Friend Member for Bromley and Chislehurst (Robert Neill) mentioned, the people whom those lawyers serve.

As far as the transitional period is concerned, market access will remain the same. The draft withdrawal agreement provides that, during the implementation period, EU and UK professionals working in the UK or EU will continue to have their professional qualifications recognised. We set out in the future economic partnership White Paper our proposal for new arrangements for services and investment after we leave the single market. We must recognise that we will no longer be in the single market and that there will be implications for market access.

The outline political declaration made last week identifies:

“Ambitious, comprehensive and balanced arrangements on trade in services”.

Those go well beyond World Trade Organisation commitments. The political declaration also identifies the need for provisions on market access and the importance of non-discrimination, and records the need for arrangements on professional qualifications. Alongside that, the mobility framework will support businesses to provide services—that includes travelling freely without a visa for temporary business activity, for example.

The outline political declaration will be built on and finalised with the aim of producing a full political declaration, which we hope can happen before the end of the month. In a no-deal scenario, there will be no basis for reciprocity—registered European lawyer status, which allows European economic area lawyers to practice permanently in the UK under their home title, will be phased out after exit. New entrants will be able to seek recognition of their qualifications and be admitted to the UK profession in the same way as third-country lawyers. There will be a transitional framework until 31 December 2020 for EEA lawyers and business owners to transfer their qualifications or adapt their business model.

My hon. Friend the Member for Huntingdon and Gavin Newlands asked me what preparations my Department was making for no deal. As a competent Government, we are making preparations for no deal. We have issued two technical notices, we are preparing our no-deal statutory instruments and we received £17.3 million in the spring statement, which was allocated to our Department to make suitable arrangements. My hon. Friend the Member for Bromley and Chislehurst made important points about laws that we can take advantage of in the event of no deal. We will incorporate Rome I and Rome II into our laws and we will sign up to The Hague convention in our own right.

Beyond negotiations with the EU27, we are working with the sector to promote the benefits of market liberalisation. We want to ensure the continued pre-eminence of UK legal services and English law. The Government are committed to championing the legal services sector. We are building our international and domestic and relationships and leveraging them to promote the sector overseas. We are working to improve legal services market access. We will seek opportunities in future trade agreements to include ambitious provisions for services.

My hon. Friend John Howell was right to identify the importance of international arbitration. Companies often choose the UK as the seat of international arbitration, which is an important part of the sector. The Ministry of Justice is working across the board to prepare for the UK’s exit from the EU, as well as continuing to promote legal services on the international stage.