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Jonathan Goldsmith

Jonathan Goldsmith is the Secretary General of the Council of Bars and Law Societies of Europe (CCBE), which represents around a million European lawyers through its member bars and law societies. The CCBE deals with a wide range
of EU and global issues, such as anti-money-laundering legislation, an EU-wide Code of Conduct, competition matters affecting the legal profession, and human rights. He is an English solicitor.

Now it is Spain’s turn

Jonathan Goldsmith

Friday, 3 February 2012

I have been writing in recent weeks about the radical changes affecting numerous European Union member states in the wake of the economic crisis. The item on our agenda at the Council of Bars and Law Societies of Europe (CCBE) called ‘important national developments’ grows longer at every meeting. And now along comes Spain.

The new Spanish Minister of Justice - following their national election at the end of last year - trailed radical changes last week. First, he announced the proposed cancellation of the law on access to the profession (‘Ley de Acceso a la Abogacía’). This was a hard-fought law, brought in with great difficulty five years ago, and with the support of the Spanish Bar. Until that time, Spain was the last EU member state not to have an official professional examination in order to enter the profession. All you needed was a law degree, and then you could go to the bar and apply to become a lawyer without further obstacle. The new law was brought in only after vigorous student protests. Even then, it was given a five-year implementation delay, to allow all students currently in the system to benefit from the older, easier system. Indeed, the new law only became effective for the student intake which went up to university last October.

In the single European market, the previous regime provided obvious distortions. Law students from other member states with more difficult entry requirements undertook a bit of forum shopping, went to Spain for some legal studies, and became lawyers there, with the opportunity of going back to their home member state afterwards under the lawyers’ directives, which provide for free movement. It even gave rise to the case of Robert Koller, (C-118/09), who did precisely that - went to Spain to become a lawyer, thereby avoiding the more burdensome route of becoming a lawyer in Austria. He won his case over the legal protests of the Austrian authorities. At the time, I wrote that this particular loop-hole was about to be closed - but I see now that I was wrong. I expect there to be more Robert Kollers in the future using the Spanish route.

I do not know the reasoning behind the cancellation of the law, but I can only assume that its economic basis is to reduce obstacles to entry to the profession. Yet Spain suffers from a glut of lawyers, many of whom cannot support themselves as lawyers, and so the economic reasoning seems doubtful.

The second announcement by the Spanish Minister of Justice was more surprising still. Notaries in Spain have had a particularly hard time as a result of the spectacular property market crash, and so he is coming to their aid (to the disadvantage, I expect, of lawyers’ market share). He announced a law of mediation and voluntary jurisdiction (‘Ley de mediación y de jurisdicción voluntaria’), whereby marriages and divorces by mutual consent will be able to be carried out by a notary. Referring to divorces, he said that this would ease the logjam in the courts.

I know no more detail than that, but I expect that matrimonial lawyers will have a lot to say about whether divorces by mutual consent are not more complicated than the property purchases which usually pass through a notary’s office. What, for instance, will happen in relation to arrangements regarding any children? And will all notaries be required to obtain training before they undertake the wide array of legal knowledge and skills required for divorces? Questions are also being raised in Spain as to whether this new law would be in conformity with the Constitution, where Article 24 guarantees the right of effective protection by judges and courts when citizens exercise their rights or their legitimate interests are affected. Will divorcing people lose this constitutional right by having to appear before a notary?

The economic crisis is well and truly washing over the European legal profession. Greek and Italian lawyers have been on strike against the measures affecting them (the next Italian lawyers’ strike, in case this might affect you, will be on 9 and 10 March). In Ireland, a long-awaited meeting between representatives of the legal profession and the Irish Minister of Justice brought some hope of amendments to their Legal Services Regulation Bill. I need not mention the cuts in the UK which will be familiar to Gazette readers. Now it is Spain’s turn. It is tempting to wonder what will be the state of the European legal profession once this long drawn-out crisis is finally over.

Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs

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Data protection - and gossip

Jonathan Goldsmith

Monday, 30 January 2012

As the Gazette briefly reported, the European Commission published its new data protection legislation last week, providing a fresh regulatory structure with which all lawyers and law firms will have to become familiar. I shall focus on that below.

But, first, the most important piece of legal gossip in Europe. The Liberal Democrat member of the European parliament for Yorkshire and the Humber, and former vice president of the European parliament, Diana Wallis, a solicitor who has been a great friend to the legal profession, has suddenly resigned. She had stood two days before for election as president of the European parliament as an independent, outside of the party groupings, and was pipped into third place by one vote (the winner was Martin Schultz, a German socialist). On losing, she almost immediately announced her resignation as MEP. Some British newspapers spitefully pointed out that her successor was likely to be her husband, Stewart Arnold, since he came second in the Liberal Democrat list in the last European elections. In her letter to her constituents, she said she wanted to turn a page and take a break from politics. She was the reporter on a number of significant issues for lawyers - all now being hastily reassigned - and will be greatly missed.

On to data protection. This has been mostly reported in the UK press around the right to be forgotten, which is a welcome addition to a citizen’s armoury. ‘Putting individuals in control of their personal data’ is how the Commission describes it. For a European story, it has been surprisingly positively reported, even if businesses keep saying that it is anti-business.

In summary, the Commission has published two draft legislative instruments: a regulation setting out a general EU framework for data protection (and replacing directive 95/46/EC, which is the current legislative instrument for the protection of personal data in Europe); and a directive on protecting personal data processed for the purposes of prevention, detection, investigation or prosecution of criminal offences and related judicial activities.

I shall focus here mainly on the provision covering lawyers acting as lawyers. The need to take account of legal professional privilege and confidentiality (‘professional secrecy’ on the continent) has been given a boost. Article 84 of the draft regulation says that member states may - and it is a pity that it is not a ‘must’ - adopt specific rules covering the investigative powers of relevant competent authorities against ‘controllers or processors’, which includes lawyers, when we ‘are subject… to an obligation of professional secrecy or other equivalent obligations of secrecy’. In other words, in certain circumstances professional secrecy can be protected against the supervisory authority. The option to draw up specific rules kicks in only ‘where this is necessary and proportionate to reconcile the right of the protection of personal data with the obligation of secrecy’. The rules can also apply only to personal data, which we have received from or obtained in an activity covered by the secrecy obligation. It is a shame that professional secrecy cannot take absolute precedence over data protection, but must be subject to the test of necessity and proportionality - but it is better than nothing. We at the Council of Bars and Law Societies of Europe will now look at the wording of this and other draft articles to see what improvements can be made.

For all that businesses have complained about the burdens on them, the Commission partly sells the proposals on their contribution to economic growth. It says ‘concerns about privacy are among
the most frequent reasons for people not buying goods and services online… trust in such services is vital to stimulate growth in the EU economy and the competitiveness of European industry’. It claims that the recent hacking of gaming industry client data would no longer happen under the new rules.

It also promotes the new consistency that the draft regulation will bring. It uses the different approaches to Google map photographs of people in the street - such photos are allowed in one member state, but not in another - to state that these inconsistencies would also disappear in the new EU-wide approach.

Will the European parliament in due course receive a call from Diana Wallis asking it to delete all the data it holds on her, so that she can be forgotten? (Rather let us hope will she one day make a triumphant return!)

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A Directive that you will not be able to put down

Jonathan Goldsmith

Friday, 20 January 2012

Don’t surprise me by saying that Directive 2005/36/EC on the recognition of professional qualifications is not on your bedside-table, to be consulted when you need to be entertained in the middle of the night. It is right up there with Stephen King and JK Rowling, a masterpiece in horror and wizardry. And now the European Commission is bringing out a new edition, with exciting additions.

The proposed new section which will keep you looking at your curtains as the wind blows through them - is that a claw poking through? A gun aimed at your heart? - relates to partial access to the profession. This notion derives from the European Court of Justice case (C-330/03C-330/03) Colegio de Ingenieros de Caminos, Canales y Puertos, in which Giuliano Mauro Imo qualified as a hydraulics engineer in Italy and the Court held that he should be entitled in principle to be entitled to perform similar work in Spain, even if hydraulics was included in Spain under a wider and more general qualification of civil engineering.

The Commission will now make it a duty to allow partial access if (a) differences between the professional activity in the home and the host member state are so large that in reality the applicant would have to requalify; and (b) the professional activity in question can objectively be separated from other activities falling under the regulated profession in the host member state.

Partial access may be rejected by an overriding reason of general interest, such as public health. It is too early to know the extent to which partial access could apply to the legal profession, but listen out for the screams and footsteps running past your room.

(If I may be allowed a small diversion here, to explain my approach to explaining the Directive to you, I want to say how difficult it is to translate European legislation into meaningful developments for practitioners on the ground. Selling Europe has rarely been undertaken successfully. Older readers may remember a newspaper called The European, launched by Robert Maxwell in 1990 as Europe’s first national newspaper, which turned eventually into a business newspaper, and then folded in 1998.

Because Europe covers so many people, countries, languages, and systems, its language - to be universal - is alienating and complex, and nobody ends up feeling as if it applies to them. Sceptics say that it is because it has become too large, and drifted too far from its original market origins. Enthusiasts just have to accept the challenge of trying to sell it in fresh ways. We find that our own press releases from the Council of Bars and Law Societies of Europe (CCBE) rarely penetrate beyond the specialist press, because the mainstream does not know how to accommodate European concerns. Our big successes have been when we issued releases linked to large world issues such as the trial procedures for Saddam Hussein, or more recently the activities of the Troika in the bailed-out countries.)

To return to the compelling pages of the Professional Qualifications Directive, the Commission has introduced a chilling section set in a graveyard where the corpses rise up and demand European professional cards. This is particularly likely to make UK readers shudder. Effectively, the Commission wants to introduce professional cards for all European professions, but, recognising the difficulties, proposes a voluntary system.

In other words, each profession has to request inclusion in the system before an individual member of the profession can benefit. Once in the system, the cards will be issued through what is called the Internal Market Information System, which is a government-run electronic system linking up competent authorities in each member state. But - thrilling anti-climax - you can be pretty certain that lawyers are not covered by this section. We lawyers already have our own professional identity card issued by the CCBE, and the Commission believes that our card acquires its authority through the lawyers’ directives and not through the Professional Qualifications Directive.

The final new part of interest to lawyers in the proposed changes to the Directive is the codification of the Morgenbesser (C-313/01C-313/01) judgment. Morgenbesser is the decision which allows trainees to move freely around the EU and have their qualifications and experience acquired to date recognised outside the home member state.

There is some question as to whether the new wording succeeds in doing that, or does something else altogether - but that is for discussion during the legislative process.

There are rumours that Stieg Larsson has not died. He fled from Sweden and is moonlighting for the European Commission, churning out thrilling amendments to the Professional Qualifications Directive.

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At last a money laundering challenge in Strasbourg

Jonathan Goldsmith

Friday, 13 January 2012

For a long time now, lawyers - or at any rate those concerned by the consequences of the reporting duties imposed on lawyers by the European money laundering legislation - have been waiting for a case to go to the European Court of Human Rights in Strasbourg on the subject of the compatibility of lawyer reporting with various articles of the European Convention of Human Rights. Well, such a case is now working its way through the Court.

It has been brought by Patrick Michaud against France (case 12323/11). Mr Michaud is a lawyer in Paris, and a member of the Paris Bar’s ruling Council. He is objecting to France’s implementation of the law, and in particular invokes Articles 6, 7 and 8 of the Convention, although not in that order. In the order in which they appear in his complaint, he states the following:

Under Article 8 (‘Everyone has the right to respect for his private and family life, his home and his correspondence’), he complains that, since a lawyer has to report suspicions relating to people coming for legal assistance, under the threat of of disciplinary sanctions if he or she fails to do so, there is not adequate protection of lawyer-client confidentiality and what is called ‘professional secrecy’ in France.

Under Article 7 (‘No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed’), he says that the notions of reporting suspicions and remaining vigilant are too vague to make it proper that failure should be subject to disciplinary sanctions - there is no legal certainty in the disciplinary offences.

And under Article 6 (‘Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law’), he says that the duty on lawyers to report suspicious transactions is incompatible with the right of defendants not to incriminate themselves and with the presumption of innocence in their favour.

The Court has now asked some questions of the parties, as follows:

(1) Does Article 8 protect lawyer-client confidentiality and the notion of ‘professional secrecy’?
(2) If so, has there been an interference in this protection and can Mr Michaud consider himself a victim of such a breach?
(3) Would a previous case (Bosphorus Hava Yollari Turizm ve Ticaret Anonim Sirketi v. Ireland No: 45036/98) in which a country was held not to breach the Convention because it was following its obligations under EU law be applicable here?
(4) Would one of the exceptions to Article 8 (‘is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others’) be applicable here?

It is interesting that Mr Michaud puts Article 8 as the first Article to be considered, and that the Court’s questions focus on Article 8 alone. That is because there has already been a case at European level considering the impact of the reporting duties on Article 6 - but it was a case before the European Court of Justice in Luxembourg, and not before the European Court of Human Rights in Strasbourg.

That was the Belgian case of the Ordre des Barreaux Francophones et Germanophones and others (Case-305/05), which held that the reporting duties did not breach Article 6. Just as interestingly, the Court gave a hint in that case that Article 8 might be a fruitful line to follow in the future, when it said, in the light of the referring court restricting its jurisdiction by making reference only to Article 6: ‘That being so, the legality of Directive 91/308 should not additionally be appraised by reference to fundamental rights not specified by the referring court, such as the right to respect for privacy provided for in Article 8 of the ECHR.’

Well, now we have our case on Article 8, and so the long struggle over the compatibility of the legislation with human rights will finally reach another judicial conclusion at European level.

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What to do about the Syrian Bar?

Jonathan Goldsmith

Friday, 6 January 2012

We should spare a thought for lawyers in Syria. I know that we have large issues like alternative business structures and legal aid to concern us, but they have a life-and-death struggle on their hands.

The Council of Bars and Law Societies of Europe (CCBE) has been writing letters to the Syrian government for nearly a year now, complaining about the treatment of lawyers during the current unrest. In our most recent letter we recited the following accounts, all relating to lawyers: on 28 November 2011, Fahd Musa al-Musa was arrested after a raid on his friend’s house, and they were both taken to an unknown destination in an unacceptable way; on 15 December 2011, Abdullah Al-Khalil was arrested for the third time since the beginning of the recent violence in Syria, and his son, Mohammad, who is barely 16 years old, was arrested along with him; on 15 December 2011, the security forces arrested Dirar Ismail Najm and took him to an unknown destination - the authorities have not contacted their families to disclose where they are being held, or the reasons for their arrest, and the families have been too frightened to ask directly about their whereabouts.

Ahmad Al-Rashid was abducted from the Palace of Justice in Aleppo, beaten and wounded before his colleagues, and then dragged inside the trunk of a car - his colleagues obstructed the way of the perpetrators, and finally released their colleague from the trunk, covered in blood; Abdul Salam Al-Atrush, Salam Othman and Husameddine Al-Asad were abducted more than four months ago and remain unaccounted for.

And what is their professional organisation, the Syrian Bar, doing about this? Regrettably, it appears that they are not only doing nothing, but worse than nothing. The CCBE has no policy on the status of the Syrian Bar, but the Syrian Bar is a member of both world-wide bodies, the Union Internationale des Avocats (UIA) and the International Bar Association (IBA), and they have each issued a statement over the last few months.

The UIA said recently: ‘The UIA wishes to remind the Syrian Bar of its obligations to defend the legal profession and its members... according to the information available to the UIA, Syrian professional bodies are supporting the regime by pressuring lawyers to show their support for the regime and are reporting those who refuse or who, on the contrary express their opposition. This has resulted in disciplinary procedures, arbitrary arrests and criminal proceedings that are primarily intended to suppress freedom of conscience and freedom of expression... consequently the UIA is questioning the legitimacy of the Syrian Bar’s membership to the UIA.’

The IBA is also questioning the future membership of the Syrian Bar in its organisation. Its Human Rights Institute organised a visit to Syria in early 2011, after the unrest had begun. Its report expresses serious concerns about the independence of the Bar - for instance ‘rather than offering assistance to human rights lawyers persecuted by the government, the Syrian Bar Association has on many occasions used its power to institute disciplinary proceedings in addition to the criminal proceedings against the lawyer.’

The report has a fascinating section on the history of the Bar. It appears that the reason for the current supine attitude of the Bar towards the government may be because it once tried to fight for the rule of law. In March 1980, it led a one-day strike against the Emergency Law. In April 1980, it was dissolved, and many members were detained. Most of those punished were released as a result of presidential amnesties issued between 1991 and 1995 - over 10 years later! - but about a dozen are thought to have been executed or to have died in custody. In 1981, the Bar was organised to be under the control of the ruling party, and although that was somewhat modified in 2010, the Bar remains under party control.

The question, as always in these circumstances, is what it is best to do. Cut off all contact; or engage (in the hope of bringing influence to bear)? This has been the difficult question over many years when dealing with organisations under dictatorial regimes. Cutting off contact is easy, and makes us feel good. Engagement is fraught with difficulty, because it appears to support oppressive structures. The question arises, for instance, in relation to the recent visit of the UK Foreign Secretary to Burma.

It would be good to know what the mass of our Syrian colleagues would like us to do. In the meanwhile, we have to make difficult decisions and hope that they are helpful.

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Roll up! - new EU funding for justice projects

Jonathan Goldsmith

Friday, 16 December 2011

In straitened times for most businesses, public money can be a welcome support. It is well-known that the European Commission offers millions of euros in funding for projects over a wide span of subjects. Some law firms and legal academics apply regularly for project-funding. The Commission’s Directorate General for Justice has over the last few weeks published a number of calls for proposals, including two calls last week in the area of civil and criminal justice.

First you need to understand how funding works. It has many technicalities. For instance, DG Justice offers two types: tenders (where it buys goods or services, and for which it provides 100% of the money); and calls for proposals under five programmes, where the funding is only partial, usually up to 80%. The five programmes are: Civil Justice, Criminal Justice, Daphne III (violence against women, children, young people, victims, groups at risk), Drug Prevention and Information, and Fundamental Rights and Citizenship. The first two are principally of interest to lawyers.

Although I aim to be encouraging, don’t believe that it is easy to run projects. First, you have to apply, which requires thought, budget-planning, and often both a cross-border element and partners. You are not given pre-funding for putting in your application, and this can take hours - days - of drafting and negotiating. The proposal is strictly judged by panels, and so the written submission and budget are all-important. Once you have been successful, the project has to be managed within the specified time limit. Of their nature, projects are subject to unforeseen circumstances, particularly where you depend on other people for part of the performance (which is nearly always).

There has to be careful accounting of the expenses, and that can be difficult because cross-border VAT - and projects usually demand a cross-border element - and charging VAT to the Commission - which is usually forbidden - are complex subjects. And, when you finally submit the report to the Commission, the Commission might not be satisfied and so demand further work to be undertaken or, in the worst case, the return of some or all of the money.

In the face of this, why undertake projects? Some do it once or twice and never again, because of the difficulties. For others - and the Council of Bars and Law Societies of Europe is in this category - the work is vital for their general mission. For instance, we have recently undertaken the following: the development of factsheets on suspects’ and defendants’ rights in all the member states (a tender for the European e-justice portal, and so it was 100% funded); and an ongoing project to develop a search engine that will provide citizens with details of lawyers in any member state in accordance with certain search criteria such as language and practice area (the so-called Find-A-Lawyer project, which was submitted under a call for proposals, and so is only 80% funded, and which will also be placed eventually on the European e-justice portal).

Now we come to the news. As I mentioned, the Commission launched calls for proposals (that is, 80% funded) in the area of civil and criminal justice last week. There will not be similar calls for proposals for a further two years. The criminal call covers the following priorities: supporting victims of crime; procedural and defence rights for suspected and accused persons (including legal interpretation and translation); European judicial training of European legal practitioners; networking and exchanging best practice among practitioners, including implementation of existing cooperation instruments, procedural rights, victims' rights, restorative justice, mediation and detention; improving conditions relating to detention; and e-Justice (which covers either civil or criminal projects).

The civil call covers projects aimed at: promoting judicial cooperation in civil matters; promoting the elimination of obstacles to the good functioning of cross-border civil proceedings in the member states; improving the daily life of individuals and businesses; and contacts, exchange of information and networking between legal, judicial and administrative authorities and the legal professions.

There is a good deal more detail in the Commission’s published paperwork at the links provided. There are millions of euros available overall, and well-managed projects can assist not only with substantive goals, but also with enhancing the status - and, of course in these times, the budget - of an organisation. If you are successful, just don’t expect to sleep for the next two years.

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EU life goes on regardless – and at a pace

Jonathan Goldsmith

Friday, 9 December 2011

I know bigger issues are being discussed in the EU, particularly in relation to the UK’s place in it. But that doesn’t stop important lawyer-related topics making progress at the same time. This week’s blog is the ultimate seasonal treat – like a plum pudding or Christmas stocking, it is packed full of rich goodies, which in normal times would be consumed one-by-one, but which have to be crammed into a single package now to ensure that you are kept fully up-to-date before the new year.

For amusement value, I start with patents. The current Polish EU Presidency, which terminates at the end of this year (to be followed by Denmark), had plans to celebrate the ratification of the intergovernmental agreement on an enhanced cooperation for the establishment of a future European unified patent at an official commemoration in Warsaw’s Royal Palace on 22 December. But now the caterers may be being put on hold. All the substantial issues had been more or less settled by the institutions after nearly 30 years of negotiation (council document 17580/11 is the latest, but not yet available on-line). However, they were caught out by something which often proves tricky in EU negotiations – where would the headquarters of the future European patent litigation system be based? London and Munich had been suggested by their respective member states, but the EU Council submitted Paris. The chosen city is supposed to reflect a balanced approach towards the application of intellectual property rights. Munich apparently represents a liberal approach, while London is viewed as a literal applier of patent law. Paris is believed to be mid-way between the two. The Council of Bars and Law Societies of Europe’s working group on the subject is glad of the delay, because it sees a number of large substantive issues as remaining unresolved.

The question of money laundering is again urgent. The European Commission is currently carrying out an impact assessment on the Third Money Laundering Directive, expected to be completed in spring 2012, and following that it aims to present a new legislative proposal between September and December 2012. The commission organised a stakeholders meeting on 9 December in Brussels on the revision of the third directive. We know that the commission is concerned about the differing reporting rates in the member states – thousands in the UK, but in single figures in others. We also know that they are concerned as to whether disciplinary sanctions and bar filters (where the reporting goes through the bar) are effective. At the same time, and in a pincer movement, the Financial Action Task Force (FATF), which is behind much of the money laundering legislation at an international level, is nearing the completion of its review of its recommendations. The FATF organised a consultative meeting in Milan on 5-6 December to discuss the proposed revisions to the FATF recommendations. The legal professions did not come away feeling that their views would make much difference, especially given that decisions will be taken by February of next year.

The CCBE was co-organiser of its own conference last week, in conjunction with the Polish EU Presidency, the European Commission and the European Academy of Law (ERA). The subject was criminal legal aid. Of course, the lawyers, judges and academics were all in favour of generous provisions, but the governments which will provide the funding were rather quiet. This topic will come up again soon as the commission prepares for the measure on the right to legal aid in criminal proceedings, due now in 2013 as part of the minimum EU procedural safeguards. It is already being raised in conjunction with the draft measure on the right to a lawyer, which is making its way through the legislative process, with some member states arguing that it is impossible to give a theoretical right to a suspect or defendant to a lawyer’s services without knowing by how much that right will have to be supported by public funding. Others see that argument as merely a delaying mechanism.

Finally, the European Court of Justice has just introduced its new e-Curia system of electronic exchange of procedural documents. This is among the first of the cross-border electronic procedures to be introduced. I have written before about the e-CODEX project, which is trying something more ambitious – namely, to join up all the current national e-justice and electronic filing systems. The Court of Justice’s system began to operate on 21 November, and there is currently a consultation on consequent changes to the General Court’s practice directions.

I promised you a rich diet. Don’t eat it all up at once!

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ADR and ODR: the EU acts

Jonathan Goldsmith

Friday, 2 December 2011

European policy initiatives are like London buses. After a long wait, a whole bunch arrives together. But their timing is not so mysterious as with buses. No, Eurocrats are clearing their desks before Christmas, having laboured through the autumn to perfect their product. Now the lobbyists have to sacrifice their Christmas holiday in order to have a response ready for the beginning of negotiations in the new year.

One of those which arrived in a clump this week was the alternative dispute resolution package, which has been long expected. It deals with both alternative and online dispute resolution (ADR and ODR), the first via a directive and second via a regulation. If you want an entertaining introduction, you can watch a video of the commissioner for health and consumer policy, John Dalli (from Malta), explaining the background - although you might find his dancing thumbs, which are the Michael Jackson and John Travolta of the thumb world, more alluring than what he says.

So let us begin with ADR. The draft Directive aims at ensuring that quality ADR entities exist to deal with contractual disputes arising from the sale of goods and the provision of services by traders. The Directive tackles the three main problem areas. First, there are currently gaps in coverage, and so the Directive tries to ensure that ADR entities are available for all consumer disputes that arise from transactions in the Single Market.

Second, there is a lack of awareness and insufficient information, which prevents consumers and businesses from using ADR entities, and so traders will be required in the future to provide consumers with information on which ADR entity is competent to deal with a potential dispute. Traders will also be obliged to inform consumers on whether or not they commit to using ADR in relation to complaints lodged against them. Finally, the Commission is worried about variable quality, since the practices of a significant number of ADR entities are not in line with core principles. So ADR entities will have to respect a number of principles, such as impartiality, transparency, effectiveness and fairness. Competent authorities in the member states will monitor ADR entities and ensure that they function properly.

As for ODR, its regulation will enable consumers and traders to access directly an on-line platform which will help to resolve contractual disputes arising from cross-border online transactions, through the intervention of an ADR entity complying with the Directive. The platform will be established by the Commission, and will be directly accessible by consumers and traders, transmitting their complaints to a competent ADR entity in the appropriate member state. It will be an interactive website, accessible in all EU official languages and its use will be free of charge. Its operation will be eased by a network of ODR facilitators.

All complaints handled via the platform will need to be dealt with quickly. Therefore, the regulation sets a time limit (usually 30 days) which is shorter than the normal period to resolve an off-line dispute. The platform will also provide information on ADR entities and general information on ADR as a means of out-of-court dispute resolution.

These proposals exclude business-to-business ADR. However, the European Commission’s work programme for 2012 foresees a business-to-business ADR instrument being adopted by December 2012, to complement the above proposals.

If you are curious as to what else was in the line of buses coming our way this week, the main one was the publication of the Commission’s audit proposals. After much lobbying by the big four, they are lighter on trying to break up the market: joint audits will now be optional rather than mandatory. However, the ban on auditors offering legal services remains, and there is mandatory rotation of auditors.

Still to come in the next few weeks: a proposal for amending the Professional Qualifications Directive (2005/36/EC) and a Communication from the Commission setting out their intentions on Collective Redress, both by the end of this year, and on 25 January 2012 proposals for reform of the data protection directive (95/46/EC). Happy Christmas!

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Would a US-EU trade deal be good for lawyers?

Jonathan Goldsmith

Friday, 25 November 2011

I have written before about how the current economic crisis is leading to a radical rethinking of structures that impact on lawyers. Here is another initiative which could lead to significant consequences in years to come.

There are some who believe that one way out of the impasse facing the euro and the dollar is for the two economies, EU and US, to co-operate more closely. The suggestion is that a reduction of barriers in services, among other things, would lead to a growth in trade and jobs. There are very interesting statistics, running into the trillions, of how dependent the two large economies have become. We are each other’s largest trading partners in services. At the EU-US summit in Washington (28 November) ‘opportunities to grow trade and jobs’ are on the agenda. The US Chamber of Commerce has written to the White House in the run-up to the summit to suggest that, rather than have a large EU-US bilateral trade agreement where disagreement on one item can hold up the whole package, there should be smaller single deals running in parallel, including one on liberalising cross-border trade in services.

I am concerned here only with how this might affect lawyers. You might think that there is not much more liberalising that can be done that could affect lawyers between the US and EU. But you would be wrong. Our mutual wishes regarding liberalisation more or less mirror each other. We want to be able to practise wherever we wish in the US, and not just in those states which are currently relatively open such as New York or California. Similarly, they want to practise not just in London, Brussels or Paris, say, but in any member state of the EU (and each member state has different restrictions on practice by foreign lawyers). We want an easier route to qualification as a US attorney, taking into consideration our existing status as a European lawyer – and they would like that in the EU, I have no doubt. The one thing that they have included on past wish-lists is to take advantage of our EU directives on the free movement of lawyers, from which they are currently excluded (since they are not EU lawyers) ... and from which we would like them to remain excluded. But will this be up for grabs in any new liberalisation negotiation?

There is now a discussion in Brussels about the wisdom of proceeding down the single issue route. There are some large questions at stake. For instance, what impact will such a deal have on other free trade agreements, and on the multilateral system? Most of the service sectors already have open market access to the US, and so what would be the added value of this new proposal? And, maybe most significantly from the lawyers’ point of view, the majority of the remaining difficulties for service sectors in doing business in the US are of a regulatory nature, principally due to the federal structure, and the fact that many service sectors – including lawyers, who are regulated by the state supreme courts – are regulated at sub-federal level: how could such an agreement deliver removal or reduction of these state-level obstacles? The latter is a particularly big hurdle for EU lawyers, since the US doctrine of states’ rights has always meant that it is almost impossible for there to be a consistent US-wide agreement on regulation of foreign lawyers.

Of course, I suspect that as usual we will have no control over our fate, which will be decided – like nearly everything nowadays – by economic forces well beyond us. But the CCBE is beginning to discuss its position on these matters.

Finally, as a bonus for those who have read so far, I will provide a rare and useful guide, in a few sentences, as to where the main sources of essential information on international trade in legal services can be found. The prime document is a World Trade Organisation note from 2010 on legal services, with fascinating insights. US statistics and other related material on legal services can be found here. Australian statistics and other material can be found here. EU statistics on the movement of European lawyers across borders can be found here. What more do you need by way of Christmas holiday reading?

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Troika forces ABSs on Italy

Jonathan Goldsmith

Friday, 18 November 2011

Just as with the Second World War, so the current economic crisis - which Chancellor Merkel says is Europe’s most challenging period since the war - had its phoney period, which has now ended. For a long while, nothing seemed to happen, and no consequences were felt. But, from a lawyer’s point of view, that is no longer the case.

I shall start with Italy, which is not even a bailed-out country. The press reported on the huge pressure on Silvio Berlusconi before he resigned. He insisted on seeing through a package of reforms first, and this was passed on his last day in office. According to a press report in the UK, the measures were opposed by the Italian legal profession: 'Italian lawyers are already on war-footing over moves to include measures in the package to open up the legal profession to greater competition. La Stampa points out that around 150 lawyers sitting in parliament were instructed by their professional association to vote down similar measures when they were proposed by the government this summer.'

Included in the stability law approved on Berlusconi’s last day by the Italian parliament - at the urging of the European institutions - were alternative business structures, just as known and beloved in the UK. In summary, the new rules include the following:

(i) any kind of corporate structure is permitted for law firms (including limited companies and stock corporations);
(ii) the exclusive purpose must be the exercise of professional activities (including any multi-disciplinary partnerships);
(iii) the partners/shareholders may be (a) professionals admitted to the relevant professional organizations, (b) citizens of other European Union member states with the requisite professional qualifications, or (c) non-professionals for a list of technical services or investment purposes.

Outside ownership is therefore now permitted, including apparently in a majority position. This is interesting in view of the so-far rather isolated position of the UK on this question.

VAT on legal services is another issue which has changed with the real war. There used to be two member states where lawyers’ services were either zero-rated or exempt: Greece and Belgium. A rate of 23% on legal services in Greece was introduced soon after the country fell into economic trouble, and I understand that discussions are under way now in Belgium - again, not a bailed-out country - about the introduction of VAT on legal services, since the government needs all possible revenue streams. The CCBE used to mount an argument that VAT on legal services was an obstruction to access to justice, but that is going to be nearly impossible to argue in the current climate.

The Troika (IMF, EU and European Central Bank) instructs what changes should take place in the bailed-out countries. Its plans for the legal professions can be read on the IMF website under Greece, Ireland and Portugal (for Greece, there is more than one report). They share in general the same objectives - opening up the profession to competition, reviewing or abolishing reserved activities and other mechanisms which are seen by the Troika as keeping the profession closed.

The most radical measure proposed so far comes from Ireland through the Legal Services Regulation Bill, which would introduce more or less direct regulation by the government (I have written about it before). There are questions in Ireland as to whether this is a Troika measure, or something brought in by the justice minister under the camouflage of the Troika - indeed, it is not always clear elsewhere, too, which are real and which camouflage measures. For instance, in Portugal, the crisis has brought about a change relating to legal aid lawyers which does not appear in the Troika shopping list. Up until now, the Bar appointed legal aid lawyers, who were paid by the government in accordance with a list of fees. Under new proposals, the government will pay these lawyers a monthly fixed amount as employees.

The conclusion is obvious. Changes which would have been discussed and negotiated at European and national level, and which are often highly controversial, are being introduced at speed and with little chance of argument under the guise of the economic crisis. The effects of the real crisis are now upon us.

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