Greek lawyers have been on strike recently, protesting over measures brought in by their government at the insistence of the International Monetary Fund, which is helping to bail out the country’s economy. This is the first sign of a new movement: a retargeting of lawyers’ activities as part of general economic liberalisation.
The economic crisis at first brought calm to the competition front at the point where it intersects with lawyers’ activities. After some years of frenetic activity, when the competition authorities at European and national level targeted what they saw as the anti-competitive nature of bars’ and lawyers’ practices, the shock of an unregulated financial sector and its consequences seemed to make the competition authorities realise that there was some virtue in regulation. I have written that the Clementi reforms would no longer be undertaken in the current climate. But then along came the worst of the economic crisis in Europe, and the eurozone bailout.
Two countries have so far received a combination of EU and IMF funds: Greece and Ireland. The IMF has in the past been criticised for pursuing open-market policies regardless of their appropriateness or actual benefit. It clearly does not feel that regulation of the legal profession is an unqualified good. In both the agreements which the Greek and Irish governments were obliged to accept, there are measures targeting lawyers. There is reason to believe that these measures came from the IMF, not the EU, because the EU’s competition authority had clearly signalled in recent years that it no longer considered the question of professional practices as a priority.
On Greece, the IMF report says: 'Government proposes legislation to remove restrictions to competition, business and trade in restricted professions including: the legal profession, to remove unnecessary restrictions on fixed minimum tariffs, the effective ban on advertising, territorial restrictions on where lawyers can practice.' The basis is an Organisation for Economic Co-operation and Development report on regulatory indicators (which shows how the details of such reports should be followed closely while they are being produced, because of the use then made of them later).
The lawyers who have been striking in Greece are those outside Athens, because they are worried that some of the changes – presumably, the territorial restrictions on practice – will ensure that Athens firms now grab the valuable work. At the same time, and as part of the austerity package, all Greek lawyers are implementing a 23% VAT charge on legal work, whereas up to now VAT has not been charged on legal services (leaving Belgium as the only country left in the EU where VAT is not payable on legal services). You can see that there have been radical and rapid changes to their landscape.
On Ireland, the IMF report says: 'Government will introduce legislative changes to remove restrictions to trade and competition in sheltered sectors including: the legal profession, establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs.' Some while ago, the Irish Competition Authority published a report calling for similar changes to be introduced into Ireland as have been subsequently introduced into England and Wales through the Legal Services Act. The Irish legal professions saw off the attempt. You can see why Irish politicians fought hard to resist a bailout, because their sovereignty has been interfered with in the conditions attached to the money.
At the same time, the commission has not been idle. It is also part of the bailouts. It has just published a communication called Annual growth survey: advancing the EU's comprehensive response to the crisis, as part of a proactive approach to the crisis, and outlining 10 priority actions. One of the 10 is ‘Tapping the potential of the single market’, and the following action point is raised in it: 'Member states should identify and remove unjustified restrictions on professional services such as quotas and closed shops.' It was here that Commissioner Reding intervened a couple of weeks ago to avoid bans on compulsory membership for the professions. This is a different point to the one raised by the IMF, and so should also be followed closely.
The signals are clear. The IMF, doubtless with EU complicity, is using the bailouts as an opportunity to enforce greater liberalisation. This is how decision-making is taken out of the hands of national or even appropriate EU stakeholders, and handed over to the supposedly faceless bureaucrats from Washington, who have no interest in considerations of justice or the public interest, only in money. Welcome to the new reality.
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
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