Russian sanctions move further into legal services

The European Union published its 8^th sanctions package against Russia and Russians at the end of last week, in response to Russia’s illegal annexation of parts of Ukraine.

As anticipated, the package covers commercial legal services. The UK government had announced earlier in the week that it would follow suit, in language that echoed that of the EU.

Lawyers may huff and puff, but we cannot on the one hand boast about how indispensable our services are to international trade, and how much we contribute to the invisible earnings of the UK, and, on the other, expect that our work will escape from the efforts to cut Russia off from trading with the west.

The UK government puts it as follows:

‘Russia is highly dependent on Western countries for legal services with 85% of all legal services being imported from G7 countries – given London is an international legal centre, the UK accounts for 59% of these imports. The new legal advisory measures will cover certain commercial and transactional services and hamper Russia’s businesses’ ability to operate internationally.’

Some immediately want to point to the special position of legal services as part of the rule of law, and to claim that to deny access to a lawyer is to act in a way that is contrary to our own values. But there is no dispute among decision-makers that those sanctioned should be entitled to, for instance, criminal legal representation, or to representation on legal issues arising out of the application of the sanctions themselves.

This new package is about access to what the UK government calls ‘transactional legal advisory services’.

I have written before that, at least under our own framework of rights, which is still finally governed by the European Convention of Human Rights, there is no absolute right to a lawyer in civil disputes, and whether that right can be enforced in particular conditions depends on a list of circumstances, which the European Court of Human Rights has defined in case-law.

Consequently, there is no absolute right to a lawyer to undertake commercial transactions - even if, given our traditional view of a lawyer’s role, we baulk at being forbidden to provide certain services to certain categories of people or entities.

But that does not mean that the current package will be without problems. I can speak only about the EU package, since I have not seen the detail of the UK’s measures, beyond the brief press release at the end of September. And these are my personal views.

In simple terms, and without entering into the immense complexity of the application of what the EU proposes, its package bans legal advice in non-contentious matters, and also participation in commercial transactions with third parties.

Legal services, including legal advice, are notoriously slippery concepts to define. In the many discussions in which I have participated over the years, we have always come to the conclusion that it is better not to define them at all, since no definition satisfies every requirement. A couple of difficulties from the EU’s attempt provide us with examples, as follows. 

The EU seems to have chosen to follow the United Nations’ Central Product Classification (CPC), which covers both goods and services. It contains a set of internationally agreed rules to facilitate the production of data, including statistics on industrial production, international trade in services, balance of payments, and so on.

So far, so good. However, the World Trade Organisation (WTO) and the International Bar Association (IBA) have both in the past looked at this classification as it applies to international trade in legal services, and come to the conclusion that it does not fit.

First, the EU ban does not appear to cover a consultation between a lawyer and a client which may fall short of legal advice (the IBA proposes to bridge this by talking about ‘legal advice and consultation’).

Second, it targets the legal service and not the legal service provider. The question is whether advice which is not provided by a lawyer can amount to legal advice, and so be covered. From a regulatory point of view, this is the sort of problem which is resolved differently in different jurisdictions, depending on the concepts behind the legal system. In some jurisdictions, legal advice can by definition be provided only by lawyers. Does that leave some non-lawyers providing legal services scot-free under the EU package?

For lawyers, these may be academic points because the joint action taken by law firms’ professional indemnity insurers and law firms’ banks may mean that, regardless of the wording, it will be next to impossible to undertake any work at all in this field.

My main point is that it would serve lawyers better if there were full discussions between the authorities and the legal profession before such decisions are made.

Jonathan Goldsmith is Law Society Council member for EU & International, chair of the Law Society’s Policy & Regulatory Affairs Committee and a member of its board. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society