Amid French hostility and concerns surrounding the country of origin provision, Andrew Laidlaw finds that the directive on services in the internal market does contain some beneficial provisions for lawyers

Over the past few days there has been a great deal of comment about what the unequivocal French 'non' to the draft European Constitution will mean for many issues and many groups within society in France and elsewhere in Europe.


One group, from whom the implications of the result have so far provoked little comment, is the legal profession. It is not widely known within the profession in England and Wales, but there is one highly controversial piece of draft legislation currently under consideration that affects lawyers' practice and which is highly likely to find itself a casualty of the post-referendum rethink in Europe.


The proposal, the Directive on Services in the Internal Market, is intended to liberalise across the board the provision of all types of service in the EU, removing barriers to the establishment of service providers in other EU member states and to the cross-border provision of services. The theory is that service providers, such as lawyers, should only have to comply with the relevant legislation and regulations in their home member states before being able to supply services throughout the EU. While this seems like a good way of freeing trade, particularly for small and medium-sized enterprises, the prospect that service providers need only satisfy rules in their country of origin is too difficult for many countries to accept and has provoked particular hostility in France.


It must be said that the country of origin provision also presents difficulties for the Law Society of England and Wales. This is because the existing system that allows for the free movement of lawyers across the continent, which has been in place since 1977, is based on a very different approach. It allows the host country to regulate foreign lawyers rather than that lawyer's country of qualification.


Although the draft directive acknowledges that lawyers already have a specific directive governing their cross-border practice that would remain in force, the services directive would still cover all unregulated providers of legal services. This approach could create a complicated patchwork of regulation. Unregulated legal service providers would be able to ply their trade across Europe having only to comply with their home country rules, while regulated legal service providers would still have to comply with host country rules. On top of this, notaries would be excluded entirely and so the liberalising benefits would be few.


This is precisely the type of un-level playing field that the Law Society has campaigned against in the context of the money laundering directives. The Society has been actively engaged in the European Parliament and with the UK government to alert lawmakers to the potential unintended consequences on the legal side of this aspect of the services directive. Although it is not a perfect solution, it would be better if the provision of legal services were to be exempted entirely from the country of origin provisions in the services directive. At the very least, it could then be argued that, although we still have a regulatory patchwork, at least consumers have a better idea what they are dealing with.


Although the services directive has its drawbacks, it would be disappointing if it disappeared completely in an attempt to address French concerns, expressed in some quarters during the referendum campaign, that the EU is becoming too liberal. There are some provisions in the draft directive that could benefit lawyers themselves and help to address some of the criticisms made by consumer bodies of Europe's less consumer-orientated legal professions. These provisions include measures to improve quality of services, one-stop shops for those looking to find out how to provide their services across borders and, crucially, the acceptance that competition policy has a role to play in the provision of legal services - all of which is difficult to argue against.


The services directive integrates some of the important conclusions from the review of competition in legal services undertaken by the European Commission last year. It addresses questions such as bans on advertising, scale fees and vehicles of practice such as multi-disciplinary partnerships. If the directive does ever make the statute book, it will provide an important means by which the reality of practice can be made easier across borders.


On top of these practical benefits, the draft directive also contains an important symbolic acknowledgement of the importance of self-regulation of the legal profession, something that exists nowhere else in the European 'acquis'. Against a backdrop of measures that increasingly seem to be undermining this approach, such a statement would be useful.


Like so much else that happens in the EU, including the draft Constitutional Treaty, it is not necessarily easy to respond by saying 'yes' or 'no'. What is needed is a 'yes, but...' or a 'no, unless...' The problem is that these equivocal statements make poor headlines but they reflect the day-to-day reality of European lawmaking.


Andrew Laidlaw is the internal market policy executive at the Law Society's Brussels office. E-mail: andrew.laidlaw@lawsociety.org.uk