On 9 July, the European Commission published its updated recommendations for reform of regulation of seven professional business services (including lawyers). The recommendations build on their previous version, published in 2017, and summarise progress made by member states in creating a more business and innovation friendly regulatory environment.
The objective of the recommendations is to help member states create a regulatory environment that supports growth and innovation. They focus on seven professional business services that have high potential for growth, innovation and job creation: architects, engineers, lawyers, accountants, patent agents, real estate agents and tourist guides.
The Commission’s analysis points out that business services, many of which are regulated professions, represent 13% of EU value added and14% of its employment. The same analysis also shows that there has been little progress made by the member states since it issued its first set of recommendations in 2017.
The analysis is based on broadly the same methodology as OECD’s Product Market Regulation (PMR) indicators (2018 edition). The type of regulatory requirements that are covered by the indicator has not changes since 2017 and include:
- regulatory approach (e.g. activities reserved to specific professions or title protection);
- qualification requirements;
- other entry requirements (e.g. compulsory membership or registration in professional body, limit to the number of licences granted, etc.);
- exercise requirements (e.g. restrictions on forms of company, shareholding and voting requirements, restrictions on joint exercise of professions, incompatible activities, etc.).
Based on the criteria above, the Commission analyses the professional regulation in seven business services mentioned above, progress made since 2017 and suggests further areas for improvement. The recommendations that address the legal profession mention several areas in which the Commission would see further changes to the existing regulations:
- scope of reserved legal activities: the Commission urges members states that reserve the provision of legal services exclusively to lawyers to make sure that legal services can develop and innovate. It particularly stresses that the development of digital services should not be limited by a broad scope of reserved activities.
- legal form and shareholding requirements: the Commission recommends that all member states assess the incompatibility rules and multidisciplinary restrictions. It stressed again the emergence of digital solutions and pointed out the emergence of new business models.
The Commission also addresses specific countries and recommends that:
- Bulgaria maintain an open regime for legal services;
- Ireland adopt the implementing measures under the 2015 Legal Services Regulation Act so that lawyers are able to provide multidisciplinary services;
- Belgium and Germany review the current rules for access to practise before their supreme courts, also taking into account the rules applicable to EU lawyers;
- Germany review the need to maintain minimum age restrictions for practising before the Federal Court of Justice (Bundesgerichtshof), in exchange for measures that appear to be better suited to achieving the set objectives, such as professional experience;
- Bulgaria, Croatia, Malta, Poland and Slovenia remove bans on commercial communications for lawyers.
The recommendations, and accompanying working documents, are thought as a guide for the member states’ regulatory efforts. The Commission plans to follow these up through regular policy processes, such as European Semester and Recovery and Resilience Facility, as well as a permanent dialogue with stakeholders, especially though its expert groups. The Commission also intends to monitor the application of the EU law and, if necessary, initiate enforcement actions. It also will continue to update the recommendations when needed and appropriate.