Ever since the founding of the European Union, steps have been taken in favor of European integration and the free movement of persons, services and capital. In particular, the free movement of lawyers has been one of the objectives of the European Union and has become a reality.
In 1977, a first step was completed with the Directive 77/249/CEE. However, it was not until 1998 that the exercise of the freedom of establishment for lawyers was specifically regulated (Directive 98/5/CE). Subsequently, in the year 2006 the Directive 2006/123/CE established a general legal framework as well as the free movement of services, at the same time ensuring a high level of quality of services.
In this context, the Directive 2000/31/CE is especially relevant as it determines that online service providers are subject to the legislation of the State in which the provider is established. In this way, ABSs incorporated in the United Kingdom may indeed attract customers in other Member States as long as they operate online.
Currently, the European Commission has set up a general liberalization process of professional services with the aim to improve competitiveness in the European economy.
All of the above has led Member States to adapt their national legislations. The level of development is different amongst countries, standing out the liberalization operated in the United Kingdom. In fact, the United Kingdom is one step ahead of the rest of Member States, resulting in a high degree of tension. In this regard, owing precisely to the free movement and the European integration, the rest of Member States see as a threat the developments in the United Kingdom and, specially, the possibility that ABSs may operate in their jurisdictions. For the moment, no ABS is operating outside of the United Kingdom, though it is likely to occur sooner or later.
In other Member States such as Spain, Germany, the Netherlands and Belgium, professional firms have also been authorized. As in Spain, the Netherlands contemplates an incompatibility with regards to account auditors. On the contrary, Belgium admits the creation of multidisciplinary teams between lawyers and account auditors, though separate invoicing is required.
On the other hand, in June 2015, Brussels initiated an infringement procedure against Germany, Spain, Austria, Cyprus, Malta and Poland alleging that the requirements that must be fulfilled by certain service providers in said countries are in breach of the Directive 2006/123/CE. Article 15 of said directive lists the requirements levied on service providers related to the legal form, the share capital and the tariffs. These requirements are not strictly banned, though, according to the Court of Justice of the European Union, they create barriers in the single market for services. They can only be maintained if they are not discriminatory, if they are necessary and proportionate. In this way, the European Union is forcing Member States to open their markets.
Elzbieta Benkowska, the European Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs, stressed recently that “the free provision of services is one of the pillars of the single market. In some Member States barriers continue to exist, be it in the form of restrictions to the legal form and share capital or of restrictions regarding qualifications or fixed tariffs which hinder both companies and individuals from providing their services freely throughout the whole of the European Union”.
In the case of Spain, the European executive requests the authorities the derogation of the minimum compulsory tariffs that apply to solicitors. The Commission also expresses its concern with the legislation in force in Spain under which certain activities of solicitors are incompatible with those of lawyers.
In addition, the Commission questions the States affected by the proceedings the excessive requirements regarding share capital –such as the requirement for professionals to own the total voting rights and share capital of a firm or that the firm must have its registered office in a particular territory–. With the entry into force of Act 25/2009, known as the “Omnibus Act”, Spain authorized the entry of borrowed capital up to 49%, though maintaining the territorial obligations for registered offices. The Commission believes this latter “could hinder a second establishment or the cross-border service provision in the Member States at issue”.
Consequently, we can see, on the one hand, the gradual liberalization of professional services in the European Union and, on the other, the continued existence of certain restrictions in the national legislations of several Member States. For its part, United Kingdom is one step ahead of the requirements established by the European Union.