‘Brexit’ – How Could it Impact Foreign Lawyers and the QLTS?

The unexpected has happened and the UK has voted to leave the European Union. This British Exit – known as ‘Brexit’ – has caused a lot of uncertainty and confusion both in the UK and around the world.

You will hear different opinions on how this event will impact the world economy and the legal profession.

We have received many queries and concerns from current and potential QLTS candidates.

In this post we will cover the possible consequences of Brexit and how these may affect overseas lawyers who are planning to qualify as English solicitors through the QLTS assessments.

Of course, this decision will result in a lot of uncertainty; this is the natural consequence of an outcome that has no precedent. It is impossible for us or anyone else to predict with precise accuracy what will happen, and anyone who tells you otherwise may need to reexamine their certain position. We are certainly engaging in some speculation here, but on what we like to feel is an informed and positive basis.

However, rest assured that we at QLTS School have long considered and planned for a ‘Brexit’ and you will see in the coming weeks and months that we are staying abreast of developments and adapting to ensure that QLTS candidates are well-informed and able to take advantage of the opportunities (yes, there ARE opportunities) that may arise from Brexit.

What does this vote mean for the UK?

The short answer is that, right now, nothing has changed. This includes the QLTS and qualifying as an English solicitor, moving to and working in the UK.

The UK continues to be a full member of the EU, and all laws and regulations apply to the UK as it did before the referendum.

No model for exit has been determined yet.

What we do know is that the EU legal framework permits for an exit process to be triggered once notice is served in accordance with Article 50 of the Lisbon Treaty, and a withdrawal agreement to be negotiated with the EU over a two-year period, or if needed, a longer period of time.

The exit notice has not yet been served, and it appears that the EU cannot force the UK to do so.

Uncertainty will remain as exiting the EU is not a process that can happen overnight and a lot needs to be covered in the negotiations.

If no agreement is reached and the two-year period is not extended, the UK would then cease to be a member of the EU.

In what form the exit will take place?

There are various main options currently discussed for a post-EU Britain, as outlined by an article written by the London School of Economics and Political Science:

1. The Norwegian model – joining the European Economic Area (EEA). EEA members are granted access to the EU’s single market even if they are not part of the EU. Non-EU members in the EEA still have to follow EU rules and regulations.
2. The Swiss model – bilateral treaties. The UK could gain access to the European single market through a series of bilateral treaties governing its relations with the EU, without being a member of either the EU or EEA.
3. Re-joining the European Free Trade Association. This would guarantee bilateral goods tariff-free access imported and exported between the UK-EU. It would not, however, provide for free movement of people or free trade in services between the UK and the EU.
4. World Trade Organization. If the UK leaves the EU without putting in place any of the alternative arrangements, then its trade with the EU would be governed by the WTO. This would raise the cost of exporting to the EU for UK companies.
5. A complete exit from the European Union. Britain would be in control of all its legislation. The UK would become an independent player in trade negotiations. Instead of entering into new agreements with the EU following Brexit, the UK could opt to seek closer integration with countries outside Europe.

There is also the possibility of the UK holding ‘associate member’ status with the EU. This involves signing an association agreement between the UK as a third country and the EU, pursuant to which the agreement would provide for all-embracing framework within which to conduct bilateral relations. These agreements normally provide for the progressive liberalisation of trade depending on what is agreed, and there appears to be some flexibility and scope to agree provisions that suit both parties.

What will Brexit mean to London as a financial centre?

Over the past 30 years, London has become more international with global and US banks being particularly dominant. Experts believe that the City of London will still rule finance after Brexit, so that other EU jurisdictions will realise they need London even more than London needs them. Continental Europeans will continue to rely on London to raise capital and channel funds into investments around the world. The City will remain a major international financial centre and the UK vote to leave the EU will not result in a “mass exit” of banks and other financial institutions, said the City of London financial district.

That being said, the fate of thousands of finance jobs could rest on the UK negotiating a deal that allows trading access to the EU and preservation of the “passport” scheme, and the city financial industry workers would face a period of uncertainty while details are worked out.

If, however passport rights were not preserved (and this would be subject to the exit package and is currently an unknown), this would compel the City to adapt and seek new opportunities and innovative ways of operating in order to remain competitive.

On the legal aspect, London-seated arbitration remains very popular, and the impact of Brexit is said to be minor.

Choice of English law

English law has always been distinct from other EU jurisdictions, being the only common law system in Europe, whereas other EU Member States have civil law jurisdictions.

Many EU lawyers have been taking the QLTS to qualify in England and Wales in order to add more appeal to their professional profile and enhance their legal knowledge and ability to offer a wider range of services to their clients. To this extent, the UK’s EU membership is almost inconsequential.

Despite the UK vote to exit the EU, the English law will continue to preserve its undisputed standing internationally as the preferred choice of law for commercial transactions and dispute resolution. Indeed, many international transactions and contracts are governed by English law even though the parties or the substance of the transaction has no geographical connection with the UK or the EU!

Transactional work is the obvious area that will be most affected by Brexit, with no-one really knowing whether deal activity will now pick up post-vote. We have heard reports anecdotally from some in practice that some deals have been suspended or cancelled, but that equally others will now proceed regardless of the Brexit vote, due to the UK element of cross-border transactions being a small part of the whole picture.

Furthermore, the Law Society’s October 2015 report ‘The EU and the Legal Sector’ cites several factors that contribute to the success of England and Wales as the jurisdiction of choice for the resolution of international disputes,

• quality and commercial acumen of judges
• legal certainty
• impartiality
• English as the language of global business
• the influence of common law on legal systems throughout the world, and
• the reputation and availability of legal advisers, particularly in London which is home to the major courts.

The Law Society president Jonathan Smithers said: “It’s also important to say that the law of England and Wales retains its international commercial appeal and England and Wales remains an attractive and stable jurisdiction, with a high quality legal profession, internationally respected courts and the best law firms in the world that have attracted clients from across the globe for many years.”

White & Case partner David Crook believes “the willingness of parties to choose English law will continue,” despite Britain severing its ties with the EU.

Holman Fenwick Willan partner, Damian Honey, considers that Brexit will not result in parties moving away from English jurisdiction, unless enforcement and service are issues.

Similar views were expressed by Karen Birch and Sarah Garvey from Allen & Overy in their article “English governing law clauses – should commercial parties change their approach?”, which addresses preliminary concerns of businesses (and indeed some English solicitors who may be concerned about the diminished appeal of the legal services sector in England and Wales post Brexit).

It might even be argued that Brexit could lead to English law being more attractive as the law of choice as the UK would no longer be required to incorporate those aspects of EU law which can prove problematic and uncertain.

English law as a jurisdiction will continue therefore to be preferred and even with a proposed points-based migration system (a separate issue from EU membership), lawyers may well qualify as being sufficiently skilled. If this happens, this may also suggest that the need for dual-qualified lawyers will continue to be in high demand.

QLTS syllabus and criteria

Remember, the QLTS and qualification as an English solicitor is independent of, and not contingent on, the UK’s membership of the EU.

It is expected that changes in the legislation will be made to remove or alternatively adopt some areas of work from English solicitors in relation to EU Law. However, as suggested by Slaughter and May, the influence UK laws derived from EU law over 40 years will not be instantly stripped from the statute book. This will take many years and keep lawyers occupied for the foreseeable future!

Once such changes are in place by the UK government, they are likely to affect areas of law covered by SRA Outcome A1: The Legal System of England and Wales and European Union Law, and Outcome A10: The Human Rights Act 1998 and the European Convention on Human Rights. These are tested in the Multiple Choice Test (MCT). No major changes are expected in the practical assessment, the Objective Structured Clinical Examination (OSCE).

QLTS School will distribute to all its registered candidates a Brexit update package with all the changes in course content, once these become clearer. Again, even if the Article 50 notice were served on 1 July 2016 (and there is no suggestion at this stage that it will), it would be at least 1 July 2018 before any of this would take effect, so don’t expect this anytime soon!

No changes are expected in the eligibility criteria, recognised jurisdictions, professional titles or requirements to apply for admission as an English solicitor following completion of the assessments.

It is possible though that in the future lawyers qualified in EU Member States will not be able to apply for exemptions from elements of the QLTS as they are entitled today, which is in fact the case of all other lawyers qualified in jurisdictions outside the EU.

Another possible development is that lawyers from the EU seeking admission by virtue of European Directives 2005/36/EC and 98/5/EC will no longer be able to pursue this route, which enable EU lawyers to register themselves with the SRA and after three years of legal activity in the UK they can become solicitors without any testing. Those lawyers may need to take the QLTS instead.

However, at this present time, no immediate changes are expected to be implemented by the SRA. Paul Philip, SRA Chief Executive, said: “We, like everyone else, will be looking at the implications of the Brexit vote in general and for the legal market in particular. Any transition will take time and it would be premature to draw any further conclusions at this point.

“There are of course European lawyers working in firms that we regulate throughout England and Wales who may have questions about their current role or an application to practice. As it stands there is no impact on your ability to practice or apply. We will keep you updated if this position changes in the future.”

Immigration of lawyers to the UK

Some law firms expressed concerns that Brexit would make recruiting overseas talent harder. However, it might be the opposite – currently, to hit a political immigration cap the UK government is forced to turn down applications from highly qualified people from non-EU countries, while anyone seeking work from the European Union is entitled to move, live and work in the UK, whatever their talents.

If, following Brexit, the UK will apply the same immigration policy to EU and non-EU countries, while maintaining or even lowering the same level of immigration, the number of talented people (such as foreign lawyers) accepted would surely increase, as all decisions would be based on merit and would give firms a wider pool of talented people to recruit. As for talented EU citizens, if they’re of the high standard firms demand, they would surely qualify regardless – especially with a multinational firm offering them employment.

The immigration position generally is still to be confirmed, but there are indications that there is no intention to ‘pull up the drawbridge’ on immigration, and those already in the UK may be able to benefit from ‘grandfathered’ rights to remain. Again, however, we have to stress that until the exit agreement is actually in place and the UK actually leaves the EU, this aspect (and free movement of persons) remains unchanged.

Effect on the November 2016 OSCE and the February 2017 MCT assessments

Kaplan has clarified that unless otherwise stated in advance, candidates taking the QLTS assessments are assessed on the law in force at the time of the assessment.

Kaplan do not anticipate any changes to UK law resulting from the June 2016 referendum to be in force before either the November 2016 OSCE or the February 2017 MCT. This means the assessments will test candidates’ knowledge and understanding of the UK’s position in relation to the EU and EU law as it was before the June referendum has taken place.

In the unlikely event that such changes are introduced sooner than expected or without warning, Kaplan will seek to ensure that candidates are not disadvantaged.

We will update once the position is clear about future assessments.

Please contact us if you wish to speak with one of our QLTS consultants, or check our QLTS course packages whenever you’re ready to commence your preparation for the assessments.