Brexit: prepare for impact

So far, January is not providing the clarity we might have been hoping for in the Brexit process. Following a Government defeat of historic proportions on the negotiated deal and subsequent survival of a vote of no confidence, the UK Parliament will now consider article 50 again on 29 January and any proposals put forward by MPs to break to current deadlock.

While there is still a sense that avoiding a no-deal Brexit is the prevailing majority view, time is certainly running out to secure it before the article 50 negotiation period runs out. While there have been some reports of willingness on the EU’s side to extend the period beyond 29 March, they are only likely to do so if there is a real chance of progress in that time; and given that they have consistently held that the current deal represents the extent of the concessions they are prepared to make, it is difficult at this stage to envisage what an amended agreement would look like.

As a result, despite Government messaging that they are working to prevent a no-deal situation, prudence still dictates that we make all necessary preparations for such an eventuality.

There are various resources available to help with this.

Impact on practice areas and practice rights

The best place to start for your practice is with the Government’s technical notices. These include topics such as handling civil, commercial and family cases, intellectual property matters, oil and gas, and farming and fishing (to name a few), as well as a notice on professional services and mutual recognition of qualifications, which includes specific reference to the legal profession and practice rights.

The EU has also published a set of corresponding Brexit Preparedness notices.

Reciprocity

One of the key issues to consider is whether, and the extent to which, your practice involves relying on reciprocal arrangements with other EU member states. For example, in relation to cross-border civil legal cases there will no longer be an agreed EU framework for ongoing civil judicial cooperation between the UK and EU countries should we leave without a withdrawal agreement in place. If the UK were to apply EU rules unilaterally after exit, the UK’s status as a third country would mean that EU countries would not consider the UK to be covered by these rules. As a result, UK citizens, businesses and families would not benefit from them.

Because of this loss of reciprocity, in the event of a no deal scenario, the Government’s technical notice (handling civil legal cases), which covers judicial cooperation in relation to civil and commercial, insolvency and family law matters, explains that the UK and devolved administrations will repeal most of the existing civil judicial cooperation rules and instead use the domestic rules and international treaties which each UK legal system currently applies in relation to non-EU countries. In some specific areas detailed in the notice, it would be possible to retain elements of the current EU rules, where they either do not rely on reciprocity to operate or where they currently form the basis for our existing domestic or international rules.

We would also continue to apply existing international agreements, such as the Hague Conventions, which in many areas provide alternative rules covering the same areas as the EU-specific instruments, although the Government recognises in its notice that they are not always as comprehensive. Where the UK currently participates in Hague Conventions because of our EU membership (namely the 2005 Hague Convention on Choice of Court Agreements and the 2007 Hague Convention on Maintenance), the Government and devolved administrations will make the necessary arrangements to continue to participate in these international agreements in our own right.

There is also further information covering family law cooperation both with and without corresponding Hague Conventions, as well as the likelihood of securing recognition of UK insolvency proceedings in the EU (and vice versa) without recourse to the EU Insolvency Directive.

The notes do not provide any clarity on what will happen in relation to cases that are ongoing when the rules governing the enforceability of any case cease to have effect.

Harmonisation

Other areas of practice have been harmonised to varying degrees across the EU, particularly where they seek to regulate the internal market, and will therefore be subject to change. Rules relating to consumer rights, the environment and competition law are just some of the notices published on the Government’s website that have been standardised to a point.

Intellectual property law has a high degree of harmonisation, as much of the UK legislative framework in this field is currently composed of directly effective EU regulations and transposed EU directives.

The Government has published technical notices on copyright, patents and trademarks, and exhaustion of intellectual property rights, detailing some of the implications of a no-deal Brexit on matters such as rights holders with either an existing registered EU trade mark or registered Community design, or with an EU application underway; the retention of EU patent law through the EU Withdrawal Act 2018; and whether it will be possible for the UK to remain within the Unified Patent Court and unitary patent system in a “no deal” scenario.

Although the UK’s continued membership of the main international treaties (for example, the Paris Convention and the Berne Convention) on copyright and related rights will ensure continued protection of copyright works in the UK and of UK works in the EU, the EU cross-border copyright mechanisms extend only to member states of the EU or EEA. Therefore, in the event of there being no withdrawal agreement when we leave the EU, recognition under these mechanisms will cease to apply to UK rights holders.

The Intellectual Property Office has also published a factsheet on intellectual property rights and EU exit, and the Society’s Intellectual Property Committee published its own briefing on the impact of UK withdrawal from the EU in the area of intellectual property law.

Practice rights

We have already published Journal articles about the impact of Brexit on practice rights for Scottish solicitors working in the EU and for Scottish solicitors working in the UK including in the event of a no-deal Brexit. The Government’s technical notice on cross-border services does not add much to what we have already said, although it does contain some clarity on the mutual recognition of qualifications (which is helpful for us in deciding how to treat EU candidates seeking to requalify here in future). It also contains some information for employers of registered European lawyers, albeit excluding Scotland from the advice as we operate under our own set of regulations. While this is true, in practice the two regimes are very similar.

Impact on business

For business owners, Scottish Enterprise has created a Brexit self-assessment tool to identify what business owners can do now to prepare for business post-Brexit. It is available alongside various other sources of advice and information, including practical advice on issues such as cross-border VAT, funding applications and data protection, at www.prepareforbrexit.scot.

The UK Government also published a partnership pack for businesses, which is intended to help business owners with their own contingency planning as well as help them to advise their customers, members and clients. The pack has recently been updated as the Government has stepped up its no-deal preparations to include further information about preparing for changes at the UK border after a “no deal” EU exit.

Employment and immigration

For businesses that employ EU staff it is important to be up-to-date on the latest developments in order to be able to advise your staff. In December last year, the UK Government published a policy paper outlining its action to protect citizens' rights in the event that the UK leaves the EU without a deal, both for EU citizens in the UK and UK nationals in the EU. At the same time, it published a separation agreement reached with the EEA EFTA states (Norway, Iceland and Liechtenstein), the main aim of which is to protect the rights of citizens living cross-border.

The Government’s position is that, whether or not there is a deal on Brexit, there will be no change to the rights of EU citizens and their families until 1 January 2021. The Government would continue to run the EU Settlement Scheme for those resident in the UK by 29 March, the main difference being that there would no longer be the six-month grace period built into the application process that there would have been had there been an agreed implementation period until 31 December 2020. It is therefore vital that EU colleagues/employees apply before this deadline.

Data protection

There would be no immediate change in the UK’s own data protection standards due to the fact that the Data Protection Act 2018 would remain in place and the EU Withdrawal Act would incorporate the General Data Protection Regulation into UK law. Because of the high degree of alignment between the UK and EU data protection regimes, the UK Government has undertaken to allow the free flow of personal data from the UK to the EU. While the Government believes it likely that this would be reciprocated by the EU, the EU has indicated that it will not take a formal position on this until the UK becomes a third country. UK businesses might therefore need to take action to ensure EU organisations are able to continue to send personal data to them in the intervening period.

As well as the Government’s technical notice, the UK Information Commissioner’s office has published detailed guidance on data protection if there is no Brexit deal.

Next steps

This is clearly not an exhaustive list of the issues that solicitors will need to consider in preparation for life outside the EU, and it does not consider economic issues, such as the impact on lending conditions or the property market, which could affect business. The fact that we must all accept a level of uncertainty until we enter the next phase of our relationship with the EU is unlikely to sit comfortably with a notably risk-averse profession.

However, at the Society we aim to keep our website fully updated on latest developments, as well as offer CPD training and events on the implications of Brexit on the membership. Throughout February we will also be running a series of lunchtime focus groups aimed at our high street members, with additional sessions for our in-house members to find out what your concerns are about Brexit, how it is impacting your firm or business and the advice you are giving.

At this time, regular communication is key and we want to hear from you so that we can tailor our work in this area to meet your needs.