Government predicts defeat in Brexit legal challenge

London expects to lose its legal battle over whether it can start the Brexit process without wider parliamentary approval. The British government appealed a High Court ruling that parliament must be allowed to vote on triggering Article 50, which starts a two-year deadline for an EU member to withdraw from the political bloc.

Applications to Irish roll up 275 per cent as firms prepare for Brexit

The Law Society of Ireland has revealed it has admitted a record 810 English qualified solicitors to the roll by this year as leading UK firms rush to secure a second jurisdiction for their lawyers in the wake of the Brexit vote.

Including local trainees, there will be 1,347 new solicitors in Ireland by the end of the year.

The figure beats the previous record set in 2008 by more than 500 solicitors, and represents an increase of 275 per cent compared to 2015.

It has been dubbed a “tsunami of new solicitors” by Law Society director general Ken Murphy.

It follows UK firms including Freshfields Bruckhaus Deringer, Eversheds and Slaughter and May rushing to admit lawyers amid fears it may be more difficult to practise EU law after Britain leaves the union.

Freshfields has registered 117 solicitors on the Irish roll, while Eversheds has registered 86 lawyers and Slaughter and May 40.

Freshfields told the Law Society its lawyers taking out an additional qualification in Ireland were “primarily anti-trust, competition and trade law practitioners” based in its London and Brussels offices.

“They were doing it to allay any conceivable concerns in the future about the status of their solicitors in dealing with EU institutions including in relation to legal privilege in EU investigations,” a statement by the society said. “They told us, unambiguously, that Freshfields has no plans to open an office in Ireland.”

It has emerged Freshfields senior partner Ed Braham, managing partner Chris Pugh and general counsel Colin Hargreaves met with director general Murphy at the firm’s offices in Fleet Street in mid-July.

“They expressed appreciation for the helpful and efficient way in which the relevant staff of the Law Society of Ireland had facilitated their colleagues with their transfers,” a statement read.

Clifford Chance submitted applications for all 34 of competition lawyers across its London and Brussels offices to be admitted to the Irish bar but so far just 12 have been admitted. Herbert Smith Freehills funded 34 lawyers to be admitted in Ireland this year, of which 25 have been admitted. Meanwhile Hogan Lovells has had 34 lawyers admitted in Ireland; Allen & Overy 24; Linklaters 20; and Bird & Bird 10.

At US firms, Shearman and Sterling has registered 11 lawyers on the Irish roll; Covington & Burling has 10; and Arnold & Porter and Gibson Dunn & Crutcher both have six.

The Irish Law Society said it was receiving 10 to 12 queries a day from England and Wales qualified lawyers amid Brexit uncertainty and following the vote. In the first half of 2016 a record 186 lawyers were admitted.

To join the Irish bar lawyers must pay a one-off charge of €300 (£252) plus an annual cost of around €2,000 to qualify as a practising solicitor. Unlike solicitors from other EU countries, practitioners from England, Wales and Northern Ireland are not required to go through a transfer test.

Australia law firm bosses say Brexit will benefit their businesses

Australian law firms believe they will significantly benefit from Britain leaving the EU, a survey has found.

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Around 55 per cent of managing partners of Australians firms said they viewed the UK’s historic decision as either “positive or an opportunity” for their firms.

Of that number, around 15 per cent expected Australian firms to benefit from large corporates looking to invest outside of Europe as a result of Brexit.

One senior respondent to the survey, carried out by Eaton Capital Partners, said Brexit will benefit Australian law firms as it “distracts the fully-merged firms of Herbert Smith Freehills and Ashurst”, both of which earned a large presence in the country through local combinations.

However, another 40 per cent of the 20 managing partners surveyed believed Brexit could have a negligible impact on their businesses and clients.

“If you’re a global firm the negative impact of a ‘black swan’ event in a single country should be offset by the pick-up in other legal markets: bye Canary Wharf, bonjour la Défense,” said one respondent.

Only 5 per cent said Brexit would have a negative impact on the British component of their work, which is a significant chunk of their practice.

Eaton Capital Partners surveyed country managing partners from firms including Allen & Overy, Clyde & Co and Herbert Smith Freehills, US firms Hogan Lovells and Jones Day, Asia Pacific-based King & Wood Mallesons, global player Baker & McKenzie, accountancy giant PWC Legal, and independent firms such as Clayton Utz and Gilbert & Tobin.

Another key finding of the survey was that 75 per cent of respondents agreed that large accountancy firms are a real threat to their firms’ market share.

Around 35 per cent of Australian managing partners say the accountancy firms’ extensive international network and mix of advisory and consultancy services makes them attractive to clients, while 40 per cent of them hold the view that they are different from a traditional law firm and that appears to some clients and lawyers.

Only a quarter, or five managing partners, disagreed with the notion. Four regarded the accountancy rivals as not having the depth or leverage to act on major pieces of work. However, one partner believed the Big Four had tried and failed to crack the legal market before and nothing would change this time around.

“Top tier law firms still have a major advantage in attracting the best legal talent, and are adapting their own model to increasingly offer a broader range of advisory services,” a managing partner commented.

Earlier this month, The Lawyer reported PwC Legal’s latest expansion in Australia that saw the accountancy firm’s legal arm add six new partners in Sydney and Melbourne. Clifford Chance Australia co-founder Mark Pistilli and DLA Piper’s former Australia chief Tony Holland were among the new recruits.

PwC Legal’s recruitment drive pushed its Australian lawyer headcount to over 70, including 18 partners, just two years after it first launched its Australian legal services arm in 2014 with former King & Wood Mallesons (KWM) partners Tony O’Malley and Tim Blue.

The survey also highlighted that, similar to their UK counterparts, Australian firms are facing growing pressure from disruptive factors such as technologies and NewLaw models.

Around 50 per cent of the managing partners said “technological change challenging and undermining the traditional large law firm model” as the biggest change in the Australian legal landscape in five years’ time.

The other half of the participants saw domination of the market by global firms (20 per cent) and boutique and specialist firms taking work away from larger full-service firms (30 per cent) as two other major changes to come.

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UK Government confirms it will appeal High Court Brexit ruling

The Supreme Court is set to hear the appeal in ‘early December’, the UK government has confirmed.

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Brexit legal challenge: UK Government defeated and poised to appeal to Supreme Court

The UK Government has been defeated in the landmark Brexit High Court challenge over whether Article 50 can lawfully be triggered without a vote by Parliament.

Lord Chief Justice Lord Thomas handed down the decision in the Royal Courts of Justice this morning.

His verdict read: “The court does not accept the argument put forward by the Government. There is nothing in the text of the 1972 Act to support it.

“In the judgment of the court the argument is contrary both to the language used by Parliament in the 1972 Act and to the fundamental constitutional principles of the sovereignty of Parliament and the absence of any entitlement on the part of the Crown to change domestic law by the exercise of its prerogative powers. The court expressly accepts the principal argument of the claimants.

“For the reasons set out in the judgment, we decide that the Government does not have power under the Crown’s prerogative to give notice pursuant to Article 50 for the UK to withdraw from the European Union.”

The Government will appeal the decision, with the appeal heading straight to the Supreme Court in early December. The case is understood to have been fast tracked following Prime Minister Theresa May’s pledge to trigger Britain’s exit from the EU next spring.

Successful claimants were represented by Mishcon de Reya and Edwin Coe. Leading the charge was Blackstone Chambers’ Lord Pannick QC as well as Maitland Chambers’ Dominic Chambers QC and Matrix Chambers’ Jessica Simor QC, Helen Mountfield QC and Rhodri Thompson QC.

Representing the UK Government, the Attorney General instructed Blackstone’s James Eadie QC and 11KBW’s Jason Coppel QC.

Bindmans partner Halford, who represented the People’s Challenge group in the claim, said in a statement: “The oversight, control and democratic accountability needed for decisions on Brexit have to match the consequences of those decisions for UK citizens. That is why our constitution empowers Parliament, not the government, to take these decisions.

“The People’s Challenge group and thousands of backers unhesitatingly committed to defending Parliament’s sovereignty. They have prevailed so far and will resist the anticipated government appeal in the Supreme Court.”

The Law Society has also been swift to respond to the groundbreaking verdict. President of the Law Society of England and Wales Robert Bourns said: “The question as to whether the decision to trigger Article 50 is one for the government, using the royal prerogative, or for Parliament through statute is central to this court case. Most commentators assumed that this case – whatever the outcome in the High Court – would be appealed to the Supreme Court so today’s ruling is a step along the road to a final decision.”

Meanwhile a Clifford Chance partner said today’s decision heralds further uncertainty for the business world. The firm’s co-chair of public policy Simon Gleeson said: “This is just round one. Whether this tussle continues solely in the courts or also Parliament, in the form of a bill, it will continue to extend uncertainty and make planning and investment tougher for businesses.”

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Brexit legal challenge makes ground in the High Court

A historic legal challenge over whether UK Prime Minister Theresa May has the power to start the country’s withdrawal from the European Union (EU) appears to have succeeded, with a government lawyer saying that it is now “very likely” that the procedure will be subject to a parliamentary vote.

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Speaking in London’s High Court yesterday, James Eadie QC, one of the government’s lead advocates in civil litigation, suggested that politicians would now be able to vote on the Brexit process. “The view within government is that it is very likely that this treaty will be subject to ratification process in the usual way,” he said.

A group of claimants led by investment manager Gina Miller and hairdresser Deir Dos Santos initiated the legal proceedings to demand that all elected politicians – and not just the Prime Minister – decide on the triggering of Article 50, which starts a two-year deadline for an EU member to complete its exit from the political bloc.

The three judges presiding over the four-day judicial review, which finished yesterday, have not yet made a formal ruling. The judges reserved their decision in order to “consider the matter” more fully, but said they would deliver their judgment “as quickly as possible”. A decision is expected by the end of the month and would be open to appeal.

David Greene, senior partner and head of group action litigation at London law firm Edwin Coe, which is representing Dos Santos, dismissed Eadie’s comments as a “sop to the judges”, however. Greene told Law.com that giving parliament a say on the final Brexit deal does not go far enough. “It is correct that the government may not have [changed its stance] had we not pursued the case, so it is a form of victory,” he said. “The proposal from Eadie means however that parliament will be faced with a fait accompli. Even if they get a vote at the end [of Brexit negotiations], if they do not approve the deal, exit will happen in any event at the end of the two-year period [as set out by Article 50].”

It still represents a significant concession by the government, however, with Prime Minister May previously announcing that she would trigger Article 50 by March 2017. Miller’s skeleton argument [PDF] said that triggering Article 50 without an act of parliament would “substantially undermine” constitutional rights, and added that May’s statement put her on a “collision course” with the courts by effectively “pre-empting the outcome of the case”.

May had softened her approach recently by agreeing to demands from rival parties for parliament to hold a “full and transparent debate” of the government’s Brexit plans before the formal exit process begins, but stopped short of pledging a parliamentary vote on EU negotiations or the triggering of Article 50.

Parliament now appears set for what will be a challenging decision, with large numbers of politicians likely to be conflicted between voting based on their own personal beliefs and upholding the result of a democratic referendum, as the majority of UK politicians wanted the country to remain within the EU.

Miller was represented in the case by London-based Mishcon de Reya. The firm instructed a group of heavy-hitting barristers – specialist UK advocates who represent clients in court, typically operating independently from standalone “chambers” instead of law firms – including David Pannick QC of Blackstone Chambers, widely regarded as one of the country’s leading experts on constitutional law. Mishcon’s London headquarters have been targeted by protesters opposed to the legal action.

Eadie was representing the government alongside UK attorney general Jeremy Wright QC.

Miller and Dos Santos were joined in the action by a number of interested parties and interveners, including The People’s Challenge, which has used crowdfunding to finance the case, raising almost £160,000 ($195,000) from around 4,500 supporters.

The People’s Challenge was represented by John Halford, co-head of public law at London law firm Bindmans, which is known for its work on civil liberties and human rights, and Helen Mountfield QC of Matrix Chambers. The crowdfunding was organised by Grahame Pigney, a British expat living in France who is part of the pro-EU campaign group, Say Yes 2 Europe. “The enforced removal of citizenship rights from 65 million people is completely unprecedented in a modern democracy,” Pigney states on the fundraising page.

A separate crowdfunding by Jolyon Maugham QC raised more than £10,000 ($12,000) to pay for legal advice from public law experts.

The claimants secured an early win a fortnight ago, with a High Court judge ruling that the government release its private legal arguments for not consulting parliament on the triggering of Article 50. The documents revealed that government lawyers will argue it is “constitutionally impermissible” for parliament to be given a vote on the Brexit process. “It is a polycentric decision based upon a multitude of domestic and foreign policy and political concerns, for which the expertise of ministers and their officials are particularly well-suited and the courts ill-suited,” the documents state.

The requirement for the UK’s withdrawal from the EU to be subject to an act of parliament has widespread support within the legal industry. More than 1,000 UK attorneys previously wrote to then Prime Minister David Cameron to demand that MPs vote on the triggering of Article 50.

The news that parliament is now likely to vote on the process has led to a rally in the value of UK currency, which rose 1% to $1.23 – its biggest gain in two months. The British pound hit $1.50 immediately before the EU referendum but its value has plummeted since the Brexit vote. It suffered another steep fall earlier this month, when May indicated that the country would withdraw from the European single market as part of a so-called “hard Brexit”.

There are fears that a loss of single market access could result in banks and other companies – including global law firms – shifting business away from London to other European cities. Last week, Russia’s VTB Bank became the first major financial institution to announce that it will relocate its European headquarters from London due to the UK’s decision to leave the EU.

But it emerged on Monday that the government is now considering plans to continue paying billions of pounds into the European Union budget even after the country leaves the political bloc in order to maintain access to the single market for key industries.

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Would Brexit mean the end of the Unified Patent Court?

The Unitary European Patent system aims to support innovation by cutting red tape, costs and save time by automatically validating a single patent in all EU countries that have ratified the Unified Patent Court treaty and which have at the same time adhered to the UE regulation on the European unitary patent.

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It will provide significant advantages for inventors, as under the current European Patent Office (EPO) scheme the European patents after grant by the EPO are still treated as national rights, subject to the national court jurisdictions of each member state, and in certain countries also to the filing of a translation of granted patent in the national language.

As part of the plans, the new Unified Patent Court will have a central division based in three locations:  Paris, for disputes about physics and electricity inventions; Munich, for mechanical engineering patents; and Aldgate Tower in London, for pharmaceuticals and life sciences, chemistry and metallurgy patent disputes.

It will rely on expert judges recruited from countries that have ratified the treaty. Potential British and other judges have already been pre-selected. It has taken about 40 years to reach an agreement on the new system.

As the new system involves accepting EU law, the basic principle of state liability for the implementation of EU law and the jurisdiction of the European Court of Justice in Luxembourg, it appears the UK Government will be reluctant to ratify the treaty after Brexit vote.

The Unified Patent Court is distinct and independent of the European institutions, and organised by its own treaty, but as mandated by a preliminary opinion delivered by the ECJ it is open to ratification only by EU countries.  The Unified Patent Court treaty has not yet been ratified by Germany and the UK, although France and 10 other countries in Europe have done so. Italy has started the process of ratification. The UK is still a “contracting member state” of the UPC system, so until further notice, it still continues to participate and vote in meetings and will remain active in the initiative.

As Italy is the country that has the highest number of patent filings after Germany UK and France, under the treaty rules it would be Italy that would be considered as the location for chemistry – pharmaceutical disputes of the Central division of new court, if the UK refuses to ratify.

Italy, and likely Milan, that will also host a local division of the court, could soon be a candidate for hosting the central division. Milan is a key centre for innovation in life sciences and IP expertise. The court in Milan currently manages most parts of the Italian patent litigation and the experienced Milan specialist court is appreciated by IP practitioners, for being  efficient, reliable, open and receptive to new international IP trends, and for its carefully reasoned decisions.

In a separate development, the Italian Government together with local regional authorities of Lombardia and the municipality of Milan also recently adopted a common proposal, for Milan to host the offices of the European Medicine Agency.  Milan is ready to reflect its key central role in Europe for pharma innovation, research and patent litigation.

On this basis, an Italian trade body for patent attorneys and trademark experts recently wrote to the Italian Prime Minister to request that he officially applies for Milan to be selected for the new court location.

If the UK refuses to ratify the treaty, the current agreement may be renegotiated. The implementation of the new court will also be delayed.

Interestingly, a renegotiation could lead to a new opportunity, for countries that are not current members of the European Union to be eligible to join in the Unified Patent Court system. Such an enlargement might encourage the UK Government to support the recognise the supremacy of the European Court and of EU law, only for the purposes of the Unified Patent Court disputes. But this even if theoretically feasible, it may be politically unacceptable.

This would also be helpful for the pharma sector itself, as it strongly relies on patent protection and a unified jurisdiction may offer an opportunity to protect its innovation and to resolve disputes promptly and more efficiently in the European Union. Delays in ratification and in the implementation of the new court would represent a step back on the development of IP law in Europe and for European competitiveness in the global landscape.

 

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Gowling WLG revives annual pay review

Gowling WLG has regained confidence after the surprise EU referendum result and decided to lift its freeze on salaries.

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The salary review, which was backdated to July 2016 was applicable to all staff excluding fixed share and equity partners. However bonus payments, for 2015/16 for those eligible were paid as usual in the July payroll and summer promotions had gone ahead as planned.

In August, Fennel said: ‘Like a lot of firms our annual pay review is effective the 1 of July, and it still will be. But given the significance of Brexit and the uncertainty and pandemonium in stock markets and the fall of the value of the pound immediately after that result it was prudent to pause and take stock and see how the markets and the economy reacted to Brexit. So that’s what we’ve done.’

The news came amidst a subdued year for the recently-merged Gowling WLG, which posted essentially flat revenue and profits for its UK arm for financial year 2015/16.

Revenue was up 2% from £180.4m to £184.7m, while profits per equity partner (PEP) remained static at £383,000. Although the Canadian arm of the firm does not report financials, according to Gowling WLG, the total revenue for both LLPs was £410m.

Construction and engineering which recorded a 23% increase, and IP which posted a 17% increase, were the highest preforming practice areas for the firm, alongside pensions, corporate and real estate.

According to Gowling WLG, the overseas offices also performed well, with the Munich office increasing by 38% while Guangzhou in China delivered a 16% increase. Paris, the firm’s largest overseas office, saw an increase of 3%.

Last month it was reported that Addleshaw Goddard had also frozen its August salary review as a result of Brexit.

The move followed Berwin Leighton Paisner’s decision to freeze pay and bonuses until November. In June managing partner Lisa Mayhew told staff in an email the reason was ‘political and financial uncertainty in the UK following the recent vote to leave the EU.’

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Brexit means Brexit … but when?

Leaving the EU may not happen soon given the UK government does not know what it wants and is not yet equipped to ask for it.

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Two months ago on Tuesday, Britain voted to leave the European Union. The shock was immense; the fallout dramatic. But then summer came. The early turbulence subsided and normality (more or less) returned.

Brexit, though, has not yet begun to happen.

The government does not know what it wants and is not yet equipped to ask for it. Britain and the EU, it is increasingly clear, are far more intimately enmeshed than the leave camp had claimed. For all the leavers’ assurances, extricating the UK from the bloc, negotiating new relationships with Europe and the rest of the world – and ensuring that Britain’s laws and practices adapt – is a gargantuan undertaking.

The referendum result, however, is a political reality. The 52% of leave voters – and the politicians who represented them – expect it to be acted upon. So two months on, where does Brexit stand?

The legal challenges

The most immediate obstacle to Brexit is judicial. There is a substantial school of thought which says the government is not constitutionally entitled to pull the trigger on article 50 without the specific approval of parliament.

At least seven private actions have been grouped together and will be heard by the high court starting in October in what judges have said is a “matter of great constitutional importance”, with a decision possible by the end of the year.

Separately, cases have been launched in Northern Ireland arguing that Brexit would breach the Good Friday agreement by reinstating a physical border with the Republic of Ireland and undermining the legal basis for the 1998 peace deal.

So, while we may be two months in, you might want to get used to the waiting. Brexit may not happen quite yet.

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Brexit faces new legal challenge from NI

 

A victims’ campaigner has launched the first legal challenge in Northern Ireland to the UK leaving the European Union.

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Raymond McCord lodged papers at the High Court in Belfast yesterday seeking a judicial review of the British Government’s move towards Brexit

His lawyers claim it would be unlawful to trigger Article 50 of the Lisbon Treaty without Parliament voting on the move.

They also contend it would undermine the UK’s domestic and international treaty obligations under the Good Friday Agreement, and inflict damage on the peace process. With similar legal action under way in England, efforts are being made to secure an initial court hearing in Belfast next week.

Mr McCord, whose son Raymond jnr was murdered by the UVF in north Belfast in 1997, is believed to be the first person in Northern Ireland to issue proceedings over Brexit. He is taking the case amid concerns that European peace money that goes towards victims of the Troubles may be discontinued.

The challenge centres on the Government’s response to the June 23 referendum result.

His legal team claim they were not given assurances that Article 50, the mechanism under which the UK begins the formal process of leaving the EU, will not be invoked without first securing a Parliamentary mandate. Any attempt to use Royal Prerogative powers instead cannot be justified, they contend.

Mr McCord’s lawyer Ciaran O’Hare, of McIvor Farrell Solicitors, said his client fears Brexit could impact on his fundamental rights. “As a victim of the most recent conflict in Northern Ireland, Mr McCord is very concerned about the profoundly damaging effect that a unilateral withdrawal of the UK from the EU will have upon the ongoing relative stability in Northern Ireland,” he added.

“He is concerned that any withdrawal would be contrary to the UK’s international law obligations pursuant to the Good Friday Agreement.”

Insisting any notification under Article 50 must be done lawfully and constitutionally, Mr O’Hare described the legal challenge as “an important constitutional case which engages the Northern Irish public interest in a way that no other case has or is likely to for many decades”.