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City lawyers are hoping that Brussels will begin legal action this month against an EU country they accuse of stifling competition. Firms including DLA Piper, CMS Cameron McKenna (CMcK) and Austrian practice Wolf Theiss lodged a formal complaint against Bulgaria with the EU Commission last November.
Their argument is that the government of Bulgaria, its competition commission and its lawyers' associations have breached a European directive that is supposed to give EU lawyers the right to practise in other EU countries on equal terms.
While fewer foreigners may now be snapping up holiday homes on the Black Sea, Bulgaria and Romania are still regarded as untapped opportunities for foreign investors. And, despite the fact that these countries have not entirely shaken off their communist past, the big EU firms insist they are there to stay.
“We are committed to Bulgaria. We see opportunities there,” says Peter Valert, the partner in charge of DLA Piper's office in the capital, Sofia. “And it is our belief we are complying with European law.”
Valert feels there is no justification for restricting foreign firms. “We think that clients — both local and international — should have a free choice in who they want to use.”
Richard Clegg of Wolf Theiss agrees — pointing out that other countries in Eastern Europe have already implemented European law. “The
Slovenian Supreme Court granted an appeal by Wolf Theiss last Thursday, holding that European law requires national Bars to allow the establishment of local branches of EU law firms,” says Clegg.
“We hope that the Bulgarian Bar will support the implementation of European law and the positive role that the liberalisation and development of the legal market will have for investment in Bulgaria.”
Shortly before it joined the European Union in 2007, Bulgaria introduced laws that in effect prevented foreign lawyers from practising there before 2010 at the earliest.
Lawyers from other EU countries are banned from opening branches in the country and practising under their firm's name.
Instead, some have registered as ordinary commercial enterprises. But that, in turn, led to complaints by Bulgarian law firms to their country's competition commission. The foreign firms were accused of trying to get round local practice rules.
One article in the country's legal press — headlined Devil's Advocates from the EU— argued strenuously that lawyers from Bulgaria would not be allowed to practise in England unless they complied with local requirements.
Last August, the Bulgarian competition commission fined CMcK and DLA Piper the equivalent of £23,000 and £18,400 respectively (at current rates). The firms lodged appeals and continued practising.
To reduce the risk to its locally recruited lawyers, DLA Piper is now taking steps to restructure its Sofia office.
CMcK has gone a step further. No longer a commercial enterprise, it now practises in Sofia through a Bulgarian firm — although both names are on the door.
Subsequently, some Bulgarian law firms offered to arrange for the competition commission's ruling against CMcK and the firm's fine to be set aside — even though the decision was not within their gift.
“That offer was rejected,” says David Butts, managing partner of CMcK's Sofia office. Instead, the firm is pursuing its appeal.
“We firmly believe that this was an attempt by the local law firms to drive a wedge between the foreign firms,” Butts adds. “We are fully backing the EU complaint.”
Will Brussels now act? A spokesman for Internal Market Commissioner Charlie McCreevy says: “We are finalising our fact-finding on this matter in order to establish if and when we will start an infringement procedure — for breach of the EU Treaty rules — against Bulgaria.”
Meanwhile, Paul Marsh, president of the Law Society of England and Wales, shares his members' concerns that Bulgarian restrictions are in obvious contravention of EU law.
“We hope to reach a solution with the Bulgarian Supreme Bar Council,” he says, “which will allow English solicitors and English law firms access to the market on a level playing-field.”
