by Pedro Petiz, Master’s student in Law and Informatics at UMinho

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“Just think what Europe could be. Think of the innate strengths of our enlarged Union. Think of its untapped potential to create prosperity and offer opportunity and justice for all its citizens. Europe can be a beacon of economic, social and environmental progress to the rest of the world.”^[i]

This auspicious introduction belongs to the Communication from the European Commission, “Working together for growth and jobs – A new start for the Lisbon Strategy”.

To reach Europe’s “untapped potential” for prosperity, the Lisbon Strategy aimed at the completion of the Single Market in the area of the energy, transport, public procurement, financial services, and in the area of regulated professions.^[ii]

The Services Directive (2006/123/EC) played an important role in this objective, since it required Member States to take concrete legislative measures to abolish the restrictions on the freedom to provide services that were found as being unnecessary and disproportionate.^[iii]

This also encompassed the rules on the liberal professions, such as fixed minimum or maximum tariffs [Article 15(2)(g)], restrictions on advertising (Article 24), and – most importantly – restrictions on multidisciplinary partnerships (Article 25).

Restrictions on multidisciplinary practice are an obstacle to the implementation of legaltech companies,since these enterprises provide services that are the result of the combination of different areas of expertise (namely Law and Technology).

The term “legaltech” (or “lawtech”) refers to “technologies which aim to support, supplement or replace traditional methods for delivering legal services, or transactions; or which improve the operation of the justice system”. ^{[iv] [v]}

The objective of article 25 was to “remove  restricting the exercise of different activities jointly or in partnership where such restrictions are unjustified while at the same time ensuring that conflicts of interest and incompatibilities are prevented and that the independence and impartiality required for certain service activities is secured”^[vi] that may be stipulated in national legislation or in rules of professional bodies.

This norm states certain conditions that must be met for these restrictions to be maintained. Clearly inspired by the case law of the European Court of Justice, in particular the exception established by Wouters, that allows for restrictions that could reasonably be considered to be necessary for the proper practice of the legal profession,^[vii] article 25 allows for restrictions in multidisciplinary practice “in so far as is justified in order to guarantee compliance with the rules governing professional ethics and conduct, which vary according to the specific nature of each profession, and is necessary in order to ensure their independence and impartiality”.

Besides the aforementioned obligations, Member States had the duty to report to the Commission which providers are subject to restrictions on multidisciplinary practice, the content of the requirements and the rationale behind these restrictions.^[viii]

It is relevant to compare the impact of the Services Directive on Portugal and Spain and observe which of these countries has removed the barriers to multidisciplinary practice, and consequently, may accommodate Legaltech companies, due to this Directive.

1.1.1         Spain

Spain’s relevant provisions for this subject are Ley 2/1974, de 13 de febrero, sobre Colegios Profesionales, and Ley 2/2007, de 15 de marzo, de sociedades profesionales. 

These norms were the subject of important amendments due to the Services Directive, with changes introduced by Ley 25/2009, de 22 de diciembre, de modificación de diversas leyes para su adaptación a la Ley sobre ele libre acesso a las actividades de servicios y su ejercicio (Ley Omnibus), and Ley 17/2009, de 23 de noviembre, sobre ele libre acceso a las actividades de servicios y su ejercicio (the Ley Paraguas).^[ix]

Restrictions and barriers to multidisciplinary professional activity were lowered as follows:

• The exercise of a profession in the form of a partnership is now no longer to be obstructed by any rules of professional bodies that may impose restrictions beyond those present in legislation.^[x]
• Regarding professional partnerships, the requirement related to the composition of members’ share capital and voting rights were made less restrictive by lowering professional partners’ minimum holding from three-quarters to a simple majority.^[xi]

On the other hand, the bylaws of the Spanish Bar Association, the Estatuto General de La Abogacía Española, state that “Lawyers may enter into multi-professional partnerships with other non-incompatible liberal professionals, without limitation in number and without affecting their full capacity to practise before any jurisdiction and court, using any legal form, including commercial companies”^[xii], provided the purpose of the association is to provide specific joint services, including specific legal services that complement those of the other professions^[xiii], that the activity does not affect the correct practice of law by the member lawyers^[xiv] and members who are lawyers must separate themselves when any of their members violates the rules on prohibitions, incompatibilities or deontology proper to the legal profession.

As we can see, Spain already allowed for the provision of legal services in a multidisciplinary way. However, the Services Directive allowed for a further liberalization of these services.

With regards to legaltech companies, since one can consider engineers as being part of a liberal profession, by taking into account the case law of the ECJ^[xv] and the definition included in the Directive on the recognition of professional qualifications 2005/36/EC^[xvi] and considering that Spanish law allows partnership between lawyers and other liberal professionals, we can state that legaltechs are allowed under the current Spanish regulatory framework.[xvii]

1.1.2         Portugal

In Portugal and Spain – as well as Italy – the regulation of joint professional practices was done via the creation of “an overarching legal framework for all joint professional practice or of liberal professions organized into chambers, in order to achieve a harmonisation of conditions in view of inter-professional collaboration,”^[xviii] respectively named “Sociedades Profissionais”, “Sociedades Profesionales” and “Società tra Professionisti”.

In Portugal, the relevant legal provision is Lei 2/2013, de 10 de Janeiro, Criação, Organização e Funcionamento das Associações Públicas Profissionais.

This law partially transposed the Services Directive, covering two major fields: the legal framework of professional associations and the establishment of new rules regarding joint professional practices.^[xix]

While Spain reduced the restrictions on multidisciplinary practice and prevented the bylaws of professional associations from prohibiting these enterprises,^[xx] Portugal took the opposite path.

Lei 2/2013, in its article 27 (1), stipulated that “Join Professional Practices of professionals whose principal object is the pursuit of professions organised in a single public professional association may be set up in conjunction or separately with the pursuit of other professions or activities”.^[xxi] (my emphasis)

However, article 27 (4) established the following exception, “Restrictions on the provisions of the preceding paragraphs may be laid down in the statutes of professional public associations”.^[xxii] (my emphasis)

By making it possible for these entities to be prohibited by the statutes of professional associations – unlike in Spain – this norm rendered the creation of professional associations between lawyers and non-lawyers impossible.

In fact, even though Lei 2/2003 stipulated a revision of the statutes of the Bar Association,^[xxiii] and therefore a preliminary draft of the bylaws included the possibility of multidisciplinary practice,^[xxiv] the statutes that were ultimately adopted did not allow these enterprises – thus maintaining the prohibition established in the Bylaws of 2005.^[xxv] [xxvi]

In sum, the Services Directive did not produce a significant effect regarding multidisciplinary practice in Portugal, since the Portuguese Legislator – and the Bar Association – prevented these partnerships.

Therefore, partnerships between lawyers and other professionals – which are the core of legaltech companies – are currently not allowed in Portugal.

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^[i] Commission Communication “Working together for growth and jobs – A new start for the Lisbon Strategy” COM (2005) 24 of 02.02.2005.

^[ii]Commission Communication “Working together for growth and jobs…  P. 16

^[iii] Rego, Raquel, ed. The Trend towards the European Deregulation of Professions and Its Impact on Portugal under Crisis. Palgrave Pivot. Basingstoke: Palgrave Macmillan, 2013, p. 43

^[iv] Law Society UK. “Introduction to Law Tech,” in https://www.lawsociety.org.uk/support-services/documents/introduction-to-lawtech-october-2019/.

^[v] “There is no universally recognised definition for legal technology (short: LegalTech). In this article, we will define the term LegalTech broadly as technology and software used in the legal profession.”, in Bues, Micha-Manuel, and Emilio Matthaei. “LegalTech on the Rise: Technology Changes Legal Work Behaviours, But Does Not Replace Its Profession.” In Liquid Legal, edited by Kai Jacob, Dierk Schindler, and Roger Strathausen, 89–109. Cham: Springer International Publishing, 2017. https://doi.org/10.1007/978-3-319-45868-7_7.

^[vi] European Commission, and Directorate-General for the Internal Market and Services. Handbook on Implementation of the Services Directive. Luxembourg: Publications Office, 2007.

^[vii] “4. It is not contrary to Articles 52 and 59 of the EC Treaty (now, after amendment, Articles 43 EC and 49 EC) for a national regulation such as the 1993 Regulation to prohibit any multi-disciplinary partnerships between members of the Bar and accountants, since that regulation could reasonably be considered to be necessary for the proper practice of the legal profession, as organised in the country concerned.”  Judgment of the Court of 19 February 2002. J. C. J. Wouters, J. W. Savelbergh and Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten, intervener: Raad van de Balies van de Europese Gemeenschap. Case C-309/99.

^[viii] Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, articles 39(1) and 25(3)

^[ix] María Jesús Guerrero Lebrón, Zofia Bednarz, Antonio F. Galacho Abolafio, Commercial and Economic Law in Spain, Kluwer Law International.

^[x] “El ejercicio profesional en forma societaria se regirá por lo previsto en las leyes. En ningún caso los colegios profesionales ni sus organizaciones colegiales podrán, por sí mismos o través de sus estatutos o el resto de la normativa colegial, establecer restricciones al ejercicio profesional en forma societária”, Ley 2/1974, de 13 de febrero, sobre Colegios Profesionales. Article 2(6)See also: “Las sociedades profesionales podrán ejercer varias actividades profesionales, siempre que su desempeño no se haya declarado incompatible por norma de rango legal.”, Ley 2/2007, de 15 de marzo, de sociedades profesionales. Article 3.

^[xi] “Como mínimo, la mayoría del capital y de los derechos de voto, o la mayoría del patrimonio social y del número de socios en las sociedades no capitalistas, habrán de pertenecer a socios profesionales”. Ley 2/2007, de 15 de marzo, de sociedades profesionales, Article 4.2, See also “Informe Sobre La Transposición de La Directiva de Servicios En España: Ministerio de Hacienda.”, “REPORT ON THE TRANSPOSITION OF THE SERVICES DIRECTIVE” Accessed February 3, 2020. https://www.hacienda.gob.es/es-ES/Areas%20Tematicas/Internacional/Union%20Europea/Paginas/InformeTransposiciondelaDirectivadeServicios.aspx., p. 100.

^[xii] “Los abogados podrán asociarse en régimen de colaboración multiprofesional con otros profesionales liberales no incompatibles, sin limitación de número y sin que ello afecte a su plena capacidad para el ejercicio de la profesión ante cualquier jurisdicción y Tribunal, utilizando cualquier forma lícita en derecho, incluidas las sociedades mercantiles, siempre que se cumplan las siguientes condiciones:” Real Decreto 658/2001, de 22 de junio, por el que se aprueba el Estatuto General de la Abogacía Española, article 29.

^[xiii] “Que la agrupación tenga por objeto la prestación de servicios conjuntos determinados, incluyendo servicios jurídicos específicos que se complementen con los de las otras profesiones”, Real Decreto 658/2001, de 22 de junio, por el que se aprueba el Estatuto General de la Abogacía Española, article 29 (1)(a)

^[xiv] “Que la actividad a desempeñar no afecte al correcto ejercicio de la abogacía por los miembros abogados”, Real Decreto 658/2001, de 22 de junio, por el que se aprueba el Estatuto General de la Abogacía Española, article 29 (1)(b)

^[xv] ECJ 11 October 2001, C 267/99, ECR 2001, I-7467 (Adam), para. 3.

^[xvi] Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications, Recital 43.

[xvii] “Are multi-disciplinary practices (MDPs) allowed in your jurisdiction? Yes. Lawyers can practise in association with other compatible liberal professions on a multi-professional co-operative basis, which does not affect their capacity to fully practise in any jurisdiction or before any court, provided (article 29, RDEGA)”, in https://uk.practicallaw.thomsonreuters.com/Document/Ie844615a966011e698dc8b09b4f043e0/View/FullText.html?navigationPath=Search%2Fv1%2Fresults%2Fnavigation%2Fi0ad7403500000173426f04355e38adbe%3FNav%3DKNOWHOW_UK%26fragmentIdentifier%3DIe844615a966011e698dc8b09b4f043e0%26parentRank%3D0%26startIndex%3D21%26contextData%3D%2528sc.Search%2529%26transitionType%3DSearchItem&listSource=Search&listPageSource=7a4409a7857e8ccd9e639b28449a14a6&list=KNOWHOW_UK&rank=38&sessionScopeId=84d625f9a3f5ca9c9ce4d3eb8192102b23d4200730756791d5ddebf3cd23d259&originationContext=Search+Result&transitionType=SearchItem&contextData=%28sc.Search%29&comp=pluk

^[xviii] European Commission, and Directorate-General for the Internal Market and Services. Handbook on Implementation of the Services Directive. Luxembourg: Publications Office, 2007, p. 80.

^[xix]“ Com efeito, na verdade e em bom rigor, como concluíram Pedro Costa Gonçalves e Diogo Freitas do Amaral, a LAPP corporiza “duas leis” – rectius, compreende dois grandes temas –, a saber, por um lado, o estatuto jurídico das associações públicas profissionais – ordens e câmaras profissionais – e o estabelecimento de novas regras sobre as sociedades de profissionais.” Carlos Filipe Fernandes de Andrade Costa “As sociedades multiprofissionais no ordenamento jurídico português e no quadro regulamentar europeu: A diversidade de opções e as questões deontológicas que suscitam”, p. 168.

^[xx] See note 218.

^[xxi] Lei 2/2013, Article 27 (1), “1 – Podem ser constituídas sociedades de profissionais que tenham por objeto principal o exercício de profissões organizadas numa única associação pública profissional, em conjunto ou em separado com o exercício de outras profissões ou atividades, desde que seja observado o regime de incompatibilidades e impedimentos aplicável.”

^[xxii] Lei 2/2013, Article 27 (4),

^[xxiii] Lei 2/2013, Article 53 (3), “No prazo máximo de 30 dias a contar do primeiro dia útil seguinte ao da publicação da presente lei, cada associação pública profissional já criada fica obrigada a apresentar ao Governo um projeto de alteração dos respetivos estatutos e de demais legislação aplicável ao exercício da profissão, que os adeque ao regime previsto na presente lei.”

^[xxiv] “Ordem Dos Advogados – Lisboa – Notícias – Alterações Ao EOA.” Accessed February 12, 2020. http://www.oa.pt/cd/Conteudos/Artigos/detalhe_artigo.aspx?sidc=31634&idc=8351&idsc=21852&ida=134121.

^[xxv] “Mas se é verdade que se operaram algumas alterações relevantes com o Estatuto aprovado pela Lei n.º 145/2015, de 9 de setembro, a verdade é que, no que se refere à possibilidade de constituição de sociedades multidisciplinares, o EOA de 2015 manteve, a solução legal que já resultava do EOA de 2005: tendo em conta a especial natureza da função de advogado, proíbe-se a criação e constituição de sociedades multiprofissionais!” Carlos Filipe Fernandes de Andrade Costa “As sociedades multiprofissionais no ordenamento jurídico português e no quadro regulamentar europeu: A diversidade de opções e as questões deontológicas que suscitam”, p. 192

[xxvi] “Ao contrário do estabelecido na lei-quadro das APP e na lei-quadro das sociedades de profissionais²⁸²⁸, o EOA – aproveitando a permissão de derrogação do regime geral, prevista no art. 27.º, 4 da Lei n.º 2/2013 – não admite a possibilidade de os sócios serem não profissionais. Os sócios apenas poderão ser advogados ou outras sociedades de advogados (art. 213.º, 2²⁹), (my emphasis),Paulo de Tarso Domingues, “Lei n.º 53/2015, de 11 de junho – Regime jurídico da constituição e funcionamento das sociedades de profissionais que estejam sujeitas a associações públicas profissionais / Lei n.º 145/2015, de 9 de setembro – Novo Estatuto da Ordem dos Advogados”, available at http://bdjur.almedina.net/fartigo.php?id=53

Pictures credits: Untitled by mohamed_hassan.