Last year, I wrote about the upcoming changes to the German Federal Lawyers’ Act (BRAO).
The changes come into force on 1 August 2022 and mostly affect law firms (individual lawyers, of which there are many in Germany, are virtually unaffected).
Foreign law firms with a branch office in Germany must be admitted to a German bar if they want to continue practising.
Applications can be submitted from 1 August 2022. For existing firms, there is a transition period until 1 November 2022 allowing them to provide legal services and appear before courts and authorities before a decision is made.
When I refer to ‘branches’, I do not mean subsidiaries of English firms in Germany that are organised as German companies and connected to London head offices.
Such subsidiaries have German legal form and must go through the German company admission procedure without the special requirements for branches of foreign firms.
Whether admission is required depends on the subsidiaries’ legal form.
Since most German firms are partnerships with limited professional liability (PartG mbB), admission will be required in most cases. Admission is not required for partnerships without limited liability.
In addition to the new admission requirements, all law firms operating in Germany must continue to be added to the commercial register.
New admission process for branches of UK firms
The requirements for foreign law firms are set out in section 207a BRAO:
- the business purpose is to provide advice and representation in legal matters
- the firm is authorised to provide legal services under the law of the state where its registered office is located
- its partners are lawyers or members of a permitted profession
- the branch office has local management that can represent the firm and have sufficient rights to uphold professional law
English firms regulated by the Solicitors Regulation Authority (SRA) will have no difficulty in meeting the purpose and right to provide legal services requirements.
SRA registration isn’t compulsory: the decisive factor is that the firm is authorised to provide legal services in its country of origin. If this right comes from another supervisory body, that is sufficient.
However, there may be difficulties with admission if foreign firms have non-lawyer partners in the partnership.
The firm’s partners must be lawyers or members of accepted professional groups (including tax advisers, accountants and sworn auditors – for a full list, see section 59c(1) (1) and (2) BRAO).
Foreign patent attorneys who are not members of a German patent bar are not eligible professionals.
The reasoning behind the law does not explain this. The German Bar Association (Deutscher Anwaltverein – DAV) will discuss the issue again with the Ministry of Justice to assess whether this is an error.
Firms may be asked to submit their articles of partnership in German translation.
Of course, it would be easier if only the relevant parts of the articles had to be submitted but the law authorises bars to demand the entire contract with all annexes.
If the foreign law firm is admitted and can practise through its German branch, it is then:
- entitled to provide legal services as a law firm – this has always been clear but not regulated by law
- authorised to appear before courts and authorities – UK companies did not have this right before
Only one branch office is allowed. If an English firm has several German offices in different districts of bars, it must decide which office is to be the seat of the branch.
The other offices become “Zweigstellen”, which should be notified to the local bar but do not need to be admitted.
Questions still to be answered
The German bars have formed a joint working group on the legal issues raised by the changes, but this is currently focused on the admission procedure for German firms.
This means there are still unresolved questions for foreign law firms.
According to BRAO, a foreign firm becomes a member of the bar at the place where its branch office exists. This means the entire foreign professional practice company becomes a member of the bar.
However, the international management would also have to become members of the bar (unless they were already members for other reasons).
The logic behind this is unclear – if management in the German branch is responsible to the bar, why does the international management have to become a member?
Similarly, it’s unclear whether all globally active partners of an English law firm need to be registered in Germany, even if they do not intend to practise there.
This would initially mean a considerable amount of work on the part of the German bars.
It also raises the question of what evidence a partnership has to submit to a bar to prove that the foreign partners are also lawyers or members of one of the permitted professions.
It would be obvious if law firms regulated by the SRA could refer to their registration there but German law does not explicitly provide for this.
The first contacts with the bars are taking place in order to raise awareness of these issues and to find pragmatic solutions.
I am confident that the German bars will answer the essential questions in the next few months.
In any case, if you have an office in Germany and still want to practise after 1 August 2022, you should deal with the issues discussed here in good time.