City of London Law Society Raises Concerns Over Tougher Sanctions Rules for Lawyers

The City of London Law Society has expressed deep concerns over new regulations that it claims "criminalize a whole range of legal advice" provided by lawyers representing sanctioned Russian individuals and entities.

These regulations, known as the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023, were introduced during the summer with the aim of extending existing rules on Russian entities engaging UK lawyers. However, the City of London Law Society argues that these regulations could have unintended and severe consequences, potentially even prohibiting legal advice to international firms seeking to ensure they comply with sanctions, thereby increasing the risk of non-compliance.

One of the key provisions of these regulations, Regulation 54D, prohibits the provision of legal advisory services related to activities that would be prohibited if carried out by a UK national or within the UK. While the City of London Law Society acknowledges the objective of these regulations, it contends that the language used in the new rules goes beyond their intended purpose and poses a significant challenge to the legal services industry in the UK and abroad.

Furthermore, the society claims that UK legal sanctions are now more stringent than those imposed by the US and EU. They highlight instances where UK law firms, when asked to advise overseas clients unrelated to Russia, could inadvertently commit criminal offenses even when there is no connection to the UK.

In-house lawyers working for multinational companies are also affected, as they may be prohibited from advising their employers on sanctions imposed by non-UK jurisdictions, potentially leading to increased risks of non-compliance.

The City of London Law Society emphasizes that these issues are already arising within their member firms and anticipates that they will continue to grow over time.

A spokesperson from the Law Society of England and Wales expressed the organization's ongoing efforts to address these concerns with the government. While they welcomed the publication of general licenses and updated statutory guidance, they stressed the need for significant amendments to the regulations to ensure that sanctions compliance advice can be provided and that legal professional privilege is protected. They remain hopeful of a swift resolution to these issues through continued engagement with the government.

By fLEXI tEAM