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Restrictions on law-firm investors ‘justified’

The EU's highest court has ruled that German law can prevent purely financial investors from taking a stake in a law firm. 

The case centres on a 2021 decision by the Munich Bar Association to revoke the registration of German law firm Halmer Rechtsanwaltsgesellschaft, after an Austrian limited liability company acquired shares in it for purely financial purposes. 

Under the German legislation applicable at the time, only lawyers and members of certain professions could become a member in a law firm.

The law firm is challenging the decision before the Higher Bavarian Lawyers’ Court, which asked the Court of Justice for its opinion on the compatibility of the German legislation with EU law. 

‘Public interest’ 

In its opinion, the court said that EU law did not preclude such legislation, adding that its restriction on the freedom of establishment and the free movement of capital was “justified by overriding reasons relating to the public interest”.  

“A member state is entitled to conclude that a lawyer would not be able to exercise his or her profession independently, and in compliance with his or her professional and ethical obligations, if that lawyer were part of a firm, certain members of which are persons who act exclusively as purely financial investors, without practising as a lawyer or exercising another profession subject to comparable rules,” the judges stated.