Despite objections from some Members of the European Parliament, lawyers are covered by the amended text of the controversial European Union (EU) Services Directive, following recent political agreement between EU ministers. The so-called Bolkestein Directive has undergone substantial changes since the original proposal in 2004, with the European Parliament making more than 200 amendments.

The aim of the proposal was to improve the effectiveness of two fundamental principles enshrined in the European Community (EC) Treaty – freedom of establishment (article 43) and the free movement of services (article 49).

The Directive takes a horizontal approach – establishing a general legal framework for most economic activities involving services rather than dealing with each service sector on an individual basis. The proposal introduced various simplification measures, such as the 'single point of contact' for those seeking information on local legal requirements in a particular service sector and the obligation to use electronic procedures.

The hallmark of the original proposal, as well as one of the most controversial EU initiatives of recent times, was the 'country of origin' principle. This principle dictated that a service provider would only be subject to the law of the country in which it was established – and not the requirements of the countries in which it operated.

This proved to be extremely unpopular with fears over the quality of overseas-based service providers and regulations of the lowest level.

This aspect of the proposal was famously rejected by the European Parliament, having contributed towards the French and Dutch 'no' votes on the EU Constitution.

Two existing directives deal with the provision of cross-border legal services: the Lawyers' Services Directive and the Lawyers' Establishment Directive (LED). The former allows lawyers to practise temporarily in another member state, including rights of audience, and has effectively permitted lawyers to follow their clients across borders in individual cases. The latter permits lawyers to establish themselves in any other member state provided that they register with the host state Bar.

However, these directives do not cover every aspect of legal services and, in any event, have not been without problems. For example, an English solicitor is currently challenging the Luxembourg Bar over a requirement for lawyers registered with the Bar to be proficient in French, German and Luxembourgish. The final judgment is due later this year, but the Advocate General has already indicated that such language requirements are not compatible with the LED.

EU institutions have been split over whether to exclude lawyers from the Services Directive. Lawyers were initially included in the proposal by the European Commission but there was debate over the precise effect of the European Parliament's amendments. The most recent revision of the text by EU ministers put lawyers firmly back within its scope.

There has also been a split in opinion within the profession. The Council of Bars and Law Societies of Europe (CCBE) claims that lawyers should be excluded. Many Bars maintain that the existing lawyers' directives are adequate and far better suited to the specific case of lawyers, while the CCBE continues to lobby for the exclusion of lawyers in the final Services Directive text.

The English Law Society and others in the UK firmly support the inclusion of the legal profession in the Services Directive, asserting that the UK already has a well-recognised liberal market and that UK lawyers can gain from having easier access to other markets in the EU.

While the Service Directive will not bring a dramatic increase in the number of lawyers providing services across the internal market, some benefits would arise, including greater ease of access by practitioners to information and the requirement of a European 'code of conduct' for the profession.

In spite of the controversy caused by the proposal, the Services Directive – which is likely to be adopted by the end of the year – will not significantly change the way services in general are provided across the EU, particularly following the removal of the 'country of origin' principle. It should simplify administrative procedures and, to an extent, consolidate existing case law, but that is where its impact will stop.

It is unlikely that the Service Directive will result in relevant national authorities suddenly developing a more 'European' approach than has been seen over the last 50 years. It remains too vague and, much like the relevant provisions in the EC Treaty, will continue to require judicial clarification and enforcement.

The current version of the Directive is little more than an incomplete consolidation of case law and, perversely, may result in future in reduced scope for the fascinating case law developments that have been hallmarks of the internal market regime.

Michael Renouf is a partner at Berwin Leighton Paisner.