21 June 2010 | By James Swift
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As Greek lawyers are forced to down tools in protest over the government’s austerity measures, not everyone agrees that this is the best course of action.
On June 7 lawyers across Greece put down their pens and statute books, and began a 48-hour strike in protest over their government’s proposed austerity measures. It is the third strike by the legal profession this year and will almost certainly not be the last.
The strikes were called by the Athens Bar Association (ABA), which has circulated emails requesting support from its members. By law, all practising lawyers in Greece must be members of the ABA.
Enthusiasm for the strike among lawyers, however, is far from uniform.
“To be honest it’s something that I’m frustrated with,” says Theodorus Rakintzis, partner at Kyriakides Georgopoulos & Daniolos Issaias.
We’ve been seeing decisions for strikes but we don’t know how effective they are; they mostly just provoke problems because we can’t represent clients. If you have a civil or criminal case, you can’t go to court; even if it’s very urgent, it’s difficult. And as soon as it’s over, big queues are going to form for people that want to file lawsuits.”
Under the terms of the strike, lawyers cannot appear in court without permission from the ABA, and some firms have gone further and closed their offices entirely.
But according to one partner, the strike is far from absolute and has been blown out of proportion by coverage.
“The situation is more complex than it seems,” Stathis Potamitis, partner at Potamitisvekris. “It would be to overstate the case to say that the whole profession is on strike. What we have is a bar association, which is not really a representative association… but decided it would call a strike.
“Some trial lawyers will maybe take advantage of this if it’s convenient for strategic purposes, but on advisory work there’s no strike… so there’s an element of smoke and mirrors.”
Whatever the true nature of the strike, chief among lawyers’ (or the bar’s) concerns is the imminent 23 per cent rate of VAT that will be levied on legal services. Other proposed government measures being protested are a change to the country’s social security structure and the erosion of minimum fees for legal services.
Until now, the legal profession in Greece had been something of an anomaly, in that its services were exempt from VAT. And while the change means little to the larger firms, which represent businesses that can offset the additional tax, for smaller firms that represent individuals, the rise in legal bills could be a disaster. The news led one partner at a Greek firm to declare, “the sole practitioner is dead”.
The measures are an attempt by the government to crack down on tax evasion. The majority of lawyers in Greece, in general, do not bill clients by the hour and charge by the job instead, and often do not send out formal invoices to clients, making it difficult to accurately assess taxes.
But not everyone is confident that the new tax will serve its purpose.
“To pay VAT a firm must have an invoice system,” says Potamitis, “and the way most of the small firms deal with that is that they don’t invoice and just collect cash instead, so the new position is going to make tax compliance even more unlikely.”
Abolishing minimum fees for certain legal services - like real-estate transactions and divorces - will also disproportionately affect the smaller firms. And in Athens, where according to one partner there are around 25,000 lawyers, it paves the way for a race to the bottom in terms of pricing.
Some at the larger firms, however, see minimum fees and similar protections, like the ban on advertising and the federal nature of the bar across Greece which makes creating nation-wide firms difficult, as well as antiquated.
“With the new agreements that Greece made with the IMF, those medieval protections will be swept away and smaller practitioners are worried because they don’t know what the legal market will look like,” says Potamitis. “But I think it’ll look better.”
“We’re in a free market and we’re not a profession that should be protected,” agrees Rakintzis. “We’re professionals and we have studied. We just have to serve the client to the best of our ability.”
One proposed change that will affect everyone however, is the amendment to social security funds.
“In Greece we have many social security funds that are controlled by the state and some are performing well and some are not,” says Rakintzis. “The one formed for the legal profession is one that is performing relatively well. The government wants to merge all funds into one or two entities in order to effect a more efficient strategy,
and the funds that are going well don’t want to merge with the poorly performing ones because we fund it with our pension contributions.”
Even if not all lawyers can agree on the effectiveness of the strike, most, if not all, lawyers are apprehensive about the knock-on effects threatened by the austerity measures.
“Greece has a big problem and the government has increased taxes everywhere,” says Rakintzis, “but this deprived people of money and now they don’t have the money to move the market. The changes have nothing to do with even a mid-term strategy; all it has to do with is finding money to fill gaps. I don’t know how it will end but we’re all very concerned.”