The UK Treasury’s Office of Financial Sanctions Implementation (OFSI) has issued a new general license, which took effect on 28 October 2022 and continues in effect for six months, until 28 April 2023. The license consists of two parts. First, it allows for the collection of legal fees up to £500,000 (including VAT) and expenses of up to £25,000 (including VAT) from a person designated under UK sanctions (a “DP”) accrued during the period before such person was designated. Secondly, it allows for fees and expenses (up to the same maximum amounts as indicated above) to be charged for legal services rendered after a DP was designated, subject to caps on hourly rates. The hourly rate cap for barristers is £1,500 and the rate caps for solicitors are tiered for London and non-London solicitors and by experience level, topping out at £896 for a London solicitor with more than eight years of experience. A license is still required for fees and expenses in excess of the maximum set amounts (the maximums apply during the term of the license, so for a six-month period) and the obligation to obtain a license arises as soon as it appears that the fees and expenses will exceed the caps, and not once the caps are reached.

The license also includes provisions for UK banking and financial institutions to enable them to process payments for legal services on behalf of DPs. In many cases, UK banks have refused to process such payments, or have charged exorbitant fees or put up other administrative barriers, even where a valid OFSI license is in place.

At first glance this license appears to be a very significant liberalization which in some ways increases access to the UK legal system for sanctioned individuals and companies to a greater extent than, for example, the United States, which allows persons listed as Specially Designated Nationals (SDNs), the strictest level of US sanctions lists, to engage and pay U.S. lawyers for any matters before a court or administrative body in the United States, even matters instigated by the sanctioned person himself. It does not, however, allow lawyers to be engaged for transactional work, dealing with trusts and companies, and other non-contentious work. The UK license, by contrast, has no restrictions on the types of matters for which a DP can retain and pay solicitors and barristers.

However, there are certain nuances to keep in mind:

• The license only has a six-month term of validity, and it is not clear whether it is an experiment or what might happen on 28 April 2023 when it expires. Six months is too short of a period to complete most types of legal matters that would interest a DP, such as a sanctions challenge or a lawsuit.
• Many UK legal services providers expect that even before the license expires, OFSI may issue additional clarifications and restrictions such as regarding the types of legal matters to which the license applies. It is particularly expected that transactional work, whether in the UK or elsewhere, will be excluded from the scope of the license.
• The license places responsibility on “persons using this license” for compliance “in full” by “parties” with the terms of the license, with the word “Persons” being defined in the license to include both law firms and financial institutions. The fact that financial institutions are included in the group potentially bearing liability for, as the license puts it, a “criminal or monetary penalty” means that there is a good chance that UK banks will continue to take a very cautious view towards processing of any payments from DPs to law firms.
• For the reasons above, most UK lawyers will continue to be extremely selective in terms of what representations they choose to take on, and existing relationships will be the key to success in finding and retaining UK legal advisers.

On the whole, the license can be seen as a positive development towards establishing access to legal representation and the UK administrative adjudication and judicial systems as a right rather than as a privilege. It also recognizes that sanctioned persons can continue to have legitimate interests in the UK that require legal advice to defend. Ideally, after the initial six-month period the license will be extended for a longer term without significant further restrictions.