Glorious statistics and their consequences

Last week’s publication of the Law Society’s annual International Data Insights report will have prompted many reactions. 

First, we belong to such a highly successful profession. The figures are incredible. Legal services exports have grown in value by over 60% in the last five years to just under £11bn. There are more impressive stats, such as the use of English law in stunning quantities of international trade and commerce, and the resolution of disputes in markets worth trillions.   

Second, we belong to such a fractured profession. Legal aid firms struggle to make a living; small and medium-sized firms are staggering under the weight of regulation; and the courts are crumbling, both physically and due to long backlogs. How can these polarities exist within a single profession?

Third, congratulations to the Law Society for publishing these statistics. Without data, there is no proper understanding or policy. We find that we export more legal services to the EU than to the US, twice as much to Luxembourg as to any other EU member state, and that Dubai has overtaken New York as the second most popular destination for commercial court judgments after the London Commercial Court.

Fourth, international arbitration’s outsized contribution to London’s success. In particular, the number and value of ad hoc arbitrations (which take place outside arbitral institutions) far outstrip the contribution of the institutions themselves. The caseload of the London Maritime Arbitrators Association (LMAA) towers above other international institutional and ad hoc bodies, making up around half of all the others’ caseloads combined. It grew by 16% over the last year. I understand that part of the LMAA’s success lies in clients moving away from arbitral institutions towards the ad hoc sector in areas of law which are no longer strictly maritime. It leaves me wondering why international arbitration – a success story for London and an important source of income for lawyers – seems to lie outside nearly all policy and supervision. These statistics should prompt policymakers to take a proper look.

There are more conclusions. Perhaps the most notable is the need for a more extensive collection of data about lawyers’ contributions to national economies everywhere. I know we are ahead in England and Wales with an unmatched annual report by the Society, but the profession overall would benefit if it happened elsewhere.

Take the European Union as an example. It has just run a ‘Justice for Growth’ campaign which did not once mention the economic contribution of lawyers and legal services. Rather, it focused on the digitisation of court services, improving procedures for the recognition of judgments, or helping start-ups avoid the usual bureaucracy of establishing a new company. But lawyers’ economic contribution? No.

And yet the EU can tell a good story (partly for the same reason as the UK: some member states once had empires that adopted its laws and legal culture). Europe is the source of around half of the law used in jurisdictions around the world. It is estimated that the world’s 320 or so legal jurisdictions (not the same number as countries) are now dominated by just three major families of law: common law (England and the US), making up roughly 40%; Napoleonic at 30%; and Roman-Germanic at 20%. The remaining 10% is a mix of others, such as Islamic sharia law. In other words, 50% come from EU jurisdictions. 

There are major international arbitration centres located in the EU, such as the International Chamber of Commerce Court of Arbitration headquartered in Paris, which is a world leader (12% of its arbitrations take place in France and a further 6% in other EU capitals, with over 15% of cases being decided by one or other EU member state’s laws), and the growing Stockholm Chamber of Commerce Arbitration Institute. 

The Netherlands has the Commercial Court in Amsterdam, a specialist division of the Amsterdam District Court and Amsterdam Court of Appeal, hearing international civil and commercial disputes. France and Germany also have specialised commercial courts to handle international disputes. These often can hear cases in English with specialist judges who have experience in international commercial disputes.

We may not want to promote our competitors, but the legal profession overall would benefit if our economic contribution to the world economy were recognised. That is not to say it is our only contribution; some would argue that it is not even our main contribution. However, it would persuasively hammer home our values: that we promote legal certainty and reinforce the rule of law.

Jonathan Goldsmith is Law Society Council member for EU & International, chair of the Law Society’s Policy & Regulatory Affairs Committee and a member of its board. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society