Global liberalisation of legal services will not just lead to growth in the legal sector - already worth hundreds of billions of pounds worldwide - but to higher quality and lower prices for clients, an influential report has suggested.

The report from the Organisation for Economic Co-operation and Development (OECD) revealed the growing financial stakes in legal services, with output in the US and Europe generating £200 billion between them in 1999.


The findings are being presented this month by the OECD to members of the World Trade Organisation (WTO). It aims to help them understand the context and key issues as they negotiate liberalisation of legal services as part of the Doha round of talks under the General Agreement on Trade in Services (GATS).


Hong Kong: rise in exports

Earlier this month, the deputy director-general of the WTO said legal services are moving up the international trade agenda (see [2004] Gazette, 9 September, 1).

The report said that while only modest liberalisation was achieved in the previous round of GATS talks, ‘the current negotiations offer the opportunity to achieve greater levels of liberalisation in all countries’.


It explained: ‘This could lead to benefits that go well beyond the growth of the sector, including higher quality and lower prices for all consumers of legal services (both individuals and businesses).


‘As these are for the most part corporate clients, the increased availability of these services, and the more secure environment they create, can help to attract foreign investment, create business opportunities for local suppliers and enhance overall economic efficiency.’


It said several barriers to foreign lawyers working in many countries have been identified as major obstacles for removal. These include foreign lawyers employing and going into partnership with local lawyers, as well as nationality and residency requirements.


The report said that although there is limited reliable data on the overall size of the sector, the practice of law in the US grew from an estimated $4.2 billion (£2.3 billion) in 1965 to an estimated $148 billion in 1999. In Europe, the output of legal services reached €176 billion (£120 billion) in 1999.


‘A new feature of the market for international legal services is the growth and emerging export activity of Asian law firms,’ the report said. In Hong Kong, for example, the total revenue of the legal sector exceeds $1.5 billion, while the turnover of Singapore’s domestic law firms was estimated to be SG$849 million (£500 million).


The two major exporters of legal services are the US and UK. Between 1986 and 1999, US exports rose 26-fold to $2.6 billion, while the UK’s trade in legal services doubled between 1997 and 2002 to £1.8 billion. Jurisdictions such as Hong Kong and Australia have also seen sharp rises in exports.


The report was compiled with the help of Alison Hook, the Law Society’s director of international. She said: ‘It is important for bar associations in countries that are liberalising their legal services to understand what is happening and to feel it is in their interests to open their market.


‘The OECD checklist is an enormously useful tool for them to use when thinking through how liberalisation could be implemented and we are already using it in our discussions with foreign bar associations.’


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