The City of London’s position as a world leader in finance and business is widely acknowledged. I know this only too well from my own work, both as an international commercial barrister and as the current chairman of the Bar of England and Wales.
But the City is being challenged by other financial centres in the increasingly competitive markets in which we operate. That is why it is important to understand what attracts foreign investment to the City and the UK as a whole, and what can be done to ensure that our position is not undermined.
Trust in the rule of law
I see the strength of our financial and related professional and business services sectors from the perspective of a lawyer and as someone who has spent time abroad. It is crystal clear that the rule of law and our justice system underpin the success of the City. Trust, in both our legal and financial systems, is probably the single biggest factor in attracting investment to the UK.
We cannot underestimate the high reputation in which our courts are held around the world, and the role this plays in our economic success. Our judiciary are seen as genuinely independent and incorruptible. Our courts, especially commercial courts, are a popular forum for commercial dispute resolution. In 2013-2014, a foreign party was involved in about 80 per cent of the 1,100 commercial claims issued, and in about 45 per cent of cases all parties were from outside the UK. This reflects the appeal of our courts, but also that of the barristers and solicitors who practise in them.
Our courts are also innovating in response to demand. The new Financial List in the High Court will enable us to consolidate our position as a world-leader in commercial dispute resolution. This benefits not just the City, but also our international trade.
Building on the combined expertise of the Chancery Division and the Commercial Court, the Financial List has been designed to provide swift, efficient, specialist and high quality financial dispute resolution. Cases benefit from being managed and heard by a judge with a particular expertise and experience in the law relating to financial markets. The List includes fixed income, equity, derivatives, loan, FX and commodities markets, as well as complex banking transactions and sovereign debt.
Markets are most efficient when actors have mechanisms to resolve uncertainties quickly and definitively. This is the reason for a ground-breaking procedure, currently on pilot, to facilitate the resolution of market issues where immediately relevant authoritative English law guidance is needed, even where no dispute has arisen as yet. The Court is able to grant declaratory relief on the grounds that it is in the public interest to do so.
It is not just London’s role as a world-class global dispute resolution centre that underpins its position as one of the world’s top financial centres. It is also the trust placed in our justice system more widely, combined with the preference for English law which – together with London’s financial services expertise – plays an important role in attracting overseas investment into the UK.
Role of barristers
As the representative body for barristers in England and Wales, the Bar Council works closely with the Bar to ensure that our services can be delivered efficiently and cost-effectively. That is why we have lobbied the government about the detrimental impact of recent rises in court and tribunal fees, which restrict access to justice and have the potential to make our legal services sector less internationally competitive. It is also why we work hard to ensure that the burden of regulation on the Bar is proportionate, and that the legal profession remains independent of government.
Barristers are often perceived as specialist advocates who represent clients in the court room. But their expertise extends beyond that remit. Many work in-house in the legal teams of businesses up and down the country, providing vital support to UK plc. In addition, many barristers in private practice provide specialist legal advice to the business community.
The Bar’s work is vital to the legal services sector, supporting our financial services, business and other industries. A 2015 report by TheCityUK indicated that our legal sector generates £22.6bn, or 1.6 per cent of the UK’s GDP, and directly employs over 300,000 people.
The number of barristers handling work for clients based overseas continues to rise and, in 2014, over 10 per cent of the profession received instructions from overseas clients. In the same period, the Bar’s international earnings grew by 9 per cent. Significantly, 30 per cent of the overall increase in the self-employed Bar’s earnings in 2014 came from international work. These figures understate the position – they do not include barristers who are working in-house as general counsel, for example, nor do they capture work on overseas matters for clients based in the UK.
There is a clear trend. Barristers’ earnings from international work have been rising steadily for over a decade, with some chambers even establishing a commercial presence overseas. This growth in international work enhances the UK’s reputation as a partner with which to do business. Much of the work the Bar Council has done with UKTI, including trade missions, is aimed at increasing the work of the legal sector and that of barristers in particular, and promoting the legal profession beyond England and Wales. By promoting English law and English lawyers, we promote the UK more widely. Many international financial, trade and energy contracts are based on English law, such is its reputation. This brings transactional work, as well as disputes, to the City. TheCityUK report showed that 27 per cent of the world’s 320 jurisdictions use the English common law system.
Integrity and investment
Without trust in our legal system, inward investment to the UK would suffer. You can only feel comfortable about investing in a market if the legal system and judiciary are above suspicion.
Transparency International’s Corruption index measures corruption levels in the public sector of each country: it ranked the UK as the tenth least corrupt country in 2015. When I lead Bar international trade missions, designed to promote the services of barristers abroad and the virtues and values of the rule of law (which in this country we tend to take for granted), I am struck by how often people comment on the integrity of our judges. That is why it is important that we continue to attract men and women of the highest quality to serve as judges. They are essential to the rule of law, and also to our ability to attract inward investment and disputes to the UK.
The Bar Council recently signed a Memorandum of Understanding with the British Council to promote justice and the rule of law overseas. While the initial priority is to help other jurisdictions embed the core principles of justice into their cultures, an additional benefit is the indirect promotion of England and Wales as the world leading market for fairness, justice, transparency, as well as its world-class legal sector.
The UK cannot afford to rest on its laurels. As financial hubs like Singapore and Dubai seek to compete with London, so too do their legal sectors. The City Corporation, the Ministry of Justice, the Foreign Office, the Department for Business, Innovation and Skills, and the Treasury, alongside the Bar Council and the Law Society, need to make every effort to promote the strengths of our justice system as well as the experience, capabilities and skills of our legal services sector to international audiences, especially at a time of considerable global economic uncertainty.
The contribution the City makes to the prosperity of the UK is considerable. The underpinning support which our legal services sector contributes to that achievement – and to the maintenance of our leadership position in a tough, competitive environment – is crucial. Together, I believe, we can create a world-class business environment. Our future depends on it.