Liberate the law from regulation that shackles it
AS THE British economy faces tough economic challenges, promoting areas of potential economic growth is not only important – it is essential.
With an annual turnover of £25bn (roughly the equivalent to two per cent of our country’s GDP) the legal services industry in England and Wales is an example of one such area.
The UK is recognised, internationally, as a global centre of legal excellence. We offer world class, highly specialised practitioners and expert judges. A decision from a UK court is received, the world over, as a hallmark of integrity, impartiality and enforceability.
This global reputation offers significant opportunities for growth, especially in providing legal services to developing economies. However, protectionist regulations in key growth markets such as India and a number of other emerging markets currently inhibit the export of UK legal services.
The Indian legal market alone is estimated to be worth $4bn (£2.52bn) in annual revenue. The Ministry of Justice predicts that, should it be de-regulated, the Indian market could be worth $12.3bn by 2016. For this reason the industry and the government have, rightly, made persuading these economies to tear down their barriers to entry a key priority. On a recent trip to India, the lord chancellor campaigned on the very issue of the liberalisation of legal services.
Deregulation is a win-win. Mid-sized firms and multinational companies seeking to invest overseas, particularly in emerging markets, require high-quality legal advice. Increased competition in these closed markets, particularly in the area of corporate law, will benefit local firms by driving up standards, while local firms will retain their competitive edge thanks to their lower costs.
But opening up such opportunities is not enough. Our international position is not guaranteed. The coming decade promises to see increased competition as other cities, such as Paris, New York and Hong Kong aspire to compete with London as the world leader in legal services.
Meanwhile our preeminence faces legislative threats such as the common sales law being put forward by the European Commission as an EU civil law alternative to English common law.
The industry is working with key policymakers and government departments to ensure the UK retains its competitive edge. However, there are also changes that we must implement ourselves to ensure we stay ahead of the game. Law firms must make themselves more attractive to the general business community they serve. For too long, the industry has been resistant to change. There are signs that we are waking up to this, but there is still more to do. The industry’s billing structure, for example, is antiquated and is in need of reform. More fundamentally, the legal community needs to shift public perception away from one of instruction takers and executers of legal briefs to a profession of senior, trusted advisers able to bring deals to the table.
The challenges the legal industry faces in ensuring the UK remains the world leader in the provision of legal services are significant. However, I am confident that by working in unison with foreign governments and other bodies, these barriers can be overcome and our goals achieved.
Lord Tim Clement-Jones CBE is partner (international business relations) and London office managing partner for DLA Piper.