TROUSERS, cashmere sweaters and bananas — this is the stuff of international trade. Well, maybe in the past. But these days, services are taking a growing share of global international trade. And the law is one of international trade’s brightest stars. Exports of legal services from the UK — and to countries well beyond the Commonwealth — grew by more than 400 per cent in the decade 1993-2003 to top £2 billion. UK law firms have more than 450 offices in 70 countries across the globe.

Despite contributions by Roman Polanski and the Zeta-Jones Douglas family, most purchases of legal services by foreign clients are not an end in themselves but part of a much larger transaction. Not surprisingly, the relative importance and growth of legal service export earnings in different geographical markets mirrors the pattern of UK outward investment and export activity more generally. The story is familiar — large core markets for UK legal services in the US and the European Union, spectacular growth in Asia, especially China, and interesting prospects in many other emerging markets in wider Europe, the Gulf and South America.

The potential for further growth is significant. But there is a familiar obstacle in many emerging markets — protectionism. This includes the outright prohibition against any practice of law by a foreign lawyer — a prohibition that still exists, for example, in India, South Korea and the Philippines.

Although vested interests in restricting competition are part of the reason; fear and a misunderstanding of what the advent of foreign lawyers would mean also play a part. Concerns include the loss of jobs by local lawyers, poaching of the best local lawyers by foreign law firms, unscrupulous or ill-trained foreign practitioners fleecing unsuspecting consumers and worries about alien influence in the justice system.

Fortunately, there is a growing body of evidence to counter these concerns from those countries that have opened up their legal sectors to some extent. Foreign law firms would rarely, if ever, enter a market on the off chance that they might pick up work. American law firms did not open offices in London to do conveyancing. Likewise, UK law firms do not open offices in China in order to appear in local Chinese courts. They will have a client who instructs them, usually because they bring specialist expertise that is not available locally in areas such as capital markets, project financing and construction. Allowing foreign legal practice can therefore help countries to raise their own global competitiveness.

As economies open up, their legal sectors get larger and a wider range of opportunities presents itself to local lawyers. On the Continent, 4,000 local lawyers are employed in the European branches of US law firms, alongside only a few hundred US attorneys.

This also illustrates one of the other leading characteristics of international legal practice — the tendency towards localisation. Most foreign law firms want their operations headed by a local lawyer, who speaks the language and is locally qualified but who is also familiar with international client demands and capable of working in a global network.

We make these kinds of arguments to governments. But we also need to win the hearts and minds of lawyers in other countries who are afraid of what liberalisation might bring. This is one of the reasons why the Law Society’s international department seeks to build long-term relationships with counterparts in other countries. The local bar association will nearly always make the regulations that control the detail of foreign legal practice and, often they can make them as unhelpful and impenetrable as they like. So liberalisation will work only if we can get local lawyers to buy into the idea.

In some countries, where legal work is almost entirely court based, we may need to explain the role that lawyers can play in business transactions. We need to provide technical assistance on how liberalisation of legal services can be managed, drawing on the experience of 20 years of liberalisation in this country and elsewhere.
We also need to ensure that liberalisation has the best chance of delivering some concrete benefits to local lawyers, whether through training, law firm placements or referral opportunities. By working together with fellow bar associations and lawyers in other countries, we can ensure that it brings benefits both to local and foreign lawyers, that it supports inward investment and economic activity and that the independence of the local legal system is protected.

The author is the president of the Law Society of England and Wales

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