54 Thursday February 3 2022 | the times
Law
5
Times Law
Editor Jonathan Ames
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For print and online: Jeanine Kiala
020 7782 7518 [email protected]I
n my time as lord chancellor in
Theresa May’s administration,
I would make the case within
government and externally for
the importance of our legal system
and the rule of law.
Much of the importance related to
protecting our individual rights, but
— particularly in discussions with
the Treasury — I would highlight
the crucial role our legal culture and
institutions had for the economy.
Our reputation for adherence to
the rule of law gives businesses and
investors the confidence to undertake
activities within the UK. Our
judiciary and legal professions are
much admired around the world and
we have long been a leading forum
for settling international disputes.
These attributes benefit our
legal services sector — to which I
returned after leaving parliament —
but also the UK economy as a whole.
One area on which I did not focus
as much as I might was English law.
LegalUK — established in 2017 by
the lord chief justice to promote
English law internationally —
commissioned Oxera to identify
the value of English law to the UK
economy. Its recent report shows
that English law is a significant but
often underestimated national asset.
The law — as it applies to business
transactions — is a vital piece of
infrastructure on which economic
activity occurs. If economic value
is created through the “gains from
trade” made possible by transactions,
the law provides economic value
by underpinning growth in these
transactions by promoting greater
confidence between parties.
English law creates particular
benefits because it is often used in
internationally mobile transactions,
such as occur within the maritime
sector, commodity trading, insurance
and derivatives. The UK’s strengths
in these sectors are longstanding
and valuable. The part played by the
globally widespread use of English
law in establishing and maintaining
our strengths in these sectors should
not be overlooked.
The use of English law generates
a number of benefits for the UK
economy. Most obviously for the UK’s
successful legal services sector, but
also widely across the economy.
The greater the number of users
of English law, the quicker that
precedent law evolves to reflect
a changing business environment,
benefiting all users of English law;
the agglomeration effects that flow
from the use of English law in
internationally mobile sectors help
to grow expertise more widely in
the UK; and transaction costs for
British businesses are lowered
because of the widespread global
use of English law, helping
international competitiveness.
It is clear that the global
popularity of English law couldenable the UK to gain an advantage
in emerging technologies or
business practices. For example,
English law has the potential to play
a key role in developing areas such
as crypto assets, fintech and
sustainable investment.
All of this is welcome. But there is
a catch: as a piece of infrastructure,
English law suffers from the “free-
rider problem”. No one has to pay
to use English law, so capturing an
economic return is hard. The result
can be that it is underpromoted
and, to use an economist’s phrase,
“underprovided”. It is an asset that
does not fulfil its potential.
This is in part an issue for the
legal services businesses to which
some of the benefits of English law
flow directly, but as the Oxera
report makes clear, many of the
benefits flow much more widely
across the economy as a whole.
The agglomeration effects of
English law improve productivity
and the reduced transaction
costs increase international
competitiveness across the economy.
These benefits are substantial and
real, but too remote and indirect to
expect individual businesses to pay
for the promotion of English law.
There is a need for legal services,
the wider business community and
the government to determine how
we nurture and strengthen English
law for the benefit of the economy.LegalUK is proposing the creation
of a national institute for legal
innovation, which would drive
understanding of the economic
significance of English law, take
the lead on matters around the use
of legal platforms, and promote
English law internationally with a
view to maintaining its position as
a leading global platform for
business and trade.
There also needs to be a
discussion about how this should
be funded — but any costs should be
outweighed by the potential benefits
for the wider UK economy.
Given that there are several
important emerging areas of
business activity in which various
practices will be established in the
next few years, the issue needs to be
addressed as a matter of urgency. If
the UK wishes to be a leading player
in these areas, it has a much greater
chance if English law establishes
itself as the customary choice of law.
The opportunity is great, but, with
other countries seeing a chance to
promote their own choice of law, we
have no time to lose.David Gauke is a former Conservative
lord chancellor and is the head of
public policy at Macfarlanes, a City
of London law firmAccording to research by the Solicitors Regulation Authority women now make up more than 60 per cent of all solicitors
Challenges remain in
quest for diverse workers
The profession is slowly crawling towards greater
diversity, but not fast enough, says Jonathan Ames
Feminisation of the solicitors’ profes-
sion has taken root in England and
Wales, as the latest figures show that
women have solidified their position as
the majority sex.
Research published this week by the
Solicitors Regulation Authority proud-
ly declared that “diversity within law
firms is continuing”, although it quali-
fied that with the modifier “slowly”.
Across the jurisdiction, women now
constitute more than 60 per cent of all
solicitors as of last year. And they repre-
sent 52 per cent of those working in
private practice law firms, a marginal
increase on the proportion in 2019.
The real problem for women remains
promotion. The report — which sur-
veyed lawyers at more than 8,780 firms
— acknowledges that “the seniority
gap between female partners and solici-
tors remains significant”. And that lag is
especially acute in the larger commer-
cial law firms, many of which are based
in the City of London.
In other words, while women form
just 35 per cent of partners overall — an
increase of 1 per cent over 12 months —
at the largest law firms in the Square
Mile, women make up only 31 per cent
of partnerships.
Women solicitors continue to be
over-represented in areas that have
been historically — and some would
say, pejoratively — seen as attracting
them. For example, women make up
56 per cent of private client solicitors,
according to the research, presumably
because a high proportion focus on
family work.
In contrast, just 39 per cent of crimi-
nal law solicitors were women — the
same percentage as in 2019.
Turning to ethnicity, researchers at
the regulator found more nuances.
Across the profession, 17 per cent of so-
licitors in 2020 had ethnic backgrounds
that fell into the categories of black,
Asian or other minority, a 0.5 per cent
increase over the previous year.
Initially, that figure appears to com-
pare relatively favourably with the dem-
ographics of the overall population of
England and Wales, where about 20 percent of people are classed as having one
of those ethnic backgrounds.
But the report notes that “there is a
widening gap in the profile of partners
in the large and small firms”. Research-
ers found that just 8 per cent of partners
at the largest firms were classed as
having an ethnic minority background.
That figure rose to 23 per cent —
above the general national figure — at
firms with two to five partners. And
35 per cent of solicitors’ firms with a
sole principal were run by ethnic
minority lawyers.
On sexual orientation, more than
89 per cent of solicitors identified as
heterosexual, somewhat lower than the
nearly 94 per cent figure for the wider
population. About 7 per cent of solici-
tors declined to respond to questions
about sexual orientation.
Disability remains the Cinderella
area of diversity at law firms. The re-
searchers conceded that “there contin-
ues to be potential under-reporting ofdisability within the sector” — before
reporting that over the year being stud-
ied there was a 1 percentage point
increase to 5 per cent of lawyers saying
that they had a disability.
But that figure remains well below
the 14 per cent of people in the wider
UK working population that the re-
searchers said qualified as disabled.
Figures from the Office for National
Statistics from the most recent census
results of 2011 showed that 8.5 per cent
of the wider population in England and
Wales said that their daily activities
were “limited a lot” by disability.
Social background is another deli-
cate area for the profession. The regula-
tors’ research found “a significant
difference in the proportion of lawyers
from a privileged background com-
pared to the UK population”. They go
on to report that the largest law firms
are home to the greatest proportion of
solicitors who went to fee-paying
schools — 29 per cent compared with
7.5 per cent of the wider population.
Unveiling the research, Anna Brad-
ley, the watchdog’s chairwoman, said
that there remained “a particular chal-
lenge” for ethnic minority solicitors
and women at the larger law firms.
“We know that many firms have ex-
cellent initiatives in place to address
progression and retention,” she said,
“but there is clearly more to be done.
We will be using this data to inform our
decisions about the contribution we
can make to bringing about the differ-
ence we all want to see.”
Stephanie Boyce, the president of the
Law Society, the professional body for
solicitors, was “pleased to see that over-
all diversity within law firms is improv-
ing year-on-year, albeit slowly”. But she
too was “concerned at the pace of this
change, and at the inequalities within
the profession”.ALAMY‘The real problem for
women remains the
promotion to partner’
English law boosts
our economy, so let’s
promote it abroad
David Gauke
Comment