Seminário
Globalization and the Legal Profession
John Flood, Universidade de Westminster
24 de Novembro de 2009, 17:00, Sala de Seminários do CES
No âmbito do Núcleo de Estudos do Estado, do Direito e da Administração
Resumo
Legal newspapers such as the American Lawyer or Legal Week are constantly full of stories of law firms laying off associates and partners in the financial crisis or in some cases the entire firm imploding. Those law firms that moved into structured financial products (notably after Lehman Brothers’ demise) have suffered the worst as the fallout has ruined the credit markets. However, those that have specialized in litigation or white-collar crime defense have found their revenues rising. American Lawyer pointed out in its latest survey of the top 100 global law firms that their revenues only dropped by a few percentage points, yet some of the profits per partner figures made for dire reading. Clifford Chance’s profits (the third largest firm by revenue) dropped by 41% and Latham & Watkins fell by 20.5% in 2009. > Ver mais
It’s clear that globalization is a game played by a relatively small number of law firms and by those with a clear agenda. There always has been a marked difference between the large law firms of the US and the UK. US law firms have been bolstered by a large domestic market underpinned by lucrative litigation practices. The impetus towards globalization was never as strong as among the UK firms. UK law firms, however, never had a large domestic market to rely on and also had to deal with a split legal profession that hived off litigation to another segment. And historically there had been move to international and transnational legal work among the UK law firms since the mid-19th century when the railways were being built around the world. City lawyers were true entrepreneurs. In the last quarter of the 20th century there was a concerted effort by the British firms to extend their global reach. The top 10 of the American Lawyer’s law firms with most revenue is dominated by the UK international law firms.
Events like the collapse of the Berlin Wall, the rise of the Chinese economy, and the massive pull of the Washington consensus produced an enormous need for legal services that could bring structure to the private ordering of the new transnational world. Alongside the work of the law firms came a rise in arbitral institutions that fulfilled the need of private dispute resolution by experts. American and British law firms in particular responded to this call. Law firms in other countries such as Germany, Netherlands and France were not so aware.
Throughout this period of globalization law firms have altered little. They still retain the same profile—partners and associates—that they have for the last 100 or so years. National rules have hindered the corporatization (but not the commercialization) of law firms. Unlike the big accounting firms law firms have stayed small. The largest law firms by number are between 3,000 and 4,000 lawyers compared to 150,000 professionals in Pricewaterhousecoopers.
If the tournament model is to be believed the growth of law firms was inexorable and unstoppable. However, partners found ways of preventing the dilution of their equity in their firms by creating new layers of “senior associates” and “salaried partners”. Although increasing the leverage was good for times of financial success, it turned against the firms in crisis, hence the redundancies.
In the UK and Europe there was a twin pincer movement that had a big impact on the legal profession. Consumer complaints against lawyers were rising fast and competition authorities started to investigate professional restrictive practices to determine if they were in the public interest. The UK government established the Clementi Review into the provision of legal services that recommended a new regulatory structure for the legal profession and a new freedom in organization and ownership of law firms. Unlike earlier reforms to the profession, this one met a muted a response. Now that the Legal Services Act (LSA) 2007 has been passed, we are seeing new visions of the legal profession emerging. In 2011 the first “alternative business structures” will materialize. These will be law firms with external investment or even entirely owned by non-lawyers. Already private equity funds have manoeuvred themselves into position to invest in law firms. Supermarkets, banks, insurance companies, amongst others, have begun to set up legal practices which will challenge traditional suppliers.
Much of the work of these new legal services suppliers will depend on commoditized and standardized work. This will give a boost to legal process outsourcers in places like India and South Africa. Although most of these services will be aimed at individual consumers, corporate law firms are searching for ways to expand their markets through commoditized work.
The Legal Services Act and the moves towards the establishment of incorporated legal practices in Australia, where the first law firms have been listed on the stock exchange, will create inevitable conflicts for legal professions in other countries. The German Federal Bar Association has threatened to disallow UK law firms if they use these provisions of the LSA. And within the US rule 5.4 of the Model Rules of Professional Conduct clearly prevent external ownership of law firms. The last time the American legal profession faced such a decision was in 2000 when the ABA House of Delegates held a vote on multidisciplinary practices (MDPs) and rejected them. In the wake of Enron the appetite for MDPs waned. These changes can’t be ignored.
These changes will also be felt in legal education. There has been considerable growth in the postgraduate market for legal education. During the rise of globalization US law schools have been keen to raise their numbers of overseas students even to the extent of creating global law schools. Now they are challenged by UK law schools and others from Australia, Germany, and India, all of which offer programs in English. The global legal market is now open.
Globalization has accelerated in the 21st century. Whereas the traditional law firms and law schools could use the process to their advantage, recent changes are about to disturb these traditions more radically than most can imagine.
Nota biográfica
John Flood é professor de Direito e Sociologia na Universidade de Westminster, Inglaterra, bem como TranState Adjunct Professor na Universidade de Bremen, na Alemanha e Visiting Professor em várias universidades. Tem desenvolvido trabalhos de investigação nas áreas do acesso ao direito e à justiça, mecanismos de resolução de litígios, globalização e direito, entre outras. Obras recentemente publicadas: Lawyers, Law Firms and the Stabilization of Transnational Business (com F. Sosa), Northwestern Journal of International Law and Business, 2008; What's Wrong with Legal Aid? Lessons from Outside the UK (com A. Whyte) Civil Justice Quarterly, 2006; Report on Legal Aid in Other Countries (com A. Whyte), TBA, 2004.
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