Political think tank body, the Social Market Foundation (SMF), has found evidence that Britain risks losing its place as a world-leading economy. English law is “struggling to remain relevant” to disputes and contracts involving technological innovations such as blockchain, AI and biotechnology.
The SMF made these remarks during its latest report, sponsored by law firm Mishcon de Reya, drawing on insights from a high-level roundtable of senior lawyers, academics and officials, as well as Opinium polling of 1,000 UK businesses. It found growing evidence that English law and the civil justice system is in “desperate need of modernisation” to secure long-term prosperity.
The think-tank argues that the problem stem from politicians, officials and business having been “complacent” about the international standing of Britain’s legal system, resulting in a failure to invest and prepare for the future. Similarly, the civil justice system “performs poorly in international comparisons and operates in a way that puts it far behind the best civil justice systems in the world”.
Why is this an issue?
“Although the English justice system has historically been one of the main legal centers in the world for the resolution of disputes, there are other legal centers that are more modernised and more efficient and are competing with the UK as a global legal centre with modern approaches,” says Richard Hyde, the author of the report .
He argues that developments in technology, changing commercial patterns and the emergence of new business practices, such as concerns for ESG issues, “put at risk” English law’s capacity for supporting a prosperous domestic economy, along with its popularity as governing law for international commercial activity.
As such Hyde is worried that Britain’s “underfunded justice system has an impact on the attractiveness of England’s court service system for international users”.
Signs of decline
Despite the UK’s historical success, SMF says there are challenges which “cast doubt on the ability of English law and the civil justice system to underpin continued economic prosperity”, risking slower growth and lower GDP-per-capita for the UK economy.
The roundtable discussions for the SMF report found that a lack of urgency is the key reason for complacency among some policymakers. Without action, the UK could suffer from less growth and lower levels of prosperity, the report says.
The SMF reveals that only 39% of businesses surveyed believe the law has “supported their freedom to contract in the most commercially appropriate ways”. Ultimately, the SMF says that English law is “failing to consistently facilitate commerce” for UK businesses and that there could be as many as two million businesses whose experiences of the civil justice system “fall short of what should be expected”.
Likewise, the broad consensus among roundtable participants was that policymakers and those who have a trusteeship role over the law and civil justice system have been “complacent” about the quality of English private law and the efficacy of the civil justice system.
Hyde chalks part of the complacency down to underfunding and poor management. “There doesn’t seem to be accountability for those who are running the courts, if they are running it poorly” he explains. “There doesn’t seem to be an impetus to hold them to account, which is probably fed into some of the less than high quality management of the civil court system.”
The decline has seemingly put at risk the pre-eminence of the international business community, as well as “being a drag” on the domestic economy, reveals the report.
Additionally, difficulties with judge recruitment and retention pose problems in common law systems like England and Wales. Miles Geffin, legal director at Mishcon de Reya, says the deficit of judges can be a “significant problem”, which also adds to the issues of backlogs and times taken to bring cases through the courts as “more high quality judges would mean a faster, less costly court system”.
Hyde explains that “the deficit of judges can be a significant problem, which adds to the issues of backlogs and times taken to bring cases through the courts.” He asserts that “sufficient judges and sufficiently high quality judges keep the court system going, and more high quality judges would mean a faster, less costly court system.”
What needs to be done?
The SMF has already published its recommendations to tackle the challenges faced to the ability of English law and the civil justice system to deliver economic advantages to the UK. Firstly, it said action is needed to make the quality of English law and the functioning of the civil justice system a “higher priority” among policymakers. Secondly, the time and cost problems that blight the civil justice system need to be reduced to increase access to justice, and so outcomes are more easily and cheaply achieved.
Furthermore, the SMF report highlights that English law must be modernised to accommodate the 21st century economy so it can support higher domestic growth and “remain the best and most widely used law for governing international trade and financial flows”.
Hyde explains: “The discussion around table was that there doesn’t seem to be strategic nettle grasping among governments that will be needed to modernise English law, make sure it can deliver for the domestic economy, and continue to be preeminent across not just the older industries of financial services, trading and other goods, but these new tech industries”.
He adds that some of the current modernisation “doesn’t go far enough in some areas” and attempts with the court mobilisation programme “doesn’t seem to be being done with urgency and managed in necessarily the best way”.
Likewise, Geffin says the modernisation programme to develop a tech transformed justice system “hasn’t delivered”. “There are parts of it that work, [but] there are parts of it that work less well”. He explains that if UK law is up to date and modernised, the UK will have a “competitive advantage” which will ultimately offer opportunities for English UK law firms to increase the services they are able to offer,” he asserts.
In a similar fashion, gaps in the law where technologies, patterns of commerce, and business models and practices have evolved, need to be filled so English law can provide the “best possible framework for commercial activity” and “underpin a prosperous society”, says the SMF.
Additionally, the SMF emphasises that efforts are needed to increase the international visibility of English law, and that legal services must be a key topic in future trade discussions.
Geffin says legal services should be a key topic in any trade discussions that the UK has with other countries. “One of the recommendations is that the government should ensure that legal services are a key topic in any future trade discussions that they have with countries post-Brexit, so we’re able to enter into new trade agreements. If the provision of legal services are on the agenda, that would open up markets for UK law firms to operate in that they can’t currently operate in.”
Similarly, the SMF report also suggests the government should make funds available to train foreign judges who are interpreting English law. This is a way of helping ensure “more consistency and quality in the application of English law around the world and therefore helping uphold its reputation”.
Geffin suggests that law firms can also take an active role in trying to build a stronger international community of common law jurisdictions. He recommends implementing funding to build institutes, train lawyers and judges in other countries, and to help strengthen rule of law in developing countries. This includes helping to strengthen their legal infrastructure and their ability to trade.
More particularly for lawyers, Hyde says they can push and make key policymakers in the space aware of the problems they are experiencing. He says: “It will be interesting if more lawyers produced more analysis about some of the problems that they face practically day to day, and also where they find gaps or deficiencies in the body of law, to help build up an evidence base of the problem, and to inform policymakers about where they might go next, what they want.”
If the recommendations of the SMF report aren’t followed, Hyde explains the UK will “lose some of its geopolitical influence as well as less future prosperity than we might otherwise have had”. He concludes: “[Britian] potentially loses out on being at the cutting edge of some of these emerging high growth, high value sectors by having a legal framework system of liability that isn’t as good as that offered by other countries as our technology industries, and our science and biotech industries, are not as developed as they might have been.”