UK’s Legal Standing At Risk Due to Lack of Modernisation – Report

‘Britain risks losing out on economic growth and international influence because its crumbling legal system is not prepared for innovations such as cryptocurrencies, artificial intelligence and green investing’, a report by the Social Market Foundation (SMF) – funded by Mishcon de Reya – has said, in what is a hard-hitting indictment of the UK’s legal system.

The report stated that: ‘Delays in settling cases in over-burdened courts and a lack of laws specifically governing new markets and technologies could dissuade companies and investors from doing business in Britain or using English law in their commercial activities.’

The think-tank added that politicians, officials and business have been complacent about the international standing of Britain’s legal system, resulting in a failure to invest and prepare for the future. They noted that: ‘English law is currently used extensively by international businesses, both in English courts and in courts elsewhere. That helps bring business to the UK, but it cannot be assumed that this will continue into the 21st Century.’

And there do seem to be some issues here, e.g. enforcing contracts – see below a comparison to Singapore.

The report also noted that: ‘Civil court cases in England and Wales take too long and cost too much.’

Richard Hyde, SMF Senior Researcher, added: ‘Our laws and legal institutions have been respected around the world, generating wealth and influence for the UK. But as a country we have become complacent about it and failed to support the law and its institutions properly. If companies can’t settle their cases quickly in our crumbling courts, they will go elsewhere. If business can’t use English law to draw up contracts for cryptocurrencies, AI or green investment, they’ll use another system.

‘We can no longer take the rule of law and its economic benefits for granted. To maintain and improve our place in the global economy of the 21st Century, we must continue to invest in and update our legal code and legal institutions.’

While, James Libson, Managing Partner at Mishcon de Reya, concluded: ‘We are proud to have supported this research, which is a timely reminder of the direct and indirect importance of English law not only to our continued economic prosperity, but also to our sense of place and influence in the world.

‘For too long, we have taken the economic and social benefits of our system of law for granted, ignoring growing problems and allowing other legal centres to steal a march. 

‘If we are to continue experiencing the considerable benefits that English law has historically brought to the UK, it is vital that government, legislators, business and the legal profession act now.’

So……what is the answer? Here are some of the SMF Recommendations, (you can read the full report here.)

  • Recognise more clearly the importance of English law and the civil justice system as an indispensable element of the social infrastructure and make the quality of English law and the functioning of the civil justice system a higher priority among policymakers  
  • Reduce the time and cost problems that plague the civil justice system so that access to justice can be increased, in particular for businesses, 
  • Modernise English law so that it is fit for the 21st century economy and therefore can, most effectively, support higher domestic growth as well as remain the best and most widely used law for governing international trade and financial flows.
  • Protect English law from being undermined through its use by other jurisdictions, who are offering English law-based adjudicative services but do not have an interest in sustaining the integrity of English law over the long-term. 
  • Ensure legal services are a key topic in future trade discussions and that trade arrangements with developing countries in particular, are facilitated by efforts to help bolster the use of English in those countries.   
  • Strengthen existing – and building new – international institutions and networks that will enhance the reputation of, increase familiarity with and grow the levels of support for common law systems in general and English law in particular, around the world.

Overall, these sound like sensible approaches, although the point above about the UK legal system crumbling because there isn’t enough legislation governing cryptocurrencies and AI seems a bit over the top. However, the point about reducing the costs of civil disputes certainly rings a bell, and also resonates with the AL article this morning about unmet legal needs and SMEs.

Plus, it’s worth noting that the UK has one of the most liberalised legal markets on the planet, as well as being one of the few countries where the government directly funds legal tech adoption projects – so it’s not all bad. On the flipside, legal aid funding has declined and access to justice in the UK has arguably also reduced because of that.

Plenty to consider here for the UK’s legal community.