Skills transfer helps big law firms abroad

As we know, globalisation is rapidly becoming a dirty word. Yet the globalisation of legal services has been an economic boon both for English solicitors and for the UK as a whole. The forces behind its growth and possible decline are way beyond the powers of the legal profession. But we should be aware that, as with all aspects of globalisation, there are winners and losers. We happen to be on the winning side with legal services, but what about the losers?

In developing countries, lawyers complain that the big ticket work in fields such as foreign investment and infrastructure development goes to foreign lawyers who fly in with the work and then fly out again. The local lawyers are left with poorly paid crumbs, such as investigating local compliance. If a dispute arises afterwards, the resolution procedures also fly out of the country to arbitration centres in London, Paris or New York, where the parties are again represented by foreign lawyers. 

The International Bar Association (IBA) has been running a series of conferences for some years now, starting in Africa and moving to Asia and Latin America, which seek to help lawyers in developing countries to keep the law local, both in terms of the transactional work related to the big ticket work, and also the subsequent arbitration, if any. The latest took place in Cambodia last week, with lawyers not only from Cambodia but also from other countries in the region.

These conferences aim to explain how local firms can work with the large international firms to enlarge the local share of the pie – for instance, what will be expected of them when the work arises (including in the field of law firm management), what forms of alliance with the big law firms are available, how to find out what work is coming to the country, how to raise capital in international markets, and how to keep arbitration local.

One aspect of the conferences is to explain how international legal skills can be transferred to local players. It is obvious that if the big law firms open in a country and employ or take into partnership local lawyers, those local lawyers will soon find out how the big firms operate. But what about other local lawyers not directly connected to a particular firm?

Indonesia has solved this problem by making it an obligation of foreign lawyers in Indonesia to transfer knowledge and professional skills to Indonesian advocates. The market in Indonesia is not very open. There are various restrictions that must be complied with, and one of them is specifically to provide free legal services to legal education and research and government institutions for at least 10 working hours each month – that is 120 hours per year, or roughly 15 working days.

These hours can be complied with in a number of ways, for instance by teaching courses to law students (but not always the same course year after year), by writing legal articles, or by running moot competitions. The Indonesian government takes the exercise very seriously, and monitors it carefully through a bureaucratic exercise rather like the monitoring which used to take place in our jurisdiction on the completion of continuing legal education hours.

The IBA supports such skills transfer. It passed a resolution in 2008 on the subject. In its recitals, the IBA Council recognised that lawyers have certain responsibilities to the legal system and to society regardless of where they practice, which may encompass, inter alia, the transfer of skills relating to substantive legal practice and law firm management.

The resolution went on to say that, in order to be consistent with the general principles of the General Agreement on Trade in Services (GATS), any regime adopted for the purpose of implementing skills transfer would need to be transparent, not unreasonably burdensome, non-discriminatory as between foreign lawyers, and not adopted or designed for the purpose of constituting an obstacle to the establishment of foreign lawyers.

Some may consider roughly 15 working days to be rather burdensome, but I understand that the foreign lawyers buckle down to it, and there has been no challenge as to whether it is unreasonably burdensome.

We know that the reaction against globalisation will only grow, as President Trump and others take advantage of the fact that it has not delivered for all. Doubtless, the forces behind globalisation are so powerful that it cannot be stopped altogether. But if it is to continue to operate in the legal services sector – which, as mentioned, is in the interests of our profession and of the UK economy - exercises such as the IBA conferences I have described, and the ability for countries to require the transfer of legal skills, will be crucial. That way, the playing field will be levelled somewhat.