Thank you for inviting me to give this important lecture. I feel deeply honoured to be following in the footsteps of speakers as distinguished as Sir David Clementi and Lord Hoffman. I, as most people will know, was myself, for 25 years, a member of the Commercial Bar. I felt, throughout this period, to be part of a group of people who were under great competitive pressure, but delivering world-beating service to the market. It was a privilege to be part of this group and I profoundly miss it.
Introduction
The title of this evening's lecture is a broad one - and deliberately so. There are a great many issues affecting commercial law and practitioners of commercial law.
There is little doubt, I believe, about the pre-eminence of English law as the commercial law of choice. In tonight's lecture, I want to identify the challenges we face in order to ensure it's pre-eminence continues. These are partly issues for the Government, partly issues for the lawyers and partly issues before. I think there are four particular areas we need to focus on:
History
Firstly, a very brief word about how English commercial law became pre-eminent.
You do not have to scratch too far beneath the surface of London too find commerce or the law. The United Kingdom, as a seafaring and trading nation, has long been engaged in commercial activities across Europe, and across the world.
The earliest commercial cases were settled as far back as the 7th century.
Later - in the thirteenth and fourteenth centuries - merchant guilds in the City were established, and many established arbitration tribunals to settle disputes.
Another characteristic of commerce and law in London, alongside its deep roots in history, is an early and prevailing international dimension. This applies to trade with other countries, but also to the resolution of disputes. The English Statute of Staples in 1353, stated that disputes about the quality of wool should be decided by "six assessors, four alien and two English" and that the decision should be binding [Footnote 1].
Throughout the 16th and 17th centuries it was these early arbitration tribunals that were used most to resolve disputes. Arbitration remains important today, but the development of these tribunals shows how justice in this field has evolved, as far as possible, with and alongside business.
The business community values legal certainty: they wish to know the courts will reliably and consistently interpret commercial, property and other transactions. Yet, in the early parts of the 18th century litigants faced a legal environment in which certainty was often absent. The common law was the recognised law of the land, but at that time, was slow to innovate and commercial practice was based on the inconsistent application of local custom and the idiosyncrasies of individual professions.
It was a combination of this uncertainty, the ever-growing trade being generated by London and technological developments that hastened progress in the development of the common law insofar as it applied to mercantile transactions. In 1774 Lord Mansfield, then Lord Chief Justice, recognised the problem. He said:
"In all mercantile transactions the great object should be certainty; and therefore, it is of more consequence that a rule should be certain, than whether the rule is established one way or the other. Because speculators in trade then know what ground to go upon"
This period marked the beginning of commercial law as a developed, recognisable, unified body of law. As ever, sensitive to the needs of the business community.
Commercial disputes became more varied, more complex and, increasingly, more international in nature. There were times, it must be said, when the law struggled to keep up. Not least, the famous case of 'Rose v Bank of Australasia' where, in Mackinnon L.J's words:
"[The Judge] listened with a semblance of interest…reserved judgement and forgot all about the case. After a long delay he was somehow reminded that he ought to give judgement. This he did - in favour of the plaintiff."
The defendants went to the Court of Appeal who reversed the judgement. The House of Lords reversed it back.
Soon after, in 1894, the Queen's Bench Division said that there should be "a list to try commercial causes at the Royal Courts of Justice to be tried by a judge alone or by jurors summoned from the City". The commercial list was introduced the following year. The establishment of the Court was a significant milestone in the evolution of commercial practice and a critical moment in establishing and protecting our pre-eminence.
The present day
So, a special court - uniquely expert in the law, profoundly sensitive to commercial problems. The English common law system, which has evolved over centuries, has given us the legal framework to underpin commercial trading activities. This framework has evolved to meet the changing needs of finance and commerce, primarily through the interaction of the courts, lawyers and business.
In the 21st Century, the English law of contract has become the international law of choice over a wide range of areas, particularly in finance, shipping, and insurance.
English law is respected by the commercial community - our common law of contract is now a world-wide commodity. It has become so because it is a system that people like. In ever more complex, sophisticated and inter-related markets, English commercial law provides predictability of outcome, legal certainty, and fairness. It is clear and built upon well-founded principles, such as the ability to require exact performance and the absence of any general duty of good faith.
The capital has long been recognised as a primary centre for international and commercial litigation and arbitration, as there is overwhelming recognition that a decision from an English court will be a mark of both judicial excellence and integrity.
These legal principles were formed in the crucible of experience - the law has not developed apart from the needs of business - commercial needs and innovations have helped to shape and mould the law.
London is now host to over 200 foreign law firms and is home to lawyers from at least 50 countries. Around 65% of disputes heard before the Commercial Court involve only foreign parties, who have expressly chosen to confer jurisdiction on the English High Court.
The unique, pragmatic development of commercial law means we are in a position of strength. We are also fast becoming an international centre for alternative resolution of commercial disputes.
Our capital, in many ways, is built on the foundations of a sound law of contract.
But there is another element that puts us in such a strong position: the excellence and calibre of our lawyers. Our lawyers, undoubtedly, are some of the best in the world. This - along with the law itself - has made the common law without rival as the law of choice in commercial transactions.
The Commercial Bar has always prided itself on being at the forefront of advances in delivering legal services. Its members are respected internationally for the quality of their work. It is a well-established principle of this profession that every client should expect, and usually receives, the highest quality of service.
Let me broaden our horizons slightly and look at the contribution to the UK economy of the legal service market as a whole:
With students lining up to join the ranks, the legal profession shows every sign of continuing to grow. It has all the hallmarks of a thriving profession, making a substantial contribution to the domestic economy, and helping to facilitate global trade.
The commercial sector has been at the forefront of much of this growth and all the signs are that this will continue to be the case. The pace of change is quite simply phenomenal.
I would like to now turn our thoughts to the future and look at what challenges and, of course, opportunities are on the near and distant horizon.
The challenge from India and China
The next generation of lawyers will practice in a markedly different global environment. The rapid development of India, China and other emerging markets will impact significantly - on the sector in particular and on our overall economic development more generally.
It does not take a huge leap of imagination to see India being the primary focus of electronic services and the Chinese being global leaders in manufacturing.
The growth of India and China emphasises hugely the importance of those parts of the economy where we add value and have a competitive edge across the world. Commercial law is just such a part of the world. And not just in relation to law - but also in the knock-on effects it has in making, for example, finance, insurance, commodity trading more attractive to be done on a UK market than elsewhere.
Preserving our position
We should not see the growth of India and China as threats. Because of the strengths I have outlined we are in a position to benefit from these changes. To do so, we need to be a nation - and a profession - that adds value to this process.
Nothing is more challenging than remaining a market leader in a rapidly evolving market. As Lampudesa said "If we want things to stay as they are, things will have to change."
I want the sector to continue to grow, both at home and abroad. That means ensuring that the sector remains fit for purpose, keeping up with - or even ahead of - its clients and being at the forefront of delivering new services.
European Union
To return to the four principles I identified. First, preserving the uniqueness of our law in relation to commercial transactions. We need to encourage cross-border judicial co-operation but not confuse that with law harmonisation. The need for cross-border co-operation means that civil justice has been a critical part of the UK's current Presidency of the European Union. This is a break from the past. Too often, civil justice has been the forgotten relation.
Certainly, in the UK, the balance in terms of debate, public and perhaps political drive, has long-favoured criminal justice. It's the same in the European Union.
In my view, that's been a mistake. Civil law is of vital importance to the citizens and businesses of each and every state in Europe.
Consumers and businesses are more mobile than ever. People travel more than ever before. They purchase goods from around the world and buy from businesses in different continents. The internet is transforming the way we trade and exchange information. The inter-relations between nation states, companies and consumers is growing more and more complex.
The increase in size of the European Union, with the accession of the new member states last year - and with negotiations with applicant countries ongoing makes it all the more important that the systems in place to resolve cross-border disputes are efficient and effective.
Civil law shapes the kind of Europe we all want to see, enabling EU citizens to live, work, study, buy and sell, and do business across EU borders. In order to do this, people - and businesses - need to be confident that the civil justice system is there to help them if things go wrong.
Co-operation between Member States on these issues has a very real, tangible, positive impact on the day-to-day lives of Europe's citizens. The referendums in France and the Netherlands told us many things and, if nothing else, they told us that the EU is there to serve its citizens and not to serve a professional, bureaucratic elite.
Recently, the Commission and Member States have resolved the Article 65 issue which had held back progress in civil law in the EU for so long. We are now agreed that EU co-operation in civil justice is for cross-border cases only, though Member States may, of course, adopt similar measures in their own states, if they so wish. Agreement on the European Order for Payment - enabling the speedy resolution of uncontested debts across the EU - is now within reach.
There is of course more still to do. For example, on Rome II - which aims to provide a set of rules for the resolution of non-contractual disputes - we may need to think constructively and imaginatively about how we can work towards consensus.
Key principles: mutual recognition and judicial co-operation
We have made progress in these areas because we have started from an important principle. It is a principle that I believe unites many member states and unites the professions, business and consumers in many of our countries.
It is simply this: harmonisation across the EU of contract law, or any other sphere of law, will not work. A single law imposed across the whole of the EU, whether by regulation or directive, is not an efficient and effective way to resolve problems in civil law and justice.
There are at least five great legal traditions across Europe: the German, the Dutch, the Scandinavian, the common law and that of the Romance countries. There are, of course, many more jurisdictions. Indeed, in the United Kingdom we have three - of which one, Scotland, is primarily civil. All have their own law and each has developed uniquely in ways that suit their circumstances.
There are, of course, sectors - or parts of sectors - in the consumer field for example, where harmonisation of a part of the legal framework is a proportionate solution. In these cases, there is clear evidence that the proposal meets a specific and justified need.
But the challenge of retaining numerous different laws of contract is to find efficient and effective mechanisms to deal with cross-border cases. We are in the business of building mutual recognition and judicial co-operation across member states. Indeed, this was recognised as the cornerstone of judicial co-operation at Tampere in 1999. It was restated last year in the Hague programme, which sets out our agreed priorities in Justice and Home Affairs over the next 5 years.
This is the territory where I believe we can bring Member States together and make progress that will benefit our citizens. There is, of course, a reason why this approach works. It is quite a simple one, but is no less powerful for that. We all know our own legal systems. We all hold them in the highest regard. They are deeply embedded in our respective societies.
It is important for the UK, and important for the EU that it remains so. It would be a huge error for the UK and the EU to lose this distinctiveness in the name of harmonisation. An error not just for the UK, but for the EU as a whole.
Make no mistake, any weakening of the suitability and attractiveness of the common and commercial law of England as the most popular law for the conduct of commercial business throughout the world would be disastrous and would be seized upon by rival jurisdictions such as New York and Geneva. The EU would be the poorer as a result.
Member states must work to raise the standards of their own legal systems - we need to do this here in the UK. We all need to have confidence that cross-border cases will be dealt with efficiently and effectively. We all have an obligation to make our own systems - including our own laws of contract - as simple and modern as we can. Anything less would be an unnecessary burden on our citizens and businesses, diluting European competitiveness.
That, then, is the direction of travel for engagement with the European Union - preserving our own law, but encouraging cross-border co-operation.
Domestic issues
The second principle is preserving the quality of commercial judges.
A critical factor in the success of England as a centre for dispute resolution, has been the quality of the Commercial Court. The quality of people over the last 50 years has been quite outstanding: Scrutton, through Devlin, Bingham and Phillips. Any random selection will demonstrate quality. There must be no doubt that that this quality will continue - that will certainly be the case while I am Lord Chancellor. And there is no doubt that it is vital that the Judicial Appointments Commission should have a profound understanding of the need to continue with this quality. Without it, a significant competitive advantage would be lost.
For this quality to continue it depends not just on the state appointing quality, but also people of quality continuing to apply for commercial judicial posts. Despite the differential in reward between being in full-time practice and serving on the Bench, quality of applicant continues to be extremely high.
Quality also needs to be maintained in the Court of Appeal and in the House of Lords. These courts need to be as pre-eminent as appellate courts doing commercial work as the commercial court is at first instance. There is not doubt of the commitment of the state to ensure this occurs.
Improving commercial court facilities
The third factor, in preserving our pre-eminence is the physical facilities for court dispute resolution - not least the Commercial Court itself and the I.T facilities within it.
My Department is currently working with Her Majesty's Courts Service to finalise future investment plans for it's estate. These plans will establish what new court building projects and major refurbishment's will be taken forward by the agency and how these will be funded.
Improving the Commercial Court facilities has been identified as a priority within the HMCS Estates Strategy; which forms part of the basis for agreeing its Investment Plan.
Based on this we are developing a full business case for providing improved Commercial Court facilities, and an advisor team has been appointed to assist in the process. The business case will include a full financial appraisal of a range of options, including provision of a new Commercial Court within the Royal Courts of Justice site and also, a "market driven" solution for a new 20 -30 courtroom facility on a site outwith but close to the Royal Courts of Justice.
An initial draft of the business case, to include business justifications, costs, funding and competition aspects from overseas jurisdictions, should be completed by the end of November and will form the basis of discussion with Treasury. A decision will then be made on how the project is taken forward.
Commercial Court I.T Project
The Commercial Court IT Project is aimed at meeting the needs of the specialist users of the Commercial Court, who expect a more proactive service and management of cases, in line with that offered by Commercial Courts in other countries.
In order to retain its position in the international arena and meet the needs of its users, the Commercial Court is modernising its processes. The current application used by the Commercial Court is extremely limited and is approaching the end of its life. To this end, the project will replace the courts ageing IT and mainly paper-based processes, and help to move towards an electronic form of working.
It is also intended that the CCIT Project will not only meet the technology needs of the Commercial Court, but will provide an opportunity to test the concept of an integrated case management, e-file and diary system so that other jurisdictions may benefit in the future.
This project has strong judicial support. Lord Justice Thomas, Senior Presiding Judge for England and Wales, and Mr Justice Cresswell, have been involved from the start of the project. Lord Justice Thomas has also arranged for input from several large commercial law practices, who have knowledge of case management technology.
The Commercial Court IT Project will deliver an integrated case management system for the Commercial Court, linked to an electronic diary. This will enable the Commercial Court to store documents electronically, and provide a proactive case management system for Commercial Court cases. The project will also test some of the concept of an electronic case management system using an adapted 'off the shelf' application, enabling benefits and lessons learned to be captured. This in turn will inform any future projects that seek to deliver similar systems in the civil courts.
There have been some difficulties with the development of the software. However, we are working to resolve these issues and ensure that the system that is delivered has been fully tested and meets the requirements. Roll out of the system is likely to take place in the New Year once the application has been thoroughly tested and accepted by my Department.
In looking forward, we are considering whether there may need to be further IT based reform to ensure the continued high reputation and success of the Commercial Court.
Specifically, we are looking at a second phase, for which there is strong judicial support. This would provide the opportunity for online interaction between the Commercial Court and its customers.
Currently, Commercial Court customers are required to attend the court in person to file hard copy papers and pay fees.
Online interaction would allow online filing by solicitors and other customers which is already available in other jurisdictions around the world including Singapore and Australia.
It would also provide the ability to generate orders electronically and receive payments electronically. It is too early to assess the timetable for phase 2 as the lessons learned from phase 1 will need to be considered and we would need to plan a way forward as part of DCA's overall investment priorities. A report on these issues will be published shortly.
The final factor to ensure pre-eminence is ensuring our lawyers can continue to innovate and succeed.
Government has a role in enabling you to continue to compete and to offer services in new ways to better suit customer needs. Government also, where necessary, has a responsibility to regulate to avoid the unintended or harmful effects of free trade and to work with the profession to ensure high standards are retained.
We must do all this while protecting and preserving the profession's independence.
Legal Services Reform White Paper
Yesterday, we published our White Paper on legal services reform - "Putting the Consumer First". It proposes a lot of changes to the way we regulate legal services - some that will affect you directly, some more subtly.
The Office of Fair Trading has found that the restrictive rules of the legal profession mean clients in some areas get poorer value for money than they would under more competitive conditions. In other words, they get less than they want from their providers and they pay more for the privilege.
This is as much true for the lone parent needing advice and representation as it is for the global corporation. Whoever your consumers are, they won't benefit from restrictions which prevent them getting the services they need.
Critically, we will need to end the current regulatory maze. This is not a burning issue for the Commercial Bar - but it does affect confidence in the legal profession as a whole. It's a point that's been made many times before, but it's worth restating - people find it hard to have faith in bodies who act as both the team manager and the referee. And if they're not happy with the job the Bar Council's doing, then where do they turn - not in commercial world but in the wider world relating to the law.
It needs to be clear where ultimate responsibility lies for protecting consumers and ensuring a healthy, dynamic legal profession.
We will create a regulator, the Legal Services Board - a strong and independent body, which will oversee the whole of the legal services sector. Not to replace front line regulators like the Bar Council or the Law Society, but to work with them in setting standards across the sector. The Board will have powers to set high standards for front line regulators, and powers to take tough action if those standards are breached.
The objectives will underpin the new regulatory framework and apply to all partners in the legal services sector - whether that's an august institution like the Bar Council or a local Law Centre on a suburban High Street.
These changes, I believe will increase consumer confidence, making sure that the legal profession is not only transparent, but is seen to be transparent.
We will be taking forward our earlier proposals for enabling legal services to be provided through new business models. As traditional divisions between the work of barristers and solicitors become less rigid, so too should the structures in which lawyers are able to practise.
As the business needs of consumers and providers of legal services grow ever more complex and diverse, they should not be unduly constrained by professional restrictions. And as the range and complexity of legal services offered to consumers continues to expand, so too must the scope and strength of consumer protection.
It is for these reasons that we are opening up channels to greater flexibility in practising structures. Alternative business structures will provide a platform for different types of lawyers and non-lawyers to work together on an equal footing. This could be in a partnership, a limited liability partnership or a company - or any other structure deemed to be appropriate by front line regulators.
These firms will have access to external investment, allowing them to exploit new technologies and develop the scale and scope of their business. Whatever the uptake of the new opportunities, however far-reaching the effects, we recognise that new changes must not expose consumers to new risks. Nor should changes designed to assist the profession be able to compromise its long established values of independence and maintenance of the rule of law.
This is why we have put in place safeguards. To ensure that those who take advantage of new business structures - that is alternative business structure firms - will be as carefully regulated as those in traditional structures, if not more so. All members of alternative business structure firms, and all the services they provide, will be accountable to a front line regulator.
The regulator will have a range of sanctions available against the alternative business structure firm as a whole. This means a greater range of regulated services - widening the scope of consumer protection overall.
This will not mean pressure to change working practices where they are already flourishing. It will create no expectations to join an alternative business structure firm.
What it will do is to open the door to an inclusive, competitive environment, which will see the most efficient structures triumph. For many of you, the most efficient structure will be, as it always has been, to operate as independent sole practitioners. Many of the qualities of this system have secured the Bar of England and Wales its unrivalled international reputation for independence and professionalism.
Yet with this high regard comes the need to respond to the pace of a changing market. Whether professional excellence, competition and access to justice will be best served by new structures, or structures as they exist now, will be for you, and your clients, to judge.
These reforms create opportunities in many areas of the legal services market. The real gains here could be for those looking for a competitive edge in the provision of high-volume, consumer-facing transactions - and of course for their consumers.
But innovation in this area may lead to better management practices, the benefits of which will be felt in a more efficient referral networks and joined up working between alternative business structure firms and barristers.
As commercial barristers, you will know only too well how important it is that innovation and freedom of movement can flourish in the legal profession. These proposals can only enhance that.
Furthermore, some of you here this evening may practise not as independent barristers, but as employed barristers in corporations, or in solicitors' firms. You may or may not wish to become partners - but what the reforms do is to offer you, and your firm, more flexibility, including the option of partnership.
Our proposals for alternative business structures are there to facilitate, not prescribe. As a profession, we must embrace change; as individuals, you can choose the form of practice that best suits you and your clients.
One further point on structures. There is no doubt that the title 'QC' assists in selling English legal services abroad. It is an undisputed mark of quality, respected throughout the world as identifying a first-class advocate, where it has been given in the United Kingdom.
The submissions of COMBAR and others regarding the preservation of the title, were critical in persuading me to keep it - albeit in a way that removes a Government minister from making the decision. I am profoundly grateful to Robin Knowles and William Blair for the work they have done in constructing the new system - which I will believe will be in position to receive new appointments early in the New Year.
Can I end by looking at how together we can promote English legal services abroad?
International
Beyond Europe, we need both to capitalise on the possibilities different markets offer and show the rest of the world what this country has to offer.
Imports
Obviously, we want to maintain our enviable position as the number one international destination for dispute resolution. But we cannot afford to be complacent about London being the preferred jurisdiction to settle disputes. In addition to competition from the USA, Australia and Canada, arbitration is now developing rapidly in jurisdictions such as Hong Kong, India and Singapore.
I believe that the reforms we are making in legal services will make the UK an even more attractive place to carry out legal business.
My department is also committed to promoting the UK as a centre of excellence for legal services and UK legal practitioners globally. We work very closely with UK Trade and Investment who offer a fantastic range of services to UK legal firms. From firms who are seeking access to new markets, to those who require support in existing markets.
In addition, in partnership with the Bar Council and the Law Society, we are taking some discreet, targeted measures to ensure that the sector's international capabilities are widely recognised and understood.
For example, working together we have developed a training course for British diplomats about what the UK's legal services sector has to offer, and, more importantly, what they can do to promote it. In order to do this we call on specialists from all parts of the legal sector, including Chambers, law firms and Her Majesty's Courts Service, to brief our commercial officers.
Increasingly COMBAR members, whose expertise is highly regarded in other jurisdictions, are consulted from overseas. It helps that since 1971 it has been possible for them to accept instructions direct from overseas lawyers, and even sometimes from lay clients, without the need of a solicitor.
Exports
Barristers are also travelling overseas themselves. Human rights work is, of course, a growing field. UK barristers have rights of audience before a whole range of international courts. They can also appear in courts in other jurisdictions, such as Australia, Singapore, Hong Kong and the Caribbean - although they usually need to go through certain hoops to do so. International arbitration is another growth area, particularly in the Pacific Rim.
Barristers are becoming increasingly effective and proactive about seeking to exploit new overseas markets. Marketing expeditions have been carried out by leading sets to destinations such as Hong Kong, the US, the Caribbean and Malaysia. Some have even launched representative chambers overseas or developed associations with foreign law firms.
The value of the exports of COMBAR members has risen rapidly. In 1994, your exports totalled £35m, by 2000 they had risen to over £60 million and in 2003 they amounted to £95 million.
Overall, legal service exports amounted to a staggering £1.96 billion in 2003 - that's three times what they were in 1995. The growth of the major UK law firms into new markets overseas seems to be unstoppable. The number of solicitors based abroad increased by more than nine times between 1990 and 2004 - that is, from 355 to nearly 3,400. Currently solicitors are based in 71 countries around the world, the biggest clusters being in Singapore, Hong Kong and Japan, as well as European countries, notably France, Belgium and Germany.
To see why and how this international expansion has come about, it may be helpful to look briefly at the history of one company - others have followed a similar pattern.
In 1960 Allan and Overy was already among the top five law firms in the City, with 15 partners and a staff of 150. The first overseas offices were set up in Dubai and Brussels in 1978. The opening of the Brussels office was not unconnected with UK's entry into the EEC IN 1973. A New York office followed in 1985. Then, in 1986 came the 'Big Bang' in the City. Deregulation and the growth in foreign securities institutions led to massive growth - the company doubled in size in the second part of the 1980s.
The company looked East, setting up offices in Beijing, Hong Kong and Tokyo in 1987-8. Following the fall of the Berlin Wall, there was movement into Eastern Europe in the early 1990s, with offices opening in Warsaw, Prague, Moscow and Budapest. So that company of 1960, with 150 staff and 15 partners, now employs 4,800 staff and 430 partners, based in 25 centres around the world.
The story of Clifford Chance is similar: movement into Europe in the 1970s and '80s; then world wide expansion, particularly into Asia, the Middle East and South America. Now over 60% of their lawyers are based outside the UK. I could of course cite other examples. In 2004 the largest, third, fourth and sixth largest law firms in the world were all UK companies and all of them had more than half of their lawyers based overseas.
So why are law firms expanding on such a huge scale into other countries? I think there are two reasons. First, because they can - the international market place is growing and there are increasing opportunities in overseas markets. Second, because they must - there is a new breed of clients that demand a truly international service. When business and finance went international - lawyers had to do the same.
But expansion overseas is not always such a smooth process as I may have made it sound. In the UK we have long been aware that the more cosmopolitan a society we are in professional terms, the more attractive we become as an international centre. We have one of the least restrictive systems for the practice of law in the world.
Yet, there are many countries in the developed and emerging world, that continue to restrict access to their legal services markets in a variety of ways and for a variety of reasons. For example, some markets, such as India's, are totally closed to foreign lawyers.
The Indian Bar Association are so opposed to opening up their market to foreign competition, that in the past they have taken to the streets to demonstrate against it. One demonstration actually ended in a riot.
Other countries, such as Canada, impose a plethora of bureaucratic restrictions that make it difficult for international lawyers to work there.
In this area, in particular, there are certain things that we as Government can do to help the sector that the profession can not do by itself.
As I am sure you are aware, the UK Government, through the European Commission, takes part in the General Agreement on Trade in Services - GATS - negotiations, within the WTO. The UK objective in these negotiations is to persuade as many countries as possible to make liberalising commitments.
We are reaching a crucial stage in the negotiations. Ministers will next be meeting in December in Hong Kong and it is likely that they will set a date for countries to make their final offers. The current round must come to an end in 2006.
Although there have been some encouraging offers, many countries have refused to make any commitment to liberalise at all. Therefore in the coming months we are going to do all we can to promote the benefits of liberalisation to those countries.
We are pursuing a policy of constructive and determined engagement with them, to raise their understanding of the importance of legal services to trade and economic development. It is our contention that legal and economic systems that fail to embrace liberalisation, and restrict entry and practice by foreign lawyers, risk isolating and marginalising their own lawyers, and impeding growth as commercial business flows to truly international firms based in truly international centres. In our view, this represents a loss not only to their professions, but to their economies.
We are also working very hard to dispel many of the misconceptions that surround the concept of liberalisation. Many countries fear that liberalisation will flood their markets with foreign and unregulated lawyers. When in reality, international lawyers are on the whole only interested in commercial work, which represents a tiny proportion of the whole market. We are also spreading the message that there is no intention in GATS to prevent countries from regulating their legal services sector.
To give you some idea of just how seriously we take these negotiations, I can tell you that Ministers from my department have visited: Japan; China; Indonesia; the Philippines; South Korea; Malaysia; India and Brazil in order to engage their Governments in discussions about liberalisation. In addition, my officials have been working across Government to provide briefing for the visits of other Ministers and the Lord Mayor of London to our key markets.
These are important developments if the market in the UK is going to continue to flourish.
Conclusion
I have spoken this evening about the strong position of legal services in the United Kingdom. Our commercial law system has developed in a unique and pragmatic way: it is respected throughout the commercial world. The contribution of commercial law and the legal services sector to the economy is immense. The calibre of our lawyers is second to none.
The challenge - in an ever-more competitive market place - is to retain our position. The changes we are making to the regulation of legal services in this country will help to strengthen the sector; they will enable greater flexibility and encourage competition.
Better competition - allowing you to provide services in a way that best suits the needs of you and your clients. And better regulation - maintaining the standards and the standing of the profession as a whole.
I have also talked about our engagement with the European Union and the direction of travel. Better understanding of our legal systems is healthy and productive: blanket harmonisation is not.
And, finally I have looked at the importance of the international dimension - encouraging business to come to London and exporting expertise to new, developing markets.
This is where we need to focus to secure the future for commercial law and legal services.
Thank you very much.
Footnotes: