Upholding the rule of law can boost economic and societal progress, study finds

New IBA Impact Report assesses the legal profession’s socioeconomic influence


Countries that uphold the rule of law benefit more from the contributions of the legal profession than those that restrict legal rights, according to a report from the International Bar Association (IBA).

With the release of the first global study to comprehensively quantify the business of law’s socio-economic influence, the IBA’s Impact Report highlights the significant positive impact of the legal profession.

The IBA report highlighted that legal services globally employ approximately 20 million professionals and created an additional 14 million jobs related to legal work. The legal profession represents 0.25% of the world’s population and generates approximately 1.7% of the world’s GDP, or $1.6tr.

Correlations between legal activity and indicators of progress under the UN’s Sustainable Development Goals were carried out.

The report found that countries with better access to justice experienced 25% fewer instances of governmental overreach, with lawyers playing a crucial role in holding governments to account.

Not only does improved access to justice lead to economic benefits, but it also fosters societal progress. It attracts more investment, enhances healthcare and promotes gender equity, all of which are crucial for a thriving society.

The report made the case for increased support for the legal profession. It suggests that raising legal aid to the same standard as the top quartile of nations could reduce inequality by 5%. Similarly, supporting the rule of law to the same level as the top quartile of nations could lead to increased life expectancy, reduced informal employment and increased innovation, potentially generating an additional $83bn in research and development investment.

Diversity and ESG benefits of a strong rules-based economy include a 30% increase in girls completing secondary education; 53% less pollution; 34 million fewer youths who did not engage in education, employment or training; and the greater protection of minorities including LGBTQI+ communities.

Public recognition of the benefits lawyers bring was low: 54% of the general public believed that lawyers have a positive economic and social impact, compared with a 78% positive perception among legal professionals themselves.

The $1.6tr contribution to global annual GDP comprised $787bn in legal service revenues, $191bn in tax contributions and $637bn in ‘ecosystem effects’. Corporate law and litigation are the largest contributors, at $222bn and $193bn, respectively. North American and European law firms dominated the sector, accounting for 80% of the global law firm market.

IBA president Almudena Arpón de Mendívil said: “This landmark study demonstrates, for the first time, in a comprehensive manner, the true contribution of the legal profession through sustaining the rule of law.”

That same rule of law is threatened in many parts of the world, she said, “including through subtle attrition in many countries with democratic governments”.

Calling for lawyers to take greater action to educate the public about the rule of law, its importance and significant benefits, she said: “We must now match that economic impact with increased ambition to enhance access to legal representation, engage in advocacy, strengthen access to education and legal literacy, and promote the highest standards of professional conduct.”

The survey also identified areas of improvement for the IBA to preserve and strengthen such ambitions, alongside ongoing IBA initiatives to promote equality, diversity and well-being, including policymaking, educational and social initiatives, and maintaining a leadership role in the ethical stewardship of the wider legal profession.

“This study underlines the need for law societies, bar associations, law firms, law departments and other professional stakeholders to work collectively,” said Arpón de Mendívil.

Sam Townend KC, chair of the Bar Council of England and Wales, said the report “could not have come at a better time to highlight the important role of the legal profession and the rule of law, with only 30 days left before the UK general election”.

He added: “In the UK, justice has often been the forgotten public service and receives just 1% of total government spending. In real terms per person, spending on justice has fallen by 22% since 2009/10.

“The IBA report suggests that strong support for the rule of law encourages higher levers of inward investment and supports businesses. Yet, there has been a global erosion of the rule of law in recent years.

“The Bar Council is concerned that the UK’s longstanding reputation for upholding and respecting the rule of law has recently come under threat.”

He called for politicians to protect and promote the rule of law, both at home and abroad.

The methodology of the report, which was compiled with the help of management consultants McKinsey, was drawn from four major sources of insight: research, two quantitative surveys of lawyers and the public with more than 8,000 collective responses, a big data analysis, and qualitative interviews with more than 50 legal experts and practitioners.

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