Economic Aspects of Law: A Partnership between the Foundation and HEC Paris

This article is for the newsletter: Newsletter January 2011


By Pascal Durand-Barthez, attorney

Even if one of the characteristics of civil law is the consideration it gives to moral and social values, one of the ‘raisons d’être’ for the Foundation is an economic finding: the importance of law as an economic instrument is not recognized in France and probably not in most of the other civil law countries.

The Foundation is thus involved in gathering information on “the legal industry’s” estimated economic weight in France. As might be expected, a review of the immediately-available literature revealed that although there is relatively reliable information on the main legal professions’ revenues, it remains fragmented and requires both a broadening (particularly in order to measure the impact of corporate and banking lawyers’ activities versus those of public legal aid services) and a serious in-depth study in order to make useful comparisons with other industrialized countries.

On the other hand, it is not clear that business fully appreciates the economic consequences of the law that is chosen by the parties to international contractual relationships. It is therefore important to better understand their motivations when negotiating applicable law clauses, which involves a qualitative rather than quantitative study.

For this, the Foundation has launched a unique initiative in partnership with the Law and Taxation of HEC Paris, the first business school in Europe[1]. Professor Lenglart agreed to devote a part of the Masters in International Law and Management curriculum to a project which, if completed satisfactorily, will meet the aforementioned objectives. This Masters program hosts forty students who have a 3rd cycle diploma, most of whom have earned a Masters of Law 2 and some of whom have some initial work experience. The project is part of HEC Paris’s approach, which is to provide an economical and practical addition to traditional legal education, in order to facilitate the students’ employment at major international firms and businesses. It is tentatively entitled “The Economic Aspects of Legal Services in Business Law.”

The students from the 2010-2011 promotion were divided into eight working groups to conduct research on subjects distributed as follows:

1. “The legal industry’s” share of French GDP

2. “The legal industry” share of GDP of industrialized countries

3. Comparative cost and effectiveness of legal services for an international sales or business contract under civil law and under common law

4. Comparative cost and effectiveness of legal services for an international merger and acquisition contract under civil law and under common law

5. Comparative cost and effectiveness of legal services for a syndicated loan agreement (multilateral AML type facility), under civil law and under common law

6. Comparative cost and effectiveness of legal services for an international project funding contract under civil law and under common law

7. Comparative cost and effectiveness of legal services for an international derivatives contract under civil law and under common law

8. Paris as an international arbitration venue.

Three institutions actively participate in the project:

– The French Association of Corporate Lawyers (AFJE)

– An informal group of general counsel from major banking and industrial groups

– The “Paris, Place of Arbitration” Association.

In addition, business or banking lawyers and professionals have been appointed to assist the working groups. With the assistance of these lawyers, questionnaires were prepared to serve as interview guides for students who will contact a maximum number of corporate lawyers and lawyers specializing in international business.

Each working group will prepare a report on the subject assigned to it. These reports will be evaluated by a jury chaired by Mr. Lenglart, which will include the Foundation’s representatives, as well as corporate lawyers or in house or private-pratice lawyers involved in the project. Following this assessment, the project steering committee will decide if the quality of the works justifies their publication, after the necessary modifications are made to ensure textual consistency. This publication will provide an opportunity to organize a speaking event involving the Foundation, HEC and AFJE.

Of course, this initial study will not provide definitive or complete answers to the questions it raises. Its only ambition is to clear a space in a still surprisingly pristine wilderness, and to encourage all the stakeholders, public authorities, researchers and legal professionals to explore these important issues and to act to preserve and develop this economic tool that civil law also represents.

[1] General ranking in the Financial Times, December 6, 2010.