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Legal profession’s massive economic impact

A report from the International Bar Association (IBA) has calculated that the legal profession directly contributes $1.6 trillion (€1.47 trillion) to the global economy, or 1.7% of gross domestic product (GDP).

The figure, in an IBA report on the social and economic impact of the legal profession, includes the work of more than 20 million lawyers, para-legals, and support staff along with another 14 million workers supporting the profession.

It was calculated using data analysis, reviews of existing studies, two global surveys of the profession and the public, and interviews with more than 50 legal experts.

The total contribution comprises $787 billion in legal-service revenues, $191 billion in tax, and $637 billion of ‘eco-system effects’ in supply-side services such as administration and broader economic systems.

Of the world’s legal services, corporate law contributed $222 billion and litigation $193 billion – the two largest elements of the profession.

Access to justice

The analysis also looked at the effect that adherence to the rule of law had on countries’ social and economic performances.

It found that countries with the best access to justice had 25% fewer cases of governmental overreach.

It also estimated that, if all countries had the same standard of legal aid as countries in the top quartile, inequality could be reduced by 5%.

Education

The research also showed a link between increased participation in formal education and higher levels of access to civil justice within a country.

As a result, it concluded that 30% more girls would be graduating from secondary education worldwide, if adherence to the rule of law was at the level of the best-performing countries.

It also estimated that improving the rule of law to the highest levels “could extend life expectancy in the world by 13 years” (from 62 to 75 years).

The report also found that countries that uphold a strong rule of law “tend to experience decreased air pollution and more rapid adoption of renewable energy initiatives”.

‘Threats to rule of law’

The IBA President Almudena Arpón de Mendívil said that the study demonstrated, for the first time, the true contribution of the legal profession through its sustaining of the rule of law.

“It shows how effective legal systems, supported by robust and independent legal professionals, can limit the overreach of governments, whilst also supporting economic growth, promoting innovation and education, and combating inequality,” she added.

The IBA president warned, however, that the rule of law was under threat in many parts of the world – including through what she called “subtle attrition” in many countries with democratic governments.

She concluded by urging the legal profession to take more action to educate the public about the rule of law, and to increase awareness of its importance and benefits.