Osler, Hoskin & Harcourt LLP Distinguished Lecturer discusses how to identify and measure a good legal system

Photo by Bernard Clark

Professor Kevin Davis of the New York University School of Law takes a question from the audience during his lecture on"How to Know a Good Legal System" in Macdonald Hall.

Osler, Hoskin & Harcourt LLP Distinguished Lecturer discusses how to identify and measure a good legal system

On November 19, Queen's Law hosted Professor Kevin Davis of the New York University School of Law as the third Distinguished Lecturer in the 2010-11 Osler, Hoskin & Harcourt LLP series. Recognized for his work with contract law, business law and economic development, he has been a visiting fellow and lecturer at universities internationally. The unassuming title of the presentation, "How to Know a Good Legal System," belied the intriguingly complex considerations of international governance for developing countries that Davis explored with the audience.

"Like most people, I like the feeling that I'm part of a solution to a problem," Davis began, speaking of the motivation -- simple, yet altruistic -- behind his research on law and development: to contribute to making the world a better place.

Many lawyers already do much good, he observed, by working with individual clients to solve their problems and improve their situation. However, there's another way to go about helping people: Change the rules of the game – the entire system – and promote legal reform in society overall.

The obstacle when trying to effect legal reform on a macro level is the measurement of its effectiveness, he continued. Using the analogy of professionals who ask for feedback from individual clients, Davis suggested that in a global system, the appropriateness of a legal system should be gauged by looking at its effect on a particular society/country and how it has improved or promoted development. In other words, to paraphrase the title of his lecture, What sorts of legal rules are conducive to development? How do we know a good legal system when we see it?

He guided the audience through examples of empirical studies that considered causal connections between a law system and a predetermined data set, such as average expropriation risk, in order to draw conclusions on the effectiveness of the law. Yet he cautioned against acting upon inferences of those studies, arguing that at this time better data collection is necessary before such results can be relied upon.

He flagged the inaccuracies of two sets of legal indicators which are often cited: the Worldwide Governance Indicators and the 'Ease of Doing Business' (EDBI) Rankings.

"You're law students," he quipped. "You know law is hard!" Most studies miss two fundamental considerations: the complexity of law and the uncertainty of law, he continued. The legal system is comprised of rules, people and the context in which it operates. There isn't always a clear answer to what the law demands in a certain situation, and there are often indeterminate results when different judges, lawyers, and police officers of varying levels of expertise act, often using imperfect information. Consequently, he argued, the existing measures fail to take into account the complexities of the different factors, interactions, and outcomes that result.

The Worldwide Governance Indicators are produced by the World Bank and calculated on a weighted aggregate of 'expert' opinions and household opinions on various indicators. Turning then to the 'Rule of Law' (ROL) indicator, he cited Jamaica as an example of how the weighted composite index of different sources offered no insight at all into the legal system because of its vagueness. And why? Because the ROL model fails to reflect complexities in legal systems, it doesn't explain what it's measuring at the end, and it doesn't indicate what the information was based on – not the rules, the personnel, nor the context.

The Ease of Doing Business Indicator (EDBI), created by the lending sector of the World Bank, is a ranking of the quality of legal systems. It has been tremendously influential in the business community. Every year, EDBI surveys lawyers around the world regarding hypothetical business scenarios and then ranks the responses by amalgamating the data for time, costs, and number of steps in a specific situation. Although he commended the level of specificity that the EDBI considers, Davis pointed out that this ranking is based on a set of completely arbitrary factors. It hinges upon the presumption that legal situations can be compared on one hypothetical set of specific criteria across different countries, but often, he argued, those rankings take no account of a country's unique cultural dimensions.

Then the speaker took a new tack. "Let's try to be constructive here. Can we do better than this? I think we can. We should be less timid as lawyers and reach out to other lawyers who can report on their locality more accurately or reach out to the populations affected by the rules."

In dealing with the legal systems of developing countries, he stressed the importance of collecting data with fewer presumptions about which individual components could be important and which ones not, while taking into account typical uncertainties that can be found in any legal system. There are many ways existing practices can be improved by taking the time to better collect and analyze information and by avoiding oversimplified data, which can paint misleading pictures of the society being examined.

His discussion of such a challenging topic provoked many questions from the students and professors in attendance. He diplomatically discussed the benefits and drawbacks of data that cannot always be quantified, the importance of drawing upon interdisciplinary research to improve data collection, sources of funding for research projects, and the feasibility of measuring and evaluating legal systems.

"The Kevin Davis lecture provided a thoughtful critique of the conventional ways to measure what makes a good legal system," said Tobias Okada-Phillips, Law'11, a student who had been in the guest's Osler Symposium seminar earlier. "The lecture gave a different perspective on the class theme of the relationship between law and business."

Following the presentation, the audience was invited to the Student Lounge for an opportunity to speak directly with Davis during a wine and cheese reception.

In the distinguished business law lecture series generously sponsored by Osler, Hoskin & Harcourt LLP and directed by Professor Paul B. Miller, five internationally renowned academics delivered topical and scholarly papers in 2010-11. For more information on the other lecturers and to see a video of Professor Davis' presentation, go to http://law.queensu.ca/events/oslerDistinguishedLecturesInBusinessLaw.html