Nuno Garoupa on Reforming Legal Professions In East Asia
The traditional narrative is that Asian jurisdictions have fewer lawyers than in the West because they are much less litigious societies; they don’t need lawyers! Recent evidence has suggested the causation is probably reversed; there are not enough lawyers to provide services to all potential litigants.
Legal markets in East Asia were largely kept closed by excluding foreign law firms and imposing a significantly low passing rate for bar exams (usually less than 10%). In this context, Japan and Korea have enacted important legal reforms to modernize their legal practice and make it more competitive in the last ten years. Quite remarkably, they have been inspired by the U.S. model of legal education. The most immediate consequence has been the notable increase of passing rates in the Japanese and Korean bar exams, still low for U.S. standards (below 50%), but clearly above the traditional figures. The transformation of the law degree from undergraduate to postgraduate (similar to a J.D. program) has been less far-reaching than expected, since the undergraduate degrees were not fully eliminated.
Taiwan and Hong Kong have been changing at a slower pace. The political context (a process of democratization) has been fundamentally influenced by lawyers, but the changes in the market for legal services have been less remarkable than in Japan and Korea. Taiwan is the Asian jurisdiction with more law professors educated in the United States (still a minority though). The Hong Kongnese legal profession has been shaped by the British. Its vibrant market and the strategic location within the Greater China have attracted the attention of the big law firms.
Mainland China is a different story. For many political and historical reasons, the reform of the legal profession has not been a major priority. Passing rates in Chinese bar are extremely low (possibly below 5%) which, in my view, explains the big Chinese demand for U.S. LLMs degrees (even if low, the chances of passing the New York bar are higher than passing the Chinese bar). The big demand for legal services is concentrated in Beijing and Shanghai. Legal education has expanded significantly since the early 1990s, but most commentators agree that quality is a serious problem. The market is heavily regulated by the government (which does not exclude the possibility of less strict informal practices).
We cannot say we see a pattern of deregulation of legal services in East Asia. At best, most jurisdictions have been investing on improving the quality of their legal human capital. Entry controls traditionally were severe (they still are in mainland China), thus failing to create a competitive market (probably with the exception of Hong Kong). Recent reforms might change this pattern in the future but, at this stage, their impact is unclear. Local commentators are divided on the merits of these reforms.