Harmonization of Legal Regimes

The problem of harmonizing legal rules across multiple overlapping legal orders is, in part, a problem of knowledge. If the public goal of harmonization is to promote value in transactions and dispute resolution, a legal regime needs institutions that facilitate the production of multijural human capital: expertise about how legal rules interact with each other and with the environment in which economic actors design transactions and dispute processing mechanisms. Because much of this expertise is embedded with the actors involved in transactions and disputes, the production of expertise has to be supported by adequate incentives for private actors to invest in the costly production of information and the cost of sharing this information with public bodies such as courts and regulators. As an information asset, multijural human capital is subject to externalities which lead to underinvestment. In this paper I argue that international law firms can internalize some of these externalities to increase the production of multijural human capital. Significant obstacles to the cross-border integration of legal practice, however, interfere with the formation of truly multi-jurisdictional law firms and thus hamper the process of effective harmonization in multijural settings