Legal Environments Essay

Cheap Custom Writing Service

Firms, as societal entities, operate  in particular  economic,  political, and  legal environments.  The legal environment  is  a  result  of  legislative intervention by the government  (state) and the positive practices that  are recognized  and  sanctioned  by the  positive law. Historically, the  legal environment has usually been nationally defined, although scholars have tried to group legal systems into various groups, based on their similarities and dissimilarities.

A student  of this topic would usually argue that there  are two basic groups of legal systems, which traditionally  have been  opposed: the  Anglo-Saxon (Anglo-American) model and the continental  European  law. However,  although  both  main  systems of law may have their  distinctive  features listed, in fact there  are far too many convergences  in recent times. In the  past the  common  law (Anglo-Saxon) model would be predominantly based on the precedents,  and  the  continental   European  law  would be primarily based on the codifications. But, there is ever-increasing  legislative activity in the  Anglo-Saxon countries, with a number of codifications taking place as judiciary may uphold the consistency of court practice. In either system, a judge may take a stance to create a precedent, but the sources of precedent would differ significantly.

Anglo-Saxon Versus Continental European  Models

Growing empirical literature  has attempted to prove the overall superiority of the Anglo-Saxon model. Although it is evident that economies of Anglo-Saxon countries may be doing comparatively better than the others in the long run, it is not empirically corroborated that the growth sustained over a period of time may be directly attributed to the features of the legal system (legal environment).  Legal systems, although they may be classified into  larger groups, are basically heavily influenced by national colors and experiences of legal development, especially in revolutionary environments (when there is abrupt change in the development).

Scholars studying legal environments would focus more, nowadays, on judiciary independence  from the state and the politicians. It is believed that if the judiciary protects consistently property rights, even from the state, the results of development will be better, and in the case-law system, judges historically have been more  prone  to uphold  the sanctity of private property rights. Ex post judging is far better  in responding to local information,  rather  than the application of abstract law, regulating the principles.

However, increasingly the common  law countries are resorting  to  promulgating  laws and  codices, in order to better  capture  different areas of law. In the United States, the Uniform Commercial Code (UCC) is probably the best example. The growth in legislative activity may also be seen as a sign of upcoming struggle between judiciary and legislative power for predominant societal  influence.  Most  recently  the discussion  on  “political  delegation”  would  suggest that it is necessary to subsume, at least formally, all institutions  of the state to the highest democratically elected  body in the  country  (assembly, parliament, etc.), although that body is controlled  exclusively by the politicians. The literature has also defined a common law system as one in which judges exercise discretion to decide cases in independent and/or  adaptive lawmaking ways, while in continental  European countries  the state would control  judicial outcomes and the content of law as well.

The basic premise of change between the two wider legal groups has been the perception as to what extent the  judicial practice  may influence  the  future  legal decision taken by the court. It is a fact that in Anglo-Saxon countries  precedents  are a source of law and they have to be regarded  in the future when the act is required  in a similar situation. However, although in  the  continental  European  legal system  judiciary practice is not a formal source of law, judges take into consideration the  prior  practice  in order  to ensure consistency in acting in the court and the country.

In  comparative  law, the  literature  is quite  often focused on a set of five parameters,  like (1) judicial incentives; (2) exogenous legal human capital; (3) the processing of litigant information  into judicial error– reducing legal human capital; (4) the cost of producing evidence and legal arguments; and (5) the penalties (damages) levied in adjudication.

Judicial incentives  may be influenced  by the way their independence  is defined. Often in the analysis judicial independence  features highly, especially as it is believed to be an important feature of the Anglo-Saxon model, which contributed to its better results. In the U.S. model, over 80 percent  of serving judges are subject  to some kind of election,  reelection,  or recall voting. But even in the United States the upper echelons  of judiciary  are  dependent on  politicians who decide on their promotion to the highest offices. Similarly, in the continental  European countries,  the government may have a strong say in appointment of judges, especially in the case of higher courts. However, the  very path  of professional  progression  differs between  European  (especially French)  and U.S. judges. In Europe, judges are often career  civil servants, who have opted  for the  judiciary profession almost  immediately  upon  graduation  from the university; in  the  United  States,  judges are  appointed from among practicing  lawyers who have had more than 10 years of professional experience.

Comparative  analysis of independence  has shown more than a puzzle—judges should be independent, but the question is from whom? And, if one is independent, does it mean that he or she is also unbiased (objective)? Often  it is assumed  that  judges, if not appointed  by the government  directly, will be critical of the government and look at the breaking of law made  by the  government  in  an  unbiased  manner. However,  empirical  research  does  not  corroborate this claim. Some judges are more  independent and unbiased in the way they operate than others, but it cannot be generalized as to what contributes to that.

Another important feature is the relationship between precedents  and statutes. Anglo-Saxon law is believed to be based on a set of more or less harmonious precedents  (stare decisis), while the continental European legal practices are based on the interpretation of law and the application  of the abstract  legal (statutory) rule to a concrete situation. However, even in the latter case there is a high level of consistency in judiciary practices, as the higher courts  have the right of cassation and therefore  for the performance of judges it is important that  their  decisions not be annulled and/or modified by the higher court. Therefore, even in the continental  European legal systems, court  practices  are consistent,  that  is, jurisprudence constante.

At the far end, the issue is primarily behavioral— whether the judges will be expansive or rather conservative (narrow) in their apprehension of laws. Some recent  empirical  research  has clearly shown consistency of judicial behavior across various systems. However, de jure legal practice is not a formal source of law in continental  European legal systems, but, as already pointed  out, will be seriously considered  in the process of application of law. In both systems the vast majority of judges will opt not to rock the boat.

Career Paths

Another important feature of these two main groups of legal systems that has already been mentioned is the career path in either of the systems. In the continental European system the judges follow the clear career path  from  a judicial trainee  in lower courts  to the position in the higher courts, including the Supreme Court. Although there are mid-career  entrants  from the legal profession, it is fairly rare to have those transfers. However, transfers from the judge’s chair to the bench are more frequent, especially in the situations where there is a public distrust in the judicial system or endemic  economic  crisis. There are attempts  in both systems to objectivize the appointment of judges and base their direct promotion on merit. In France, a complex panel decides on the appointments of judges, and the panel is chaired by the president and consists of the  corresponding ministers  and  others,  mainly appointments from the judiciary.

In contrast, in both the United States and Canada, judges are appointed  only after a somewhat long and distinguished professional career, usually as a practicing lawyer. In either system the politicians are still in a position to influence the appointment of new judges/ justices, with more or less interference,  However, it seems that  the principles  of political delegation  are gaining good soil, and it is to expect that judges will be more  often  appointed  by “independent” panels, and  their  promotion will be based upon  their  performance  results and personal  zeal to succeed. One feature certainly remains to be noted. In the Anglo-Saxon practice there is a well-established process where judges are exposed to collegial referee procedures (peer review).


In various jurisdictions  the  courts  are organized  in their own way—for instance, in France, specialization for particular court cases (administrative  court, family court, etc.), while generalization  is more specific for the United States, although the situation is changing. Nevertheless, there are opportunities to reconcile these two factions. In the United States, it is believed that appellate specialization has, in fact, led to a somewhat biased position of the court, especially in patent cases, where this specialization in the Federal Circuit has led to an overly pro-patent orientation. More generalized courts may be more active in the competition for cases, that is, attracting jurisdiction and therefore ensuring more effective and efficient behavior under the outside influence.

Further  on, the systems differ in how they handle court-released  information.  It is possible to have an environment in which all the interested  parties disclose much information  or simply feed the judge with the information  he or she may need. A judge who is more under (immediate) public scrutiny may behave in a manner that he or she will carefully weigh the need for changes in the existent practices before committing to the change in the practice and new precedent being deliberated. In contrast, the judge or a Supreme Court justice who is not known to the broader public may be more enticed to make a decision that would depart from the current practice, especially if the welfare loss or gain is a zero-sum game.

Procedural  elements  are  also very important  in contrasting   legal regimes.  Namely,  procedural  elements do influence judicial incentives and direct engagement  in the  procedure  before the  court.  An Anglo-Saxon, i.e., Anglo-American,  model of adversarial justice requires a judge to be an unbiased referee as both sides present the facts and try to establish the truth. The judge in turn is not expected to actively look for other  evidence. In contrast,  the continental European model requires a judge to be an active participant  in the procedure  and to actively seek truth, and may require the presentation of facts in order to establish proof.

Similarly, the use of jurors differs between the systems, although in principle jurors are used almost exclusively in criminal cases. In the Anglo-Saxon model the jury decides guilt, while the judge as a professional does the sentencing, usually well after the case before the jury has been completed. In the continental  European model, jurors often sit with the presiding judge as a member  of the  panel and decide on the  major issues by majority vote. Even the concept  of the jury has changed over time. In the past jurors were chosen because they were familiar with the case, and nowadays the court looks for full impartiality of jurors.

Legal environments/legal systems differ from country to country  and to a large extent  they may have shown  some signs of convergence,  but  in fact they remain largely national, belonging more or less consistently to the legal groups we have outlined here.


  1. Jeffrey F. Beatty and Susan S. Samuelson, Legal Environment (Cenage/South-Western College Publishers, 2007);
  2. Beck, A. Demirgüç-Kunt, and R. Levine, “Law and Finance: Why Does Legal Origin Matter?” Journal of Comparative Economics (v.31/4, 2003);
  3. Ash Demirguc-Kunt, Inessa Love, and Vojislav Maksimovic, “Business Environment  and the Incorporation Decision,” Journal of Banking and Finance (v.30/11, 2006);
  4. K. Hadfield, “The Levers of Legal Design: Institutional Determinants of the Quality of Law,” Journal of Comparative Economics (v.36/1, 2007);
  5. La Porta, F. Lopez-de-Salines,  C. Pop-Eleches, and  A Shleifer, “Judicial  Checks  and  Balances,”  Journal of Political Economy (v.112, 2004);
  6. La Porta, F. Lopez-de-Salines, A. Shleifer, and R. Vishny, “Law and Finance,” Journal of Political Economy (v.106, 1998);
  7. La Porta, F. Lopez-de-Salines, A. Shleifer, and R. Vishny, “Legal Determinants of  External  Finance,”  Journal  of Finance  (v.52, 1997);
  8. Min-Dong  Paul Lee, “A Review of the Theories of Corporate Social Responsibility: Its Evolutionary Paths and the  Road Ahead,”  International  Journal of Management Reviews (v.10/1, 2008).

This example Legal Environments Essay is published for educational and informational purposes only. If you need a custom essay or research paper on this topic please use our writing services. offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.

See also:


Always on-time


100% Confidentiality
Special offer! Get discount 10% for the first order. Promo code: cd1a428655