Legal System Network Effects and Global Legal Development

Abstract

Law originates in local environments, yet can be transmitted globally or over time to new contexts and foreign or future users. At its origin, law arises in response to social needs, but once formalized it takes on a semantic life of its own in a network of users. A rule created in response to a random New York plaintiff could – with sufficient popularity – end up as the standard norm applied globally, regardless of underlying suitability for specific local needs. To better understand the consequence of these legal system network effects on global legal development, this paper applies Klausner’s network theory of law’s perceived value to use of foreign or transnational law in the international development context. Through this network analysis, the paper expands on Pistor’s examination of how local needs interact with standardized, international “best practices�?. With regard to law’s genesis in reaction to local environmental stimulus, the paper presents the leading theory on law generated in response to societal demand (Luhmann), but also shows the presence of similar views in Baker, Eisenberg and Glenn. This analysis brings law’s dual facets into focus: at law’s origin are systematic relationships in which societal needs stimulate the legal profession’s ordering of concepts and remedies. Once formalized, law then enjoys network effects by its users: the legal system’s concepts and remedies take value from their ability to be easily communicated and understood, becoming more valuable as the network’s user base grows. The logic of law’s network growth will tend to divorce it from attention to the disruptive stimulus of social needs. Because law as a network will become more attractive the more “settled�? (use over time) or “global�? (use over space) it becomes, change becomes undesirable. A bias in favor of well-networked law can insulate the legal system from the dynamic social responsiveness needed to retain congruence with social needs. Developing countries and law reform professionals should therefore keep in mind that although popular “fast law�? may hit the spot and please the budget, it is probably not the best way to nourish the body politic.