The Governance of Global Economic Activity: The Emerging Role of Private Law

and Legal Agents.

Edward S. Cohen
Associate Professor of Political Science
Westminster College
New Wilmington, PA 16172
cohenes@westminster.edu

Paper prepared for meeting of the Research Section on the Structure and Organization of
Governance, IPSA, University of Oklahoma, Norman, OK, March 30-31, 2001
 As the initial flurry of claims about the “end of sovereignty” or the “end of the

state” has died down, many analysts of globalization have begun to turn their attention to

the evolving patterns of “governance” in modern states (Prakash and Hart, 1999).

Among the topics that have become central in this literature, the recognition of the

growing role of non-state actors in the making and implementation of authoritative rules

for social relationships is particularly important (Cutler, et al., 1999; Higgott, et al.,

2000). If states are indeed partially “unbundling” aspects of sovereignty and allowing

and/or encouraging “private” agents and institutions to act in the name of the state, our

understanding of the authority and legitimacy of the modern state may be facing some

radical challenges. Moreover, the literature suggests that the growing role of non-state

actors is occurring at both the domestic and international level, and these two dimensions

of the process are closely connected. The study of this process, then, may be central as

well to our understanding of the changing relationship between states and the

international environment, and thus to one of the core issues in the study of governance.

My purpose in this paper is to outline the rudiments of an argument and research

plan which aims to help further our understanding of the role of non-state actors in

emerging patterns of governance. The focus of my analysis is on the governance of the

increasingly global economic order, and in particular on the role of private international

law and the legal agents – especially large Anglo-American law firms – that are the links

between the “law” itself and the choices and strategies of economic actors. The role of

private law and lawyers seems to me a woefully understudied but especially important

aspect of the governance of economic activity. While scholars have begun to look at the

2
role of such actors as credit rating agencies, accounting firms, and the insurance industry

in structuring the arena of global economic activity, there is little more than intriguing

suggestions in this literature concerning the role of lawyers.1 But legal systems and

agents play a central role in all aspects of contemporary business life, and are crucial in

the intermediation between state policy and economic activity. If we want to develop a

nuanced sense of the emerging patterns of interaction between the state and non-state

actors in the process of governance, it seems to me, we need to know what is happening

in the area of private law and what the lawyers are up to.

The following sections attempt to outline the shape of the problem of role of

private actors in governance, and to place the role of law and lawyers in context. This

discussion is primarily a review of the literature that proceeds from the broader issues,

especially the study of global and domestic governance, through the analysis of the

exercise of authority by non-state actors, to specific questions and dimensions of the role

of law and lawyers in the contemporary economy. As such, the paper lays out the

direction for research and tentative hypotheses, rather than presenting any polished

findings. It is an attempt to put my plans on paper, and to solicit any suggestions and

clarifications from the readers.

Globalization and Governance.

Of all the literatures relevant to this study, the work on the emergence of global

forms of governance is the most extensive. The main inspiration for this work has been

the sense that the globalization of economic activity – including technological change,

corporate organization, patterns of production and investment, and capital flows – and of

1
The essays in Cutler, et al., 1999 provide an excellent review of these developments.

3
the consequences of this activity have posed a severe strain on the capabilities of states.

Increasingly, individual states have found themselves unable to exert significant

regulation or control over economic activity, as the policy tools they have at their

disposal are ineffective in grappling with patterns of behavior beyond their borders. As a

result, states have been looking for new approaches and tools to cope with the impact of

these global patterns on their interests and societies.2

To this point, the focus of most studies of these responses has been on the

attempts to create multi-lateral or international bodies and agreements with the scope of

authority and the policy tools necessary to oversee/regulate globally-organized economic

activity. This is the usual meaning of discussions of “global governance,” and interest in

these bodies and agreements has deep roots in the international relations literature on

international regimes. In areas such as the environment, the regulation and settlement of

disputes regarding trade policy, and the control of global financial markets, scholars have

explored in great deal the attempts by states to pool elements of their sovereign authority

to create institutions that can provide the scope, expertise, and authority necessary to

assert some control over the direction and effects of shifting patterns of production, trade,

and investment. At the same time, we have seen more studies of the emerging politics of

global governance, and both the economic agents subject to these bodies and

organizations that aim at changing their behavior increasingly work to influence the

policy choices made at regional and global levels. Throughout these analyses, the

relative balance between the power of individual states and these global institutions,

2
For good examples of the current state of the literature, see Held, et al., 1999, Prakash and Hart, 1999,
Reinicke, 1998, and Scholte, 2000.
4
and/or the ability of these institutions to survive and act effectively, remain central

sources of debate.

The analysis of global governance raises some issues closely related to this study.

The treaties and rules through which international institutions are constituted and operate

form part of the world of international law, and it is perhaps not an accident that students

of globalization, global governance, and international law have begun to take a great deal

of interest in each other’s work. There now exist a number of significant attempts to lay

out systematically the relationships between the fields of international relations and law

(Slaughter, et al., 1998). On the whole, the existing work in this area tends to focus on

traditional themes such as the evolution of human rights law and policy, the regulation

and settlement of armed conflicts, and the status of international and regional institutions

(i.e. the European Union (EU)). But the creation of the World Trade Organization

(WTO) and the attempts to create the elements of a new international monetary order are

now spurring on studies of the ways in which international law serves to structure global

economic activity. The focus of most of this work is on public international law – the

rules generated and enforced by states and by the institutions created by states – and like

other work on global governance tends to center on the question of the relative power and

autonomy of this law in the face of the continuing autonomy of individual states.

In both the political science and international legal literatures on global

governance, then, the question of “sovereignty” emerges as central to grappling with the

problem of globalization. As states and multilateral/international institutions attempt to

develop new ways to control the global environment, the former seem to be ceding a

certain amount of the traditional elements of sovereign authority to the latter. The aim of

5
states is to promote and protect their own interests and aims, and this often leads to

tensions among individual states and between them and the institutions they create.

While the literatures I have discussed often focus on this tension and attempt to assess the

remaining autonomy of states, their more lasting contribution comes from the questioning

of the unitary and fixed notions of sovereign authority long dominant in the respective

fields of scholarship. By recognizing the “bundled” character of sovereign authority, and

exploring the ways in which the elements of this bundle can be reorganized, new doors

are open for understanding the evolving relationships between the state and its

environment (Ruggie, 1993).

This kind of theorizing is crucial to the study of the role of private law and

lawyers in the governance of economic activity. As Cutler (1999) has emphasized, in

order to gain a handle on the way the contemporary global economy is structured and

regulated we need to break with the notion that all authority is of a piece and is clearly

located in the hands of the territorial state. On the whole, however, the global

governance literature does not provide all the tools necessary to deal with the role of

private law and lawyers in the governance of the global economy, and indeed their role in

shaping the activities of states and international institutions.

The Role of Non-State Actors and Institutions.

The literature on the role of non-state or “private” agents in the governance of

economic activity is more recent and less extensive, but is fundamental to analyzing the

significance of private law and lawyers. (evidence of limited role in most works on

globalization.) This work also centers on the ways in which globalization challenges the

position of the sovereign state, but shifts the focus to the growing role of associations,

6
institutions, and other agents that are legally and practically “private,” not part of the

institutions of public power in regulating and organizing social life. In these accounts,

the emerging role of private agents can be seen as emerging outside of the cognizance of

states, as the result of specific decisions to delegate parts of state authority to such agents,

or as a combination of these processes when states ratify emergence of forms of

governance that they had little or no role in creating.

There are a number of important influences on this scholarship, but to my mind

Susan Strange’s The Retreat of the State remains the most fundamental work. In this

book, Strange traced what she called “the diffusion of power in the world economy,”

which she believed is rooted in the economic and technological changes associated with

globalization. While emphasizing the way these changes undermined the traditional tools

by which states controlled economic activity, Strange shifted the focus away from the

global public institutions to the emergence of a variety of private “regimes” as vehicles

for the organization and structuring of global economic life. Her account reviewed the

role of multinational corporations, accounting firms, the insurance industry, organized

crime, and other kinds of private agents in giving direction to processes of change

without much control on the part of states or international institutions. In the process,

Strange made important progress in conceptualizing authority as a kind of social and

political practice that is not exclusive to the public sphere of the modern state and the

institutions it has created.

Inspired by these kinds of insights and questions, there is now a rapidly

developing scholarship on the role of non-state actors and private authority in the global

political economy.3 This includes substantial articles and monographs on the ways global
3
See Cutler, et al., 1999, Higgott, et al., 2000, and Ronit and Schneider, 2000.
7
corporations structure the norms and practices of business generally as well as their

particular industries, the role of credit-rating agencies and accounting firms as

“coordination services” agents in the allocation of investment resources, and the role of

privately created organizations in the management of the internet and on-line commerce.

A survey of this literature makes it clear that a great deal of the management of

contemporary economic activity is in the hands of private actors, who have found ways to

overcome immediate competitive pressures to develop common standards of business

activity and common practices that sustain their long-term interests in stability,

profitability, and in freedom from “outside” or public regulation. Moreover, many of

these strategies bring with them the aspects of authoritative decision-making and

enforcement that are hallmarks of any understanding of “governance.” All told, the

initial work in this area seems to support Strange’s insight that a good deal of the

authority that exists in the world of contemporary economic life is devolving into the

hands of the major agents and institutions in the global economy.

The contributions to this literature have also uncovered important aspects of the

process of global governance often overlooked in the literature discussed above. This is

the activity of key private agents in shaping policy-making and implementation in the

world of multilateral and international institutions (see Sell, 1999). Among global

governance specialists, the activities of international environmental and human rights

activist groups – such as Greenpeace and Amnesty International – in shaping

international law and policy is well known. The scholarship on private authority in the

global economy, however, is pointing us to the role of corporations, business

associations, and key intermediaries in the business world in working with, through, and

8
sometimes against institutions such as the WTO and the International Monetary Fund

(IMF) to shape the body of public law and regulation directed at the global economy. A

picture is emerging in which there is a constant process of negotiation between public and

private authorities to allocate authority over the rules and practices of the global

economy. In this process, private agents work to protect their authority in many cases,

and in others to gain the sanction and protection of public authorities to attain certain

goals. In some cases, indeed, there is evidence that business/corporate actors are

attempting to work with their critics in environmental, human rights, and labor

organizations to resolve disputes and modify rules via direct negotiations outside the

sphere of public authority.

The importance of these kinds of developments for governing economic activity

is clear when we remember that exactly the same kinds of trends have been widely

observed within advanced industrial states. As Pierre and Peters (2000) have shown in

their recent work, the shifting of a good deal of responsibility for regulating the activity

of “private” agents onto those agents themselves is a central part of the changing roles of

states in society, and the changing structure of the state itself, since the 1970’s. Under

the rubrics of privatization, deregulation, the new public management, etc., states have

been actively abandoning formerly public functions and shifting responsibility onto

“markets,” which in practice means the major private actors in those markets. In the

process, both states and non-state actors are engaging in a process of continuing

negotiation and bargaining to figure out the division of power and authority most

appropriate to the new relationship between public and private spheres (see Campbell, et

al., 1991).

9
 It is not likely a coincidence that we can observe similar patterns in the domestic

and international realms. As this division becomes less and less relevant to the operation

of the contemporary economy, it is becoming less relevant to understanding the ways in

which economic activity is governed. The question of the delegation of authority to non-

state actors, then, is at the very center of the process through which the outlines of a

framework of authority in the global economy is articulated. The political processes and

conflicts that shape this delegation form a crucial context in which boundary between

public and private and the boundary between the national and the international are being

established in the contemporary global political economy. It is this part of the story of

“global governance” the has generally been ignored in the literature on this topic, and that

the work on non-state actors is increasingly bringing to light.

The relevance of all of this to the study of the role of private law and lawyers

should be clear. In modern capitalist economies, and particularly in the Anglo-American

world, private law – the law of contract, property, torts and the litigation through which

this law is developed and applied – has always played a central role in structuring

economic activity, allocating authority and wealth among economic actors, and in

managing conflicts among these actors. As the guardians and shapers of this law, the

modern corporate law firms, their leading partners, and corporate in-house counsel play a

pivotal role in shaping the strategies of the major economic actors and in developing

common rules and standards of behavior for particular industries and areas of economic

life. Moreover, private lawyers are playing an ever more important role as intermediaries

between the world of economic exchange and the world of the state and public law.

Lawyers are at the same time the representatives of private clients and officially-

10
sanctioned interpreters of public law, and play a major role in shaping the boundary

between the public and private spheres, both within societies and at the international

level. Simply put, private law and lawyers are at a crucial nexus in the process whereby

the governance of economic activity is established, enforced, and modified.

It is therefore all the more surprising that private law and lawyers are almost

totally absent from the literature on the role of the state and non-state actors in

contemporary governance.4 While there is substantial scholarship on the activities of

corporations themselves in structuring markets, and a growing interest in the role of

accountants, bond and credit-rating agents, and insurance firms, lawyers are generally

ignored in the social science literature on governance. My sense is that this ignorance is

a product of both a sense of our inadequate knowledge of the whole world of private law

and of a general disposition to think of lawyers as simply agents for the interests in whose

name they act. But we need to begin the process of overcoming this ignorance, even if it

means taking a plunge into unfamiliar waters and risking the resistance of legal

specialists. And we can draw on the beginnings of a literature that approaches lawyers as

active players in the shaping of their environment. In the rest of this paper, I will try to

sketch a picture of this literature and what it tells us so far, and to provide some direction

for future research.

Private Law and Lawyers as Agents of Governance.

4
This is evident both in the literature on non-state actors or private authority already cited, and in the best
general works on globalization, such as Held, et al., 1999 and Scholte, 2000
11
 My discussion in the following three sections will work outward from the

American context, a direction dictated by the importance of American economic and

political power in shaping the globalizing economy and by the limits of my current

knowledge. I begin with the role of the legal community in the history of the American

political economy, and then turn to look at the transformations in that role over the past

three decades. In the final section, I turn to the growing international role of American

law and lawyers as an entrée into the role of private international law and lawyers in the

global political economy.

1) Private Law and Lawyers in American History.

It was Alexis de Tocqueville who first emphasized the central role of lawyers and

the legal system in the American polity. Writing in the 1830’s, Tocqueville identified

lawyers as forming the political and social elite in the new country, easily moving

between and linking the private world of commerce and the public world of legislation.

In this time, there was little of the current professionalism in legal education or practice, a

fact which facilitated the ability of lawyers to perform these tasks. During the same

period, as historians following John R. Commons (1957) and J. Willard Hurst (1982)

have emphasized, the American legal order at the state and national levels played a

crucial role in facilitating the settlement and exploitation of the continent, and thus in

providing the means and direction for rapidly expanding economic growth. The judiciary

played a central role in molding law for this purpose, via constitutional interpretation and

the application of the doctrines and rules of the common private law.

By the 1880’s, the world of American law was undergoing fundamental changes.

As bar associations began pushing for greater professionalization, the completion of a

12
law degree was becoming a requirement for the practice of law, and law schools sprung

up around the country. The most prestigious of these schools quickly adopted the “case

method” of teaching law, which had been pioneered at Harvard. This approach, in which

students develop the ability to articulate and apply legal doctrines through the analysis of

the evolution of case law, was well adapted to the skills necessary in a common law

system. Legal education, in turn, was focused on the traditional areas of private law –

property, torts, contract, and civil procedure – and emphasized the role of the lawyer in

the world of commerce and business. Whatever might have been the ideology of the

profession, this kind of education served (and still serves) the aim of developing

individuals who are active in creating and manipulating rules to promote the interests of

their clients, and thus in advising clients in the pursuit of their business.

It was in this same period that the corporate law firm emerged as a form of

practice that would come to be seen as the elite of the profession.5 This kind of firm

combined the contacts, reputation, and ability of a number of partners with a large group

of associates among whom the detailed work of legal research and writing could be

divided. In turn, the firm combined a number of specialties associated with business law

– corporation law, litigation, the management of trusts, employee relations, etc. – in one

place. Together, these qualities made the corporate law firm an essential ally and

resource for the large national corporations coming to dominate economic life. Over

time, corporations would develop close relationships with one major law firm, and this

firm would handle much of the work of advising the corporation on the legal constraints

surrounding its activity, while serving as a key actor in promoting and defending the

5
For the history and evolution of the large American law firm, I rely primarily on Galanter and Palay,
1991.
13
corporation’s interests in relation to other economic actors and with the legal system

more generally.

This latter role would be a crucial venue for the corporate law firm to emerge as a

central player in the governance of the new industrial economy. As Morton Horwitz

(1992) has shown, corporate lawyers and law firms were crucial players in developing the

legal framework for the recognition and protection of the industrial corporation, a

framework that dominated the American political economy until the 1930’s. Law firms

accomplished this in a variety of ways – as the training ground for future members of the

state and federal judiciary, as the vehicle for translating emerging academic legal

doctrines concerning property and business organization into established precedent for

interpreting statutory and constitutional law, and as influential lobbyists who shaped the

process of drafting and implementing legislation. Between their role as business advisors

and strategists, and their role in shaping the personnel and doctrines of the judiciary,

American corporate law firms of the early 20th century provide a paradigm for

understanding how non-state actors can play a crucial role in the governance of economic

activity.

The New Deal era in American politics brought with it a new role for lawyers in

shaping the political economy. The Roosevelt administration brought a new generation

of lawyers into public life, many with more public than private experience and often

critical of existing patterns of corporate power. These lawyers were important agents in

the conception, development, and implementation of the new structure of regulatory

authorities designed to reign in the abuses and power of the private corporation in the

political economy. While the relations between the New Deal lawyers and their

14
counterparts in private practice were often hostile, the key role of the former in the

emerging regulatory state helped ensure a continued close relationship between the legal

establishment and the state, and worked to ensure that “the law” as a set of doctrines and

habit of operation would be central to the administration of the regulatory state in the

U.S.

By the 1950’s, though, the relationship between the legal community, the

corporate economy, and the state would go through a further transformation. As the New

Deal evolved into a moderate program of reform, and as large corporations became the

accepted vehicle for economic power and prosperity, a new corps of corporate lawyers

emerged as central figures linking the state and the governance of the economy.

Throughout the post-war years, the leading figures in the most prestigious New York,

Boston, and Washington law firms would circulate between government posts and private

practice, serving to bridge the gap between the interests of their corporate clients and the

priorities of the state. The corporate law firm re-emerged as a central player in managing

relationships between corporations, shaping the development and interpretation of private

law on their own and via their close ties to the highest levels of state and federal

judiciaries, and as key players in shaping public policy regarding the economy.

2) Law as a Governance Mechanism in the Competition State.

The turbulence and transformation in the U.S. economy since the 1970’s, in turn,

has brought about substantial changes in the role of private law and lawyers in the

governance.6 As we know, in the past three decades the identity of the major industries

and firms in the U.S., the relationships between corporations, labor, and the state, and the

6
Once again, Galanter and Palay, 1991 remains the best source on the following material, but there are
good accounts as well in Dezalay and Garth, 1996 and Trubek, et al., 1994.
15
ways in which firms manage their relationships with each other have all undergone

substantial changes. The impact on private law and the corporate law firm has been

multifaceted, but some crucial developments stand out.

• First, long-established relationships between corporations and

particular law firms have been strained, as these firms either disappear,

develop more sophisticated in-house legal offices, and/or shop around for

outside legal advice. As a result, corporate law firms have become more

aggressively entrepreneurial in searching out business opportunities, and

have focused on offering unparalleled skills in large-scale litigation.

• Second, corporations themselves have been increasingly attracted

to the idea of litigation as a regular aspect of business strategy for managing

relations with competitors. As the scope of government regulation has

grown and the relationships among corporations has become more

competitive, the processes and doctrines of civil litigation have come to play

an ever more important role in the governance of American economic life.

• Third, the growing emphasis on litigation as a way of attracting

clients and the growing demand for it among clients have shifted the balance

of power within corporate law firms away from the “corporate lawyers” –

who functioned as the key advisors to corporations in the past – toward the

litigation division. Rather than promoting the quiet resolution of disputes in

the name of continuity, then, large law firms now offer aggressive

competitive strategies and the proper model for business success.

16
 • Finally, as the world of private law has come to be dominated by

aggressive business competition and litigation, both judges and the leading

law firms have increasingly become advocates of the ideas associated with

the “law and economics” movement. From this perspective, the purpose of

the system of civil law is to create the conditions necessary for the kind of

competition conducive to the promotion of economic efficiency in the larger

society. Corporate law firms and key elements of the American judiciary

have become important advocates for this version of law in their own

arguments and decisions, and in political debates over the regulation of the

economy.

Of course, many of the changes in the structure of the economy and in the nature

of civil law had their origin in attempts by policy-makers to promote a more market-

oriented and competitive economic order (see Dethrick and Quirk, 1985 and Eisner,

1993). But this quick survey should help indicate the central role that private law and the

legal community have played in reorganizing the American economic system, a role very

similar to that played by these same forces a century ago. Moreover, the dominant

orientation of policy-makers towards deregulation and the reliance on market

mechanisms will only enhance the role of lawyers as key players in the management and

governance of economy, and as intermediaries between the major economic players and

the public sector. To be sure, this account is only a beginning sketch of a complex

phenomenon. But it seems clear to me that the role of lawyers in governing the emerging

economic order fits well with the pattern of the delegation of authority to non-state actors

scholars have begun to identify in the contemporary political economy.

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3) Private Law and Lawyers in the Global Economy.

The study of the role of private law and lawyers in the U.S. economy would seem

a natural basis for an examination of their role in the globalizing economy. After all, it is

widely acknowledged that American firms have been central to the process of

globalization, and that the spread of American models of business organization and

commercial practice is a central aspect of globalization. On the whole, though, we have

little scholarship to go on in this area. Even in the literature on the law, international law

and lawyers is a quite specialized and arcane field and its study has yielded much less of

general use to this project, as far as I am currently aware. Therefore, in this area of the

project – which I hope to be the focus of my work – we have the least to go on initially.

Nonetheless, it does seem possible to present an initial overview and set of hunches.

For the first three decades after 1945, the regulation and governance of

international economic activity was very much a matter of public international law.

Markets were only gradually re-opened to trade and investment, and much of this activity

was carried out under the rubric of the General Agreement on Tariffs and Trade (GATT)

and its various amendments and extensions. Governments played a central role in the

negotiation, interpretation, and application of these agreements, and the bulk of the

attempts of private corporations to influence this process occurred through lobbying and

consultation with national governments. Indeed, this kind of activity still represents the

bulk (most likely) of corporate activity to shape the governance of international trade.

Important changes began to occur in this area in the 1970’s, however. In their

pioneering work on this issue, Dezalay and Garth (1996) show how the changing patterns

of domestic and global economic relationships during this time contributed to a shift in

18
the role of private law and lawyers in the global economy. First, the emergence of a

whole new set of problems surrounding the transformation of the global oil industry –

especially the issue of nationalizations – created a new “field” of legal conflicts. Given

the propensity of the parties concerned to resolve these conflicts “privately,” much of the

resulting negotiations took place under the rubric of the agencies for international

commercial arbitration in Europe, and especially in Paris. Here, a long established but

insular community of lawyers, judges, and arbitrators was faced with the challenge of

providing an effective forum to which the parties to such disputes could be lured to bring

their disputes.

But the disputes over the oil and energy industries were of a new and more

adversarial nature than the arbitration regime had been accustomed to. This proved an

extremely promising opportunity for new players, and it was the largest and most

prestigious members of the American corporate law community that took advantage. The

new entrepreneurial approach of these firms, combined with their new emphasis and

expertise in large and aggressive civil litigation, proved attractive to the many players in

these disputes who either distrusted the insular world of European arbitration or had

become used to more aggressive approaches to defending their interests. In sum, the

emergence of an arena of large and complex global litigation problems provided a crucial

opening for the expansion of American law firms and legal methods and conceptions into

the global arena, and was central to the first real steps to the internationalization of the

practice of American (and to some degree British) corporate law firms.

19
 At the same time, though, other opportunities were opening for the same firms.7

As U.S.-based corporations adopted more competitive business strategies in Europe and

elsewhere, and became more comfortable with the use of aggressive litigation as part of

these strategies, they began demanding similar sorts of representation abroad. Naturally

enough, they turned to their familiar allies in the U.S. legal community, who used this

route as well to strengthen their presence in Europe and to some degree in Asia as well.

But the demand for their services did not come exclusively from U.S.-based clients. As

Trubek, et al. (1994) emphasize, the process of deepening of the European Union

associated with the 1992 project was central to the expansion of American legal

expertise. With the reduction of barriers to investment and trade across borders,

European firms were increasingly confronted with an uncertain legal and regulatory

context in which they had to manage operations subject simultaneously to quite varying

regulatory environments. In contrast to the relatively insular national bias of most

European law practice, American firms had extensive expertise in the problems of

managing business activity in diverse and competing jurisdictions, a product of

federalism at home and the longer history of multinational activity in large U.S.

corporations. Thus, European firms began enlisting the services of American firms in

this new context, further deepening the presence of American lawyers abroad.

American firms could also offer another kind of expertise. As Giandomenico

Majone (1999, 1997) has shown, the growth of the common European market went along

with substantial attempts to replace old models of economic management with a

framework of independent regulatory agencies. In essence, this framework was modeled

7
This discussion relies upon Abel, 1994, Roorda, 1993, Shapiro, 1994, and Trubek, et al., 1994.

20
on the approach to business regulation developed in the U.S. during the first half of the

century. American firms had long practice in helping businesses adapt their strategies to

this kind of regulatory framework and work with regulators to shape the rules and their

application in ways conducive to business interests. As the European Union began

relying more on law and legal agents to govern activity, American lawyers were

successful in selling their expertise to European firms. Moreover, the scholarship in

which this process is traced suggests, if only anecdotally, that American lawyers at the

same provided models and concepts of law that increasingly shaped the emerging field of

European law. As the E.U. and its member states encouraged the delegation of authority

over economic activity to public and private legal and corporate agents, they created a

context into which American lawyers and legal models could flow easily.

In my own work, I have found evidence of a similar process emerging in Eastern

Europe.8 In the 1990’s, American lawyers – in cooperation with U.S. government

agencies and international institutions such as the World Bank – streamed into the former

communist states offering advice and models for legal reform. At the same time,

American and European firms began entering newly opened markets, and some local

firms began to adapt themselves for participating in the global economy. While the

official, “top-down” reform efforts have had little success, the integration of these local

areas into the global economy has proven a powerful force in creating demand for

European and American legal services, among both foreign corporations and local firms

who want to be players in the international realm. The expansion of American lawyers,

firms, and legal practices into these new markets, as in the more significant case of the

8
See Cohen, 2000; my discussion there relies heavily on de Lisle, 1999.

21
EU, has been based on emergence of an indigenous demand for the kind of legal practice

and advice now seen as necessary for success in the global arena.

Of course, the current framework for governing international economic life has

now been reshaped by the creation of the World Trade Organization (WTO) in 1994. On

one level, the WTO amounts to the creation of a substantial new framework of public

international law and legal practice. But it has also further stimulated the evolution of

private international law and provided new opportunities for lawyers to actively shape its

direction. To begin with, new work on the negotiation of the Uruguay Round of GATT

and the creation of the WTO indicates that global corporations and their legal

representatives played a crucial role in shaping the structure of this new order, most

clearly in the area of intellectual property law. At the same time, though, it appears that

the WTO itself works to encourage and require corporations and other “private” actors to

take a more active role in interpreting trade law and in resolving disputes under that law.

In the words of P. K. Vandevert, the International Trade Counsel for Delphi Automotive

Systems Corporation (a division of General Motors),

In the WTO environment, importers, exporters, multinational corporations, or any

business engaged in the movement of goods across international borders
(collectively referred to here as “traders”) will be required to restructure the ways
in which the engage in cross-border transactions. In the WTO environment,
trades will have an increased responsibility because they will be charged with
making initial legal determinations as to the admissibility, tariff classification, and
dutible value of the goods they import and export, instead of the largely passive
role of merely reporting to the Customs authorities the facts of the transactions
these traders have enjoyed in the past. This increased responsibility will require
traders to acquire or develop knowledge, expertise, and policies that actively
manage their respective international trade flows. (1999: 108-09)

All of this suggests that the emerging regime governing global economic activity,

like those developed at the domestic level, will place heavy emphasis on delegating the

22
authority and responsibility for “governing” to the major non-state actors involved in that

activity. Given the growing reliance of global economic actors on legal specialists, and

the increasing “legalization” of the management of the global economy, it seems clear

that private law and lawyers will play a more and more crucial role in governing the

global economy. This brings us back to the beginning of the paper, and highlights the

necessity for research into the ways in which private law and lawyers help govern

contemporary economic life, and the implications of this role for the future of political

life in a globalized economy.

Conclusions: A Research Agenda.

Should we care about the role of American law and lawyers in shaping the

structure of private governance in the global economy? On the basis of the review of the

theoretical literature and emerging research, it seems to me imperative that we should.

International private law has and will play a crucial role in the organization of global

economic power and activity, and American legal models and lawyers have already

played an important role in shaping this legal structure. In the pursuit of this research

agenda, it seems that there are a number of central questions I will need to address, which

can be organized tentatively into the following four categories.

• What is the best way to conceptualize the development of a private legal order,

especially at the international level? The previous account makes it clear that private

law emerges out of a close interaction between the practices of business and existing

and emerging legal ideas. Is the resulting set of doctrines simply a codification of

existing business practices, or are the latter significantly influenced by the

independent development of legal doctrine, and statutory law? Are private lawyers

23
 today simply aggressive agents of the strategic goals of their clients, or do they bring

their own intellectual and normative outlook to bear on the ways these goals and

strategies are developed? If the latter is the case, what are the sources of this outlook,

and how is it related to developments in the larger political and intellectual context?

What, if anything, is distinctive of the outlook and sociology of the international

private legal order and those agents who practice primarily in this area?

• How is the development of a private legal system related to the sphere of public law,

both domestically and internationally? This is especially important if we are going to

think of the private legal order as having been delegated a degree of public authority

over the governance of economic activity. After all, the legal institutions of private

law are created and sustained by the public authorities, lawyers practicing in this area

are licensed by these authorities, and all evidence suggests that there is a constant

interaction between legal agents in the private and public arenas. How does this

interaction shape the unique role of lawyers in their role as agents of private interests?

Does this process help sustain a level of independence and autonomy for private law

and lawyers? As a result of this private-public nexus, are lawyers in a significantly

different position from other “non-state” agents who exercise authority over

economic activity?

• How is the development of a private international legal order related to the evolution

of domestic/national legal systems? International legal practice, after all, does not

exist in a fully independent arena, but involves the continual movement between

national and global institutions and norms, and between different national systems.

Moreover, as my research into legal change in the former communist states indicates,

24
 there is now intensive competition between American and European lawyers and

legal models for influence in shaping international legal norms. Moreover, individual

states – and especially the U.S. - have been aggressive in promoting the spread of

their own legal models, often through the use of extra-territorial jurisdiction. How

does this competition between legal models, and process of negotiating between

domestic legal systems, shape the development of international private law? If the

international legal system develops unique and widely shared approaches to particular

legal problems, do these in turn rebound to shape domestic legal systems through the

border-crossing activities and interests of corporations and legal agents? How are the

rules governing economic activity influence by similar processes in other areas – i.e.

international criminal or environmental law?

• Finally, what are the implications of these questions for understanding the evolution

of the state’s role in the globalizing political economy? Much of the work in the area

of international law to this point reinforces the sense emerging from the theoretical

literature that states and their sovereignty are not going away, but are being

reconfigured. What light does the emergence of international private legal authority

shed on the process of the delegation of parts of sovereign authority? How does the

exercise of that authority shape the priorities and purposes of states? What can we

learn about the increasing importance of the exercise of sovereign authority beyond

national borders, both within and outside international organizations? Where does

this leave the state’s obligation to protect the interests of its constituency, and what is

that constituency in a more globalized world?

25
 This is a challenging set of questions, but they are familiar to all who are working

on the problem of the governance, global and national, of contemporary economic

activity. The analysis of the changing world of private international law and the agents

who make it work promises to make important contributions to these larger questions,

and hopefully to ground the discussion more firmly in day to day context in which

economic agents pursue their interests and objectives. Political scientists have long been

aware of the fundamental role of the legal framework in shaping the evolution of

capitalist economies. It seems clear that, in order to gain a handle on the increasingly

international and/or global context of capitalism, we will need to extend and deepen this

awareness via the analysis of the increasingly important international dimensions of this

legal framework.

26
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