This Article draws on archival material to examine how the London Stock Exchange managed its relationship to English courts and common law in the late 19th and early 20th centuries. Like many other merchant communities, the LSE developed a private legal system that relied primarily on extralegal sanctions to enforce bargains between members. But the law and lawyers were anything but irrelevant. To the contrary, lawyers played key roles in creating and maintaining space for the Exchange to engage in self-governance. In practice, the LSE could not prevent English courts from interpreting, applying, and deciding whether to respect Exchange rules. Much of the Exchange’s internal work consisted of managing these interactions. To minimize the disruption, the LSE relied heavily on both extralegal tools (e.g., expelling members who filed prohibited lawsuits) and legal tools (eg, funding litigation to protect Exchange interests). Regardless of the nature of the tool, lawyers often shaped the LSE’s response. Governing committees routinely consulted solicitors and deferred to their advice, which was usually conservative. The ongoing involvement of lawyers limited the reach of the LSE’s private legal system, potentially more than the law would have required.
Weidemaier, Mark C, Law, Lawyers, and Self-Governance During the Heyday of the London Stock Exchange (November 21, 2019). Law and Contemporary Problems, volume 82, no 4, 2019.