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Proactive law seeks a new approach to legal issues in businesses and societies. Instead of perceiving law as a constraint that companies and people in general need to comply with, proactive law considers law as an instrument that can create success and foster sustainable relationships, which in the end carries the potential to increase value for companies, individuals, and societies in general. [1]
The word proactive is the opposite of reactive, meaning that the approach to law is based on an ex ante view rather than an ex post view. According to the dictionary of Merriam-Webster, the word proactive refers to acting in anticipation of future problems, needs, or changes. [2] Thus, the proactive law approach challenges the traditional backwards and failure oriented approach to law by acting in anticipation of legal disputes, taking control of potential problems, providing solutions, and self-initiation, instead of reacting to failures and shortcomings. [3]
The hotbed of the proactive law movement is the Nordic countries and Finland in particular. The movement took off in the late 1990s and is almost similar to the American movement – Law as a Competitive Source. Both of these parallel evolutions are founded on the work of Louis M. Brown, developed in the 1950s known as the preventive approach to law.
The proactive law movement has become more visible in recent years, but the idea of an ex ante view is not new. It is generally known that the earlier a dispute or a potential dispute is addressed, the better the chances of a fair, just and prompt solution. [4] Louis M. Brown was the first to introduce the ex ante view in his ground-laying book “Preventive Law”. [5] Although he identified and organized the preventive law into a distinctive way of thinking, he was not the inventor of this approach. It has been, and still is, well known to many legal professionals and every business manager that:
“It usually costs less to avoid getting into trouble than to pay for getting out of trouble.” [6]
To understand the general principles of proactive law requires understanding the core principles of preventive law, as these principles create the foundation for proactive law and proactive contracting. Edward Dauer identifies four core principles of preventive law: [7]
The proactive law movement encompasses the basic principles of preventive law stated above, namely preventing what is not desirable, and keeping problems and risks from materializing. [8] Thus, as proactive law consists of preventive law, the characteristics above constitute the foundation of proactive law.
To this preventive dimension of law, proactive law adds a second aspect, which is often neglected in traditional law – known as the promotive dimension.
The nature of the promotive dimension is positive and constructive and promotes what is desirable while encouraging good behavior. This is where we find the distinction to preventive law. In a legal context, proactive law emphasizes the importance of collaboration between legal professionals and other disciplines to achieve the desired goals in circumstances where legal expertise collaborates with other disciplines. Proactive law therefore emphasizes the need for dialogue between different understandings. In a medical context, the preventive law prevents ill health, while proactive law promotes well-being. [9]
The proactive law approach is based on legal certainty, literacy, and cross-professional collaboration to “localize the mines and preventing them from exploding.” [10]
In addition to navigating past the mines, the legal professionals should create economic value, and thus must be outcome-orientated to exploit the promotive dimension. Lawyers and in-house counsel thus must act to achieve results by watching for changes or opportunities and setting improved goals. To do so, legal professionals must highlight opportunities to build a solid business foundation, roadmaps for performance, trust, and better sustainable relationships. [11]
Besides achieving these business goals, it is important to focus on legal risk management to prevent disputes. Many legal disputes arise due to misunderstandings and disappointed expectations. However, careful attention to legal clarity along with early warning mechanisms, and enhanced collaboration between business partners, through establishment of common goals, avoids the business from getting to the stage of dispute. [12]
It is essential in proactive law that legal professionals, managers, and other involved stakeholders collaborate on a cross-professional basis to avoid disputes. In addition to avoiding disputes, it is also important to promote creative thinking. To develop new ideas, and concepts that correspond to the needs, problems or challenges, it is necessary to look towards the future rather than the past, maybe by using already known approaches, but also non-existing approaches. [11] This invites businesses, authorities and researchers to develop solutions through creative thinking.
Thus, proactive law is about problem-solving, detecting real-life causes for potential misunderstandings and failures, but most of all it is about fostering and promoting fruitful and sustainable relationships that enables the stakeholders to reach their goals, creating value for business, individuals, and society as a whole. [13]
An indication that Proactive Law is gaining prominence is the fact that the European Economic and Social Committee (EESC) has published an opinion on Proactive Law.
The EESC urges a paradigm shift, as the time has come to give up the centuries-old reactive approach to law and to adopt a pro active approach. It is time to look at law in a different way: to look forward rather than back, to focus on how the law is used and operates in everyday life and how it is received in the community it seeks to regulate. While responding to and resolving problems remain important, preventing causes of problems is vital, along with serving the needs and facilitating the productive interaction of citizens and businesses. [14]
By its very nature, the Community legal system is precisely the type of area in which the proactive approach should be adopted when planning, drawing up and implementing laws; against this backdrop, the EESC would argue that rules and regulations are not the only way nor always the best way to achieve the desired objectives; at times, the regulator may best support valuable goals by refraining from regulating and, where appropriate, encouraging self-regulation and co-regulation. This being the case, the fundamental principles of subsidiarity, proportionality, precaution and sustainability take on new importance and a new dimension.
The EESC believes that the single market can benefit greatly when EU law and its makers — legislators and administrators in the broadest sense — shift their focus from inward, from inside the legal system, rules and institutions, to outward, to the users of the law: to society, citizens and businesses that the legal system is intended to serve. [14]
While the transposition and implementation of laws are important steps towards better regulation at EU level, regulatory success should be measured by how the goals are achieved at the level of the users of the law, EU citizens and businesses. The laws should be communicated in ways that are meaningful to their intended audience, first and foremost to those whose behaviour is affected and not just to the relevant institutions and administrators.
The application of the Proactive Law approach should be considered systematically in all lawmaking and implementation within the EU. The EESC strongly believes that by making this approach not only part of the Better Regulation agenda, and but also a priority for legislators and administrators at the EU, national and regional levels, it would be possible to build a strong legal foundation for individuals and businesses to prosper. [14]
When Proactive Law is adapted to businesses the approach is called Proactive Contracting and Proactive Contract Management. The legal area of research developed in Scandinavia in the 1990s and has gradually gained attention. [15] Proactive contracting deals with contract management, risk management and business process management. The word proactive is the opposition to reactive and refers to acting in anticipation of future problems, needs, or changes. [16] Empirical studies on contracting capabilities [17] and research on dynamic capabilities [18] have shown that promoting proactive behavior in businesses can be advantageous.
One aspect of proactive contracting is the design of alternative dispute resolution (ADR) mechanisms to prevent escalation of disputes into litigation. [19] An ADR strategy limits the time and money spent by management on litigation. Thus, the costly disruption of litigation and the opportunity cost are limited. [20] In addition to preventing escalation of the dispute, proactive contracts allow the contracting parties to anticipate the next step of the resolution process, as the procedure has been contractually agreed. [21]
A societas Europaea is a public company registered in accordance with the corporate law of the European Union (EU), introduced in 2004 with the Council Regulation on the Statute for a European Company. Such a company may more easily transfer to or merge with companies in other member states.
Mediation is a structured, interactive process where an impartial third party neutrally assists disputing parties in resolving conflict through the use of specialized communication and negotiation techniques. All participants in mediation are encouraged to actively participate in the process. Mediation is a "party-centered" process in that it is focused primarily upon the needs, rights, and interests of the parties. The mediator uses a wide variety of techniques to guide the process in a constructive direction and to help the parties find their optimal solution. A mediator is facilitative in that they manage the interaction between parties and facilitates open communication. Mediation is also evaluative in that the mediator analyzes issues and relevant norms ("reality-testing"), while refraining from providing prescriptive advice to the parties.
In science and engineering, root cause analysis (RCA) is a method of problem solving used for identifying the root causes of faults or problems. It is widely used in IT operations, manufacturing, telecommunications, industrial process control, accident analysis, medicine, healthcare industry, etc. Root cause analysis is a form of inductive and deductive inference.
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust law, anti-monopoly law, and trade practices law; the act of pushing for antitrust measures or attacking monopolistic companies is commonly known as trust busting.
Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual obligation to "procure", i.e. to "ensure" that something is done. When a government agency buys goods or services through this practice, it is referred to as government procurement or public procurement.
Basel II classified legal risk as a subset of operational risk in 2003. This conception is based on a business perspective, recognizing that there are threats entailed in the business operating environment. The idea is that businesses do not operate in a vacuum and in the exploitation of opportunities and their engagement with other businesses, their activities tend to become subjects of legal liabilities and obligations.
Preventive police is that aspect of law enforcement intended to act as a deterrent to the commission of crime. Preventive policing is considered a defining characteristic of the modern police, typically associated with Robert Peel's London Metropolitan Police, established in 1829. In recent years, however, British police have abandoned the idea of preventive policing in favour of "quick response".
A preventive action is a change implemented to address a weakness in a management system that is not yet responsible for causing nonconforming product or service.
Corrective and preventive action consists of improvements to an organization's processes taken to eliminate causes of non-conformities or other undesirable situations. It is usually a set of actions, laws or regulations required by an organization to take in manufacturing, documentation, procedures, or systems to rectify and eliminate recurring non-conformance. Non-conformance is identified after systematic evaluation and analysis of the root cause of the non-conformance. Non-conformance may be a market complaint or customer complaint or failure of machinery or a quality management system, or misinterpretation of written instructions to carry out work. The corrective and preventive action is designed by a team that includes quality assurance personnel and personnel involved in the actual observation point of non-conformance. It must be systematically implemented and observed for its ability to eliminate further recurrence of such non-conformation. The Eight disciplines problem solving method, or 8D framework, can be used as an effective method of structuring a CAPA.
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Human performance technology (HPT), also known as human performance improvement (HPI), or human performance assessment (HPA), is a field of study related to process improvement methodologies such as organization development, motivation, instructional technology, human factors, learning, performance support systems, knowledge management, and training. It is focused on improving performance at the societal, organizational, process, and individual performer levels.
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Proactive policing is the practice of deterring criminal activity by showing police presence. It includes activities such as the use of police powers by both uniformed and plainclothes officers, engaging the public to learn their concerns, and investigating and discovering offences and conspiracies to commit crimes so that the crimes cannot be committed. In contrast, responding to a complaint after a crime has been committed is reactive policing.
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Yrjö Waldemar Vesa was a Finnish engineer, businessman and vuorineuvos.