Two countervailing trends have challenged scholars and policy makers in the debate about law and economics in the past two decades. The first was the emergence of legal origins theory in the late 1990s, which asserts the economic superiority of common law over civil law. The second, beginning simultaneously, was a sequence of crises of increasing magnitude in the very financial markets on which that assertion was based. Both trends seemed to unsettle cherished certainties about the rule of law and the proper institutional environment of market economies. They also deprived the American, European, and Japanese donor community of its shared sense of legitimacy in offering advice for legal reforms in developing and transforming countries. Traditionally, scholars of comparative law focused on functional equivalences and increasing convergence between common law and civil law rather than on their obvious historical differences. On that basis, legal reforms in developing and transforming countries in the 1990s, and Western support for them, could proceed on the assumption that both common law and civil law were functional pillars of institutional economics. Institutional economists tended to share that assumption. The older ordo-liberal school led by Walter Eucken, Franz Bo¨hm, and Friedrich von Hayek, a great admirer of judge-made law, was developed in a civil law country, and neither Ronald Coase’s nor Douglass North’s new institutional economics based on transaction costs made any distinction between common law and civil law. In the mid-1990s, however, a group of political scientists and economists led by Rafael La Porta, Florencio Lopez de Silanes, Andrei Shleifer, and Robert Vishny, commonly known as “LLSV,” began asking the important question why the stock markets of London and New York were so much larger and dynamic in the 1990s than those of Paris and Frankfurt. Their first bold step was to look for behavioral patterns and legal rules encouraging the provision of capital to financial markets. They assumed that common law favors the trust of uninformed capital owners in professional insiders acting as agents in the best interest of their principals.