There is renewed interest in the institutional economics and the politics of development literature in the impact of colonialism on contemporary political and economic institutions. A common thread in this literature is the argument that political, legal and economic institutions founded by the colonizing state reflect the preferences of the colonizer, whether it is the extraction of resources or the building of representative institutions. This paper investigates the formation of legal institutions in Mandate Palestine as a process of colonial institution building. I demonstrate that legal institutions adopted under colonial regimes do not necessarily reflect the preferences of the colonizer. Although British administrators favored the implementation of a British common law system in the Palestine Mandate, the outcome was a combination of civil law institutions with religious courts, which later laid the foundations of Israeli legal pluralism. I argue that the British colonial administrators were limited in their ability to build legal institutions based on the British common law system in Palestine Mandate partially because they faced an acute shortage of qualified lawyers trained in the British tradition. Jewish immigration from East and Central Europe increased the number of lawyers trained in the civil law tradition, while Palestinian Muslims retained Ottoman Islamic law, particularly in personal and family affairs. By focusing on the human resources aspect of colonial institution building, this paper contributes to our understanding of the impact of colonialism on the legal and political institutions of post-colonial societies in the Middle East.