Although obviously steeped in history and tradition, common law has seldom been studied in relation to its development, as one theorist proposes that it be understood.
What does the bold part means?
Subordinate clauses introduced by verbs such as "propose", "suggest", "order", "instruct", "demand" or "ask" often use mandative subjunctive verb forms. The subjunctive is identical to the bare infinitive (the plain form of the verb) - such as be:
Although obviously steeped in history and tradition, common law has seldom been studied in relation to its development, as one theorist proposes that it be understood.
This could equally well have been worded:
Although obviously steeped in history and tradition, common law has seldom been studied in relation to its development, as one theorist proposes that it should be understood.
In other words, a theorist has proposed that the appropriate way to understand common law is in relation to its development.