The Legal Profession and the Case for Fundamental Reform: Introduction

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I am grateful to Eugene Volokh for inviting me to post a series of blogs based on my Brookings book with David Burk and Jia Yan, Trouble at the Bar: An Economics Perspective on the Legal Profession and the Case for Fundamental Reform (hereafter Trouble at the Bar). In this introductory post, I provide some background about me, motivation for the book, and an overview of the remaining posts in the series.

I am an applied microeconomist interested in assessing the efficacy of markets and government intervention to enhance social welfare. I have conducted several assessments with colleagues that document both the vast inefficiencies from government regulations to address alleged market failures in the US transportation sector as well as the benefits from allowing markets, through deregulation, to solve many of their own problems.

The conventional view is that government regulations of prices and market entry and exit created inefficiencies in the process of redistributing income from consumers to producers. However, I came to learn that the larger costs of government regulations were dynamic; that is, they suppressed innovative activity by firms and consumers for decades that could have enhanced efficiency and spurred economic growth.

By contrast, instead of transferring wealth back from producers to consumers, transportation deregulation produced win-win outcomes. For example, air travelers and rail shippers as well as the airline and railroad industries benefited from deregulation. This was surprising, because observers did not predict that innovations in operations, utilization of equipment, and pricing that had been stymied by regulation would substantially improve industry efficiency, and that greater competition would transfer a significant share of the efficiency improvements to consumers in lower prices and better service.

Living and working in the Washington, DC area exposes me to the enormous influence of the legal profession on public policy. Trouble in the Bar notes that the legal profession lays claim to an entire branch of government, the courts; more members of Congress are lawyers than any other occupation; and since 1789, more than half of the nation's presidents, vice-presidents, and cabinet members have been lawyers. Even when economists have expertise in a policy area, such as antitrust, it is the lawyers at the US Department of Justice and Federal Trade Commission, not the economists, who decide both whether to bring an antitrust case, and the strategy to win it.

The significant influence of the legal profession in the United States has created two important problems. Examining them is a natural extension of my research program on the efficacy of markets and government.

First, the legal profession is able to regulate itself. I approached that problem, with Robert Crandall and Vikram Maheshri, as a classic example of regulatory failure in our 2011 Brookings book First Thing We Do, Let's Deregulate All The Lawyers. Regulation amounts to entry barriers erected by the profession that generally require lawyers to graduate from a three-year law school accredited by the American Bar Association and to pass a state bar examination to obtain a license to practice law. Kim Kardashian, who is attempting to practice law by serving an apprenticeship and passing the California bar exam, is not a common exception. Individuals who provide legal services without a license can be charged with the unauthorized practice of law.

Network industries, such as airlines and railroads, were thought to require entry regulation because they exhibited large economies of scale that prevented workable competition. Deregulation revealed that those concerns were exaggerated. Regulations created excess capacity that made it appear that network industries were characterized by large scale economies when, in fact, they were able to shed excess capacity and operate at close to constant returns to scale in a highly competitive environment.

Similarly, the justification for entry barriers to the legal profession is based on a mischaracterization of market conditions: namely, occupational licensing is necessary to ensure a minimum standard of legal services because consumers cannot distinguish between competent and incompetent lawyers, who will take advantage of them. However, advances in information technology have spurred new institutions that provide considerable information about lawyers' qualifications, disciplinary records, and assessments by clients. Such information, which is used extensively by consumers to inform them about legal and many other services, would be even more prevalent in a fully deregulated market.

First Thing We Do concludes that occupational licensing was providing no benefits to consumers while padding lawyers' pockets. Indeed, lawyers were earning premiums that were estimated to be an eye-popping $71,000 per practicing lawyer in 2004, and those premiums were widely shared among the profession. First Thing We Do called for deregulation that would make occupational licensing optional and would stimulate competition that would reduce the prices of legal services.

As noted, the larger costs of regulations are dynamic, which are reflected in the second important problem caused by the legal profession's enormous influence: lawyers have compromised the efficacy of policies affecting consumers of legal services, as well as policies affecting the public more broadly. In Trouble at the Bar, we take a long-run view of how the adverse effects created by barriers to entry in the practice of law have appeared throughout a lawyer's education in law school and subsequent career, including, in some cases, serving in elected or appointed high-level government positions. We conduct empirical analyses to shed light on the profession's key institutions and indicate how the profession's culture has evolved in a protected regulatory environment and how it has affected the rest of society.

The topic areas we discuss and the major conclusions we reach include:

  • Law schools and legal education—the returns to a law degree are declining; the law school curriculum should expand as should alternative forms of legal education.
  • Private law firms—the work environment and quality of life of attorneys is troubling, especially because lawyers who take leave to work in government have not been instilled by their law firm experience with the value of efficient and compassionate public policy.
  • Lawyers' choice of sector—an earnings penalty is associated with working in the public sector, which affects the allocation of legal talent between the private sector and the government.
  • Lawyers in the highest level of government—even when the government can attract highly capable lawyers, for example, at the Office of the Solicitor General, their effectiveness is limited by organizational and workplace constraints, while Justices on the U.S. Supreme Court are increasingly contributing to ideological polarization.

In the final analysis, Trouble at the Bar is concerned with policy toward the legal profession and how the legal profession affects policy, so in this series of posts I will use the book to discuss the public's access to justice, ideological polarity on the Supreme Court, and the efficacy of government microeconomic policy. I then synthesize the posts and draw conclusions about ways the legal profession and its impact on society could be improved.

Full disclosure: I am an economist applying my discipline's (annoying) practice of judging scholars and practitioners in other disciplines and telling them how to analyze the world and reach constructive solutions to difficult problems. I raise and address anticipated counterarguments to my positions, but you will have the last word with your online comments. I hope you find the material provocative.

NEXT: Today in Supreme Court History: April 26, 1995

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  1. The problem is far deeper and more intractable. The lawyer profession is a criminal cult enterprise with a 25000 strong hierarchy. It takes in a $trillion, and will never give any of it up.

    It must be crushed. There is full legal justification for the arrests of these 25000 traitors to our country. Their brief trials would present the sole evidence, their legal utterances. Sentencing for insurrection is 10 years. The law should be changed to permit summary execution, with no possibility of appeal. Get rid of this pestilential vermin and start over. If the new hierarchy does it again, repeat every 20 years if necessary.

    The reason it takes 100 years for substantive changes in the law is that we have to wait for everyone in the current hierarchy to pass way of natural causes. See slavery. See Jim Crow. Why wait, why suffer? These are vermin.

    1. An economist may not realize this fact. If the public is oppressed by this cult hierarchy, the lawyer is doubly so, and the regular judge triply so. Getting rid of them would markedly improve the quality of life, the income, and the public esteem for the profession and for the judges.

      The rule of law is an essential utility service, like water and electricity. Without it, one is spending all the time on physical survival. Nothing else can get done. The lawyer profession is in utter failure, like the electricity coming on an hour a day, at unpredictable times, with surges ruining appliances and starting fires. This failed occupation is totally unacceptable.

    2. This may be a silly question, but if you’re going to prosecute all the lawyers, presumably that includes all lawyers who work as prosecutors. So, who would prosecute the lawyers?

      1. God bless you for trying, but interjecting reason into that morass is a fool’s errand.

        1. Hi, Steve, aside from making money, can you name any subject, any self stated goal, any area of the law that is successful?

          1. The law is actually extremely successful. The problem is that you only notice it when it is broken. Nobody holds a press conference to announce what a good job the lawyers did memorializing a complex agreement.

            1. Those agreements cannot be enforced if for less than $million. See Trump’s Art of the Deal, where he never pays a debt. A black contractor on Facebook took 10 years to collect $5 million out of a $30 million job he did for Trump. eBay is enforcing promises to sell a CD for the 1 cent high bid. Ratings and market access are 100 more successful.

              1. Source for this contention? Also a properly drafted document doesn’t have to be enforced. Enforcement only comes after disagreement or bad faith practices. Let me assure you that when I was in private practice we did contract work and I never once made close to a million dollars on a case. Not even approaching the shores. Fun fact “suits” is not a documentary.

      2. No one is prosecuting lawyers. The hierarchy of the lawyer profession, around 25000 people, is being prosecuted.

    3. “It must be crushed. There is full legal justification for the arrests of these 25000 traitors to our country”
      One could have predicted that DB would be first in line to make his usual screed.
      Charity demands that I do not insult him today.

      1. Don. Feel free to insult me. That is all you have. These insults say more about your intellect than about anything else. Why can’t you rebut me?

        1. Because I don’t care to argue with fools

  2. Alright, which is the pseudonym: Clifford Winston or DavidBehar?

    Ever notice how they have never been seen in the same room?

    1. These views are understood and held by most people at any diner. Millions of crime victims. Millions of victims of Rules of the Road enforcement. Millions of impoverished people suffering under lawyer stupidity. Millions of bastards with no fathers due to lawyer rent seeking. The American people are sick of you lawyers. Lawyers are sick of you lawyers.

      1. ” most people at any diner.”
        Someday DB will get the chance to move up from diners to proper restaurants

        1. The people at the fancy restaurants want you all dead. The people a the diner are more charitable, having lost less than the rich people. I appreciate the rule of law, and do not want the lawyers hurt. I want you enriched, and more esteemed from your success.

  3. The conventional view is that government regulations of prices and market entry and exit created inefficiencies in the process of redistributing income from consumers to producers.

    Conventional where? Because that hasn’t been the conventional view in economics at least since the likes of Ronald Coase, Douglass North, Oliver Williamson, Elinor Ostrom, and Oliver North won the Nobel Prize. Some government interventions create value, some destroy value. The tricky bit is figuring out which is which.

    1. Oliver North won a Nobel?

      1. #Facepalm…

        Oliver Hart. (My brain was still trying to remember how many s’s there were in Douglass North’s name.)

      2. Oliver North might have won a Noble Prize, but probably not a Nobel Prize.

      3. Good catch, bernard.

        1. Thanks, but it was an easy popup.

  4. O, and as for the merits: While legal advice is a credence good – meaning that you can’t even evaluate its quality after you buy it, much less before – I don’t think occupational licencing is justified for anything other than appearing in court. The effecient management of the court’s time and resources justifies keeping the hacks out, but otherwise I don’t see why anyone should have the government’s permission to give advice about the law.

    1. Having seen the quality of hacks who appear in court with distressing regularity, I would argue that occupational licensing is a spectacular failure even at the one thing you think it might be good at.

      And I’m not buying the “but it would be even worse without it” argument – not without some actual historical evidence to back up that assertion.

  5. Even when economists have expertise in a policy area, such as antitrust, it is the lawyers at the US Department of Justice and Federal Trade Commission, not the economists, who decide both whether to bring an antitrust case, and the strategy to win it.

    I think the prevalence of lawyers in policy-making roles in government, including Congress, is a problem. There is little, AFAIK, about their training or professional experience that qualifies lawyers to deal with, for example, environmental or economic issues.

    1. This I agree with wholeheartedly. Lawyers should not set policy. They should find constitutional ways to enact policy.

      1. But if any government regulation is potentially an unlawful taking under the 5th amendment, the government might not have much of a choice but to put lawyers in charge of everything. (Over-constitutionalisation is a problem in Germany too. It’s not just a US thing.)

      2. Steve, perhaps, the lawyers can start to read the plain 8th grade language of the constitution. So far, they are making things up, and imposing their personal preferences and biases.

        1. Activist lawyers are indeed part of the problem, but de-regulation is not a solution. Imagine an AOC having more ability to influence the court…

        2. “perhaps, the lawyers can start to read the plain 8th grade language”
          Charity forbids ridiculing the weak of mind and poor of spirit

    2. But, but, bernard,
      There are two groups professions that claim that their members can do anything. Those are physicists and lawyers.
      I’ll wait for Sarcastr0 to weigh in on that.

      1. “There are two groups professions that claim that their members can do anything. Those are physicists and lawyers.”

        I have never heard a reputable lawyer claim he could make conservative positions more attractive to a broader (educated, modern, accomplished, reasoning) audience.

        (I have seen a few try, but they fail, vividly.)

        1. Out of curiousity and i realize you may not be an expert, but what’s the level of incidence of the Dunning Kreuger effect among those that consider themselves modern accomplished reasoned people as opposed to the genreal public?

          1. *general.

  6. As a practicing attorney I have some perspective on the problems in the legal field. I should start out by saying that 1) I’m a government attorney so I in no way shape or form benefit from the narrowed field. My pay sucks and it will always suck. and 2) Having an economist critique the advisability of regulating the legal profession makes as much sense as letting me as a lawyer set fiscal policy.

    Unlicensed practice of law is a real and genuine problem that negatively impacts the rights of those unfortunate enough to be caught up in it in ways that are permanent and irreperable. There is a finality to most actions that occur in the law and there is generally no unringing the bell.

    Here is the unvarnished truth of the matter. You hear terrible legal advice all day, every day. You hear it on TV. You hear it from your Uncle who claims there can be no income tax because the Supreme Court never overturned Pollock, despite there being an admendment to the constitution. Most importantly, there is an absolute TON of terrible legal advice given out every day by real estate professionals, under the auspices of their being “experts” in their field. UPL is already a plague. I’m not sure why you want to take a bunch of proverbial diseased corpses and shove them down society’s collective well so we all catch the disease.

    1. Steve. Without violating your privacy, whatever your goal as a government lawyer is, how much is achieved? For example, you may be a public defender. What fraction of innocent defendants accept a plea, and go to prison? In another example, if you are an environmental lawyer, how much did you drop the target pollutant? Without telling us your business, tell us your success rate.

      1. Then, Steve, I know you are an at will employee. Have you had a supervisor ask you to do something or to not do something for what you what you knew were political reasons?

        1. Absolutely. Yes. that’s the lot of all government workers. I have refused to participate on ethical grounds. Regulation of lawyers in that case actually protects the public. Government lawyers can refuse to participate in certain activities on the basis that they could be disbarred. I have used those rules to not write opinions I know to be false in the furtherance of the policy agenda of someone else in government.

        2. ” I know you are an at will employee”
          Oh really?
          Almost all government workers may only be dismissed for cause.

          1. Untrue. We are entitled to a Laudermill hearing but its more a lack of will and the reality of inertia that keeps non union public employees in their jobs without threat of unemployment.

            1. Steve,
              The way I read the Laudermill hearing, it assumes that there is an employment related dispute of fact. You may respond that such is not a true “for cause” rationale. But as you observe it does create a molasses that looks a lot for “for cause.”

              1. You could reply that in the private sector unemployment insurance benefits do a similar thing especially for non-exempt employees

            2. Steve,
              Looking more deeply, were your statement true before last year Trump would have had no reason to create a new category of federal “at will” employees.

              “President Donald Trump on Wednesday (Oct. 26, 2020) signed an executive order to create a new Schedule F of policymaking federal employees. The order covers “employees in confidential, policy-determining, policy-making or policy-advocating positions” and instructs agency heads to determine which current employees fit this definition and move them into this new classification, “Government Executive” reported. Positions in the new Schedule F would effectively constitute at-will employment, without any of the protections against adverse personnel actions that most federal workers currently enjoy. However, individual agencies are tasked with establishing “rules to prohibit the same personnel practices prohibited” by Title 5 of the U.S. Code.
              https://www.benefitspro.com/2020/10/27/president-trump-signs-eo-creating-new-classification-of-at-will-employment-for-federal-workers/?slreturn=20210326135928

              1. There are many levels of government. Federal employees are but one subsection of the larger group of government employees.

                1. True but the same applies in many states, certainly in CA.

      2. My goals are nearly always achieved as I am (somewhat ironically as a Libertarian) a tax collector.

    2. I hear you. But what about somewhere in between the guy on TV and the lawyer. Like the difference between a doctor and my grandmother telling me to drink ginger tea, there a wide space for trained, knowledgeable people to dispense advice and fill out forms. And frankly, medicine is complex. There are many types of law that are not–basic bankruptcies, basic contracts, basic wills. Why not let someone get an undergrad in wills and write wills?

      1. you’re basically still arguing for regulation. You just want different regulation. I’m not saying that the regulations should be exactly as they are unchanged forever. Religious adherence to the current system is foolish (since it has its flaws) but don’t confuse what you’ve suggested with deregulation.

    3. Having an economist critique the advisability of regulating the legal profession makes as much sense as letting me as a lawyer set fiscal policy.

      Your issue here is a mix of conflating questions and misplaced worship of “experts”. To highlight the issue, imagine we have a legal system where disputes are handled by playing a game of chess with the winner of the game being victorious in the argument. When you suggest the system of resolution based on chess is stupid, Kasparov and Carlsen stand up to make the point “you know nothing about chess”. The point being that playing the game and the philosophical question of “is this system a good thing” are fundamentally different questions.

      So as a lawyer, when you tell me exactly what forms I need to be filing and advise me what the judge is going to be asking me, I am going to listen. When you opine about how the system should be structured, frankly your opinion is no better than anyone else’s and is likely worse.

      I am not so keen about letting economists set financial policy either actually, and yes, you would probably do as well.

    4. No disagreement that there’s a ton of bad advice out there. The fact that all that bad advice is out there despite the occupational licensing should be a pretty big clue that the occupational licensing isn’t solving the problem of the bad advice.

      Note that more than a little of that bad advice is from licensed lawyers.

      You’ve identified a valid problem but it does not logically support your premise that licensing is a net good.

  7. The first thing to do is to define what it means to “practice law”. Laws against it are circular; they say that unauthorized practice of law is when you practice law without a license, without defining “practice law”.

    Appearing in court is an obvious example, but everything else is just talking… and talking is protected by the First Amendment.

  8. Professor Winston,

    While the medical profession has obviously not solved all its problems, one thing that it has done that the legal profession hasn’t is to create formally licensed allied professions with lesser educational requirements e.g. nurses, physicians assistants, and more. Nurses have multiple levels of license (LPN, RN, nurse practitioner, etc.) requiring anything from an associate’s degree to a master’s. People at the upper end of the allied professions spectrum have increasingly been able to do things like prescribe medicine and see patients, sometimes under a doctor’s increasingly nominal supervision.

    What do you think of allied legal professionals who would be formally licensed and have formal educational requirements that could be done as part of a bachelor’s degree (perhaps a master’s for some things) and could do things like wills, contracts, mediation, correspondence, advice on these matters, backoffice things discovery review, and representing clients in small claims, trafffic, and other lower-level courts?

    This would be an intermediate step between the present regime and complete deregulation.

  9. The book may be very timely because IMO, the legal profession is a very ripe target to be taken over by automation and AI.

    I’m not saying that AI is ready for the job today. I’m saying that attorneys and judges are low hanging fruit for future AI developments, except to the extent that professional licensing rules protect serve to block outsiders.

    1. Archibald,
      How much do you know about AI. This is an honest question.

      If you have some real familiarity, in what areas would you say the AI can play an initial role?
      Litigation, contracts, discovery, criminal law?

      1. Discovery is more a matter of automation.

        Contracts should be a natural for automation.

        Appeal briefs and judgements could benefit from a machine that has digested every opinion and every footnote of every decision in history.

        Litigation I see as having more of a poker element in it. Judgement of other humans is still a major skill. Ditto for criminal litigation.

        But I can see where analysis of successful and unsuccessful arguments and strategies from past cases could amplify the power of an attorney.

        As a litigant, I would much rather trust a machine to enforce rules and procedures without emotion than I would a human judge.

        It’s wrong to think of it as replacing people in one step. The first steps will be to make good attorneys more effective and more productive, by putting tools and information at their disposal. Gradually, these AI assisted super-attorneys may become effective enough that they need fewer partners to handle the case load. Only at a very late stage might the super lawyer say, “My machines could handle many of the simpler clients without my supervision. So be it.”

        Consider the travel agency business. Sites like Orbitz and Priceline decimated their industry, but the founders of Orbitz and Priceline probably had strong travel agency backgrounds.

        If you think automation rather than the spooky word AI, it all becomes easier to envision. Who are the architects of automation? It is always the people who know how to do things the old fashioned way.

        1. AI might as well take a shot at the law, since medicine didn’t work out so well.

          1. How far back are you referring, VR.

          2. VR,
            That report was 4 years ago, AI and machine learning have made large advances since then.
            AT’s list is also pretty much sorting big data. However, machine learning can and now does go much further than that

            1. There have been advances in some areas like natural language processing and feature recognition, and computer vision in particular has benefited, but nothing like the brain-in-the-box results that were anticipated forty years ago during the explosion of neural network research. We really aren’t any closer today to building a Star Trek computer than we were then.

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