For decades the legal industry has operated as a monopoly, which has been made possible by its self-imposed rules and state licensing restrictions — namely, the requirements that lawyers must graduate from an American Bar Association-accredited law school and pass a state bar examination. The industry claims these requirements are essential quality-control measures because consumers do not have sufficient information to judge in advance whether a lawyer is competent and honest. In reality, though, occupational licensure has been costly and ineffective; it misleads consumers about the quality of licensed lawyers and the potential for non-lawyers to provide able assistance.
Rather than improving quality, the barriers to entry exist simply to protect lawyers from competition with non-lawyers and firms that are not lawyer-owned — competition that could reduce legal costs and give the public greater access to legal assistance.
In fact, the existing legal licensing system doesn’t even do a great job at protecting clients from exploitation. In 2009, the state disciplinary agencies that cover the roughly one million lawyers practicing in the United States received more than 125,000 complaints, according to an A.B.A. survey. But only 800 of those complaints — a mere 0.6 percent — resulted in disbarment.
What if the barriers to entry were simply done away with?
Legal costs would be reduced because non-lawyers, who have not had to make a costly investment in a three-year legal education, would compete with lawyers, who in many states are the only options for basic services like drafting wills. Because they will have incurred much lower costs to enter the field — like taking an online course or attending a vocational school — and can operate as solo practitioners with minimal overhead, these non-lawyers would force prices to fall. The poor would benefit from the lower prices for non-criminal matters, and poor litigants, who might be unrepresented in criminal matters like hearings because they could not afford a lawyer and because of dwindling state legal aid, would be better off.
At the same time, if corporations — and not just law firms, now structured as partnerships — could provide legal representation, their technological sophistication and economies of scale could offer much more affordable services than established law firms do. These firms, in turn, would have to reduce prices to compete.
Of course, lower legal prices would cause new law school graduates to be paid less, but more jobs would be available for such graduates because the demand for lawyers would increase. And new graduates would begin their careers with less law-school debt, because alternative providers of legal education would force law schools to reduce tuition.
Leaving aside the matter of letting non-lawyers and non-lawyer-owned firms do legal work, more could be done to enhance consumer choice and attorney accountability. One practical measure for more effectively regulating the field and lowering costs would be for third parties to compete to provide accurate and useful information about the quality of lawyers. Third-party providers of legal services information could do a service similar to that provided by Consumer Reports and Zagat Survey and effectively regulate the legal profession by monitoring the law firms’ performance and effectiveness.
Consumers would be in a position to demand credible and complete information about a practitioner. Incompetent and dishonest lawyers would face immediate exposure over social and legal networks, thereby alerting other consumers of potential problems with their services. By sharing their experiences, consumers would understand more fully which credentials and evaluations are the most accurate and useful signals of competence and value.
Thanks to resistance from lawyers themselves, strong competition has not developed in the market for information. The efforts of a leading legal-information provider, Avvo, have been the target of a class-action suit filed by lawyers who disapprove of the firm’s ratings system. By threatening lawsuits and not cooperating with Avvo’s requests for information about attorneys’ licensing and disciplinary records, several states have impeded Avvo’s ability to provide information. But in the absence of an open, competitive approach to information about the quality of legal services, the existing licensing and discipline system creates a false sense of security.
To protect clients from bad lawyers, current barriers to entry try to separate the wheat from the chaff among potential legal practitioners. A market for information, though, would let consumers identify the chaff more precisely, saving more of the wheat. It is worth recalling that two of the finest lawyers and civil rights advocates our country has ever produced, Abraham Lincoln and Clarence Darrow, would not be allowed to practice law today under current rules. (Lincoln was self-taught; Darrow attended the University of Michigan Law School but did not graduate.) Eliminating entry barriers and allowing non-lawyers to perform legal services would, among many other gains, ensure that such talents have a place within our legal system.