Robert Crandall on It Is Time to Move Ahead with Deregulation

totmauthor —  20 September 2011

As we approach the end of this Symposium, I am struck by how much consensus exists on this subject. Of course, we are not conducting this exercise under the auspices of the ABA. Nevertheless, there is sufficient intellectual backing for a major push to begin the deregulation of legal services. Despite warnings that this is a bad time to consider such action, I think that there are reasons why this is a very good time to proceed. Contrary to popular wisdom, the number of employed lawyers has expanded through the recession, if one is to believe the results of the CPS household survey. But the employment in legal services firms has declined according to the BLS establishment survey. This is consistent with Larry Ribstein’s view on the decline of Big Law. The number of lawyers is growing slowly, but they are not having as much fun as before and are therefore less likely to come to the defense of their guild.

Cliff Winston and I think that the best way to proceed is through a variety of different state experiments. Some states could allow bar exams for persons who have not attended law school or who have subscribed to on-line law school programs. Others could offer a variety of different exams for different prospective specialties. Still others could repeal their unauthorized practice of law prohibitions. Others could allow non-lawyers to own legal services operations. Still other variants could be tried, including total deregulation. Let’s see what works – and not only in the United Kingdom.

5 responses to Robert Crandall on It Is Time to Move Ahead with Deregulation

  1. 

    there is sufficient intellectual backing for a major push to begin the deregulation of legal services

    nothing like grading one’s own paper. :)

    it is fascinating to me that you never ask a real lawyer to comment. Ask any real lawyer in private practice and they will tell you: (1) there is no business in America more competitive than the practice of law; (2) if you want to deregulate the practice, remove all the stupid regulations restricting advertising and marketing, the sole purpose of such rules being to protect Big Business. The rules work by indirection. The passage of time is the best defense of any fraudster or wrong doer. The longer clients can be kept from a lawyer, the better. Let lawyers market and cold call and they will quickly design services that are more competitive and less expensive.

  2. 

    I know enough licensed lawyers who aren’t worth a damn, to suspect that removing the credentialing and oversight requirements associated with the practice of law is going to result in a flood of shoddy services that pretty much overwhelm the good and bad licensed lawyers alike. Sophisticated clients will of course hang on to their lawyers, but the big firms will be stressed and outsource as much as they can get away with to cheap legal services providers, maybe in China or India) (caveat emptor), and the better smaller firms will feel a big pinch and likely cut off the traditional career path of legal practice for most young law school grads (or law readers, assuming that educational venue reopens).

    It’s interesting that we’re talking about treating the diseases of mass tort, pro se and strict liability abuse, and perhaps regulatory sclerosis (the latter a wholly political disease) with a reform that appears to be aimed (intentionally or not) at wiping out the legal profession in its entirety. The law, and its practice, aren’t a purely economic function; they are largely cultural practices that happen to entail economics, among other things. Although they can be analogized to manufacturing processes or the provision of some simple servie or goods, they do not respond in the same way to the same economic inputs. For one thing, I’m not sure that outsourcing law to non-lawyers will result in the same economic efficiencies and happy outcomes as outsourcing nut and bolt manufacture to China. You can spec a screw pretty easily if you know metallurgy, stresses, and some basics about length and thread and head type. It is hard to spec good legal outcomes…

    I suspect there’s more than a whiff of libertarian-flavored utopianism at work here. The purer sort of libertarians seem to be actively hostile to the idea that culture matters, and the idea that law – and the adherence to it, and its effects – may be cultural and not the result of economic calculation, doesn’t seem to have been considered. Having worked in a discovery mill where law was commoditized, as well as in private firms and government, I realize that you can farm out some really basic stuff such as discovery, much due diligence work, and maybe provide layman’s guides sufficient for basic civil legal services. Beyond that what you pay a lawyer for is good judgment and skill at applying that judgment to hard-to-know facts and harder-to-predict dymamics of deal-making, litigation and public policy. Many people that I know have not in all their lives been able to acquire discernment and good judgment; I’m curious to see how we identify and commoditize it in this brave new deregulated world. Caveat emptor I guess.

  3. 

    Tamara Piety is probably correct in noting that the forum’s population of commentators did not constitute a random sample of balls drawn from the proverbial urn of expert opinion, and the consensus (to the extent there is one) must be interpreted in that light. Of course, there may still be a case for deregulation, though I am still skeptical about the explanatory power of the Winston et al thesis. As my prior post suggested, the study leaves too many remaining open questions (at least in my mind) to constitute a clarion call for wholesale reform. One I didn’t mention earlier (as I was constrained by the *regulation* that TOTM editors imposed on words counts!) is the troubling fact that a large and (evidently) increasing number of law school graduates evidently choose not to go into occupations for which either a JD or bar passage is a requirement, even after they have graduated and passed the bar. (See, e.g., Brian Tamahana’s Monday post at http://balkin.blogspot.com/2011/09/sobering-numbers-law-graduates-who-do.html). This trend seems odd, particularly if these credentials hand one the key to a lifetime of oligopoly rents. All that said, if reform is forthcoming in this area, I very much endorse Bob Crandall’s suggestion that we try to structure it (as much as possible) as a natural experiment, so that we can at least learn about how deregulation is likely to shake down, and legal academics / social scientists can study more informative data than is currently available. (Indeed, I have endorsed such experimental approaches elsewhere on this blog, with a some good natured push-back from Larry Ribstein — see http://truthonthemarket.com/2010/08/30/the-sec-vs-shareholders/). I suspect in this case, the natural experiment will have to be a pretty long-term one before it yields much useful information. But that’s ok — it’ll give the next generation of researchers a very cool project to work on.

  4. 

    I would like to step in and urge a brief utterance of alarm here. Whatever theoretical justifications may exist for this proposal, let us not forget, gentle readers, that we are the very people currently benefiting from this structural arrangement. Is everyone here seriously proposing that we damage our own interests just to prove a point? Being the ordinary-speaking man that I am, I must say that I ardently object.

  5. 

    It seems to me very problematic to assume that because lawyers are “not having as much fun as before” that they are likely to embrace the prospect of opening the profession that they have only just narrowly entered themselves, and may or may not be eking out a living in, to all comers.That strikes me as very unlikely. (And I’m not even sure that it is the case that if lawyers are having less fun it for any reason that can’t be traced to nagging insecurity about job stability and lower rates of compensation, reasons that aren’t profession-specific. it seems to me that there have always been a lot of people unhappy with law – at least the “Big Law” model.) I too was stuck by the amount of “consensus” in this symposium, but I wonder if it has more to do with the selection process than it is representative of widespread support in the public and the bar for deregulation. There is no question that, as one contributor noted, the current system of dealing with the informational asymmetry is imperfect and it is costly. But the proper basis on which to assess the cost is what the social/economic cost is of this model compared to the social/economic cost of an unregulated system. It might be that the costs to the public in incompetent “assistance,” fly-by-night practice, incompetent filings, etc. is even greater than under the present imperfect system. As another contributor pointed out, lawyers are not just like other service providers like plumbers who likewise may possess an information advantage; lawyers have the power to extract massive economic costs from potentially blameless individuals and entities. Moreover, lawyers, like doctors, are in the position of providing services that may have life and death consequences. I find it disturbing that so many of the postings here seem to (in effect) assume that anyone who holds themselves out as providing legal services will actually *be* providing legal services. No one should be fined for trying to help a family member deal with a legal problem where that family member is fully aware that the helper is not a lawyer. If what we are worried about is criminalizing this sort of thing I should think the appropriate response is law reform aiming at not sweeping these folks in, or even at creating categories of what you might call “mezzanine services” that involve routine legal paperwork. But these and other reforms are a far cry from simply sweeping away the entire existing structures of legal education and certification. That move may or may not result in greater access to legal services and address the justice gap (it may not address the gap if all that happens is a private certification process that sorts out real legal services from the phony), but it seems manifestly unlikely to do much to address to assist those currently seeking employment as lawyers and much to hurt them.