Archives For licensing

Wal-Mart lawyers

Larry Ribstein —  11 November 2011

Yesterday’s WSJ discussed Wal-Mart’s (possible) plan to dominate the industry of primary health-care clinics:   

Wal-Mart said in its proposal document that it is interested in offering services, including clinical care such as asthma, sleep apnea and osteoporosis monitoring, diagnostic services such as allergy and blood testing, and preventive services such as vaccinations and physical exams, as well as health and wellness products. It asked vendors to propose low-cost plans and said it would make final selections by January

Wal-Mart is evidently responding to the expansion in demand for such services that could result from Obamacare.

Staffed by nurse practitioners and physician assistants, the clinics are increasingly pushing into the management of chronic diseases like diabetes, helping to fill a shortage of primary-care doctors that is only expected to worsen as health-care reform increases the number of Americans seeking their services. The clinics help lower health-care costs by dealing with patients with basic illnesses or nonemergency issues who otherwise might have gone to an emergency room.

But Wal-Mart already faces stiff competition in the medical field from such big players as CVS (645 clinics), Walgreen (347 clinics), Kroger, Target and Safeway. 

So maybe Wal-Mart would be interested in leading the way in the less-crowded field of low-end legal services, once deregulation comes to our shores.  

Should this happen?  If in medicine, why not law? The need for lower-cost legal services is surely as great as that for medical services.  The public is protected by the providers’ need to protect their costly brands. 

My point here is only that, like it or not, the Wal-Mart lawyer is rapidly getting more plausible.

Jordan Weissman is scared about Winston & Crandall’s plan to deregulate all the lawyers.  He admits that the idea has some appeal, but concludes that “a lot of it is also completely bunk.” He says the proposal is basically irrelevant for big law, where clients are looking for top talent (although he’s on board with non-lawyer financing of big firms).  But for small-time lawyers, “without licensing you’ll welcome incompetent lawyers into the market.”  He doesn’t have W & C’s confidence in third party intermediaries’ ability to do the screening or that “most consumers will be savvy enough to do their research and protect themselves.”

Weissman has a point: the idea of simply deregulating the whole industry is too simplistic.  But he needs to check out our symposium before assuming that the alternative is just a few relatively modest tweaks.

The possible futures aren’t limited to the “legal profession” as we know it today, but extend to the creation of a legal information industry.  Deregulation isn’t all about lawyer licensing. Most importantly, it will involve dismantling the regulatory infrastructure that requires legal information to be parsed out by lawyers one client at a time. Kobayashi and I discuss some of the possibilities.

The likely consequences of meaningful deregulation will not be more incompetent lawyers.  Rather, lawyers will have to prove their value against an array of technologies and information services that make legal advice cheaper and more accessible to ordinary consumers.  Whether or not they continue to be licensed, lawyers will have to get better in order not to be replaced by machines.  Licensing may remain, but its domain will shrink.  The changes throughout the existing profession are likely to be vast.

New York Taxis

Paul H. Rubin —  21 October 2011

The New York Times reports that the most recent price for a taxi in New York medallion is $1,000,000.  Wikipedia reports that there are 13,237 licensed cabs in New York.   (A “medallion” is  the physical form of a taxicab license.)  This means that the present value of the rents created by limiting taxicabs is $13,237,000,000  — thirteen billion dollars.  This is just the rents; the total lost consumer surplus is much greater because the lack of taxicabs creates substantial deadweight losses.  For example, I am confident that many people have cars in New York only because they cannot count on getting a cab.  Cabs change shifts during rush hour because they can earn less at this time and so that is when they go out of Manhattan to change drivers, just when demand is greatest.  (This is also caused by the relatively too low price for waiting compared with the price for driving.)  There is a proposal which will make it easier for limousines to pick up passengers.  Of course, the taxi owners are opposed to this plan, but it would clearly be an efficient change.

Taxicabs in Milwaukee

Larry Ribstein —  28 September 2011

I’ve often discussed the wonderful world of professional licensing beyond lawyers and its perverse effects on entrepreneurship.  The posts have covered licensing of witches, horse teeth floaters, cat groomers, and tour guides.  Here’s a story about taxicabs.

Milwaukee allows 321 taxicabs. Almost half the licenses are owned by one person.  The Institute for Justice has sued, alleging that the limitation is unconstitutional on due process and equal protection grounds.  The suit notes, among other things, that the ratio in Milwaukee is one for every 1,850 residents, compared to one per 935 residents in Seattle, one per 550 in Minneapolis and one per 480 residents in Denver.  It argues that “the artificial scarcity of cabs harms Milwaukee citizens and visitors through limiting competition in the taxicab industry and creating inferior customer service – including longer wait times for cabs and a lack of available cabs in modest and minority neighborhoods.” The Milwaukee Journal Sentinel has the story, and IJ has a video.