Limiting Competition in the Business of Law

Imagine if we had kept the same kind of guild for managing the airlines as we have in the business of Law today? We would still have expensive meals, assigned seating, few baggage charges but the fares would be two to three times as high.

Why not open up the law industry like we have the airline industry? Today this business is controlled and regulated by itself. Its stated mission is to protect the public but in reality its actions consistently reduce competition, protect attorneys and carry on the status quo. The American Bar Association (ABA) acts like a guild to restrict competition, limit the number of new attorneys, and make it very expensive for new entrants to upset the apple cart.

It probably doesn’t matter to you (directly) if some faceless corporation is paying $500 and hour for advice on a securities filing. But how about when you need assistance on a contract dispute that involves $25,000? How much “help” can you afford on a smaller dispute?

The American Bar Association approves law schools, manages the process of disciplining attorneys via State bars, and controls who can practice law via its administration of state licensing.

Here is what the legal industry does not do: 1) make it easy for an alternative approach to preparing future lawyers; 2) insist that attorneys tell their clients how much legal malpractice insurance they carry (in most states); 3) insist that attorneys tell their clients how many times they have been sanctioned or sued for legal malpractice; 4) make the complaint process against attorneys fast, transparent and fair; 4) use non-attorneys in the regulation of the legal industry (in any meaningful way); 5) demonstrate any correlation between passing the bar exam with providing excellent legal service.

There is a small glimmer of hope in a few minor areas of the law: 1) advertising is now allowed (albeit with some major restrictions); 2) in a few states individuals can take the bar exam without graduating from an ABA accredited law school; 3) foreign law firms (primarily from India) are competing with some of the research functions that were historically provided by big US law firms; 4) Legal Zoom and other online services provide legal forms that assist Americans with standard wills and contracts that were historically generated by attorneys at a much higher price; 5) internet services like elance.com allow clients to seek out legal and paralegal assistance from all over the world to do their own legal research rather than having to pay several times as much to a large US law firm.

This piece in the New York Times speaks to the obstacles to reducing the cost of law school.

The ABA requires a minimum percentage of full-time professors, strongly suggests tenure programs, and requires law schools to maintain expensive law libraries. And then they manage the accreditation process and have convinced the US government to only allow veterans to use their college benefits to pay for ABA accredited law schools.

It is time for far more competition in the business of law.