Barriers to Entry

I was recently sent an op-ed from the New York Times, which argues in favor of lowering the barriers of entry for attorneys.  Here's the link.

Thought-provoking, to be sure, but I don't agree with this op-ed.  Winston seems to make two assertions: (a) lowering the barrier to entry would lower the costs of legal representation, and (b) there should be a rating system for lawyers, like Zagat's or Consumer Reports.

I'll start with (b), the idea that there should be some sort of "freedom of information" for attorneys.  First of all, this already exists.  Martindale Hubbell has exactly that.  It's as useful as Zagat's, which is to say I've never used it.  It's also important to remember that, with very few exceptions, a lawyer is not a restaurant.  If you want to know whether your lawyer is good, the place to start is the bar association.  Every county in California has its own bar association where you can go to get referrals.  In addition, every single lawyer that's licensed by the California Bar has his record published at calbar.org, including whether he's ever been disciplined.  Don't you wish you could get that for your accountant?

Now let's talk about the idea of lowering the barrier to entry for lawyers.  Every state makes its own rules, a throwback to the days when state sovereignty still mattered.  (There are a lot of anachronisms in legal practice.)  It's true that the Bar is a "good old boys' club," out to protect its own interests (women included).  It's also true that discipline is a "revolving door" where malefactors are easily let back in, and we get to write our own rules.  The California Bar is a private organization that gets to set policy that will be enforced by our law enforcement and courts; an anachronism indeed!  (There have been mutterings to change that, but I don't think it will happen; the California legislature has its hands full already.  And half of them are lawyers anyway.)  It may be impolitic to say this out loud, but let's call a spade a spade.

Indeed, the barriers to entry are higher in California than they are anywhere else in the country.  (New York is rumored to have a difficult bar exam too, but I have a friend who just took it and he said it was easier than California.)  In other states, the exam is usually only two days, it's much more forgiving, and the passage rate is higher.

All that being said, is lowering the barrier to entry really a good thing?  First of all, we've already got droves of unemployed lawyers, and the op ed admits that the rewards for getting a legal education would decrease.  I still have $100,000 in debt; why make it harder to pay that off?

The argument in favor is that it would decrease the costs of getting legal representation.  That implies some sort of market effect, but the first rule of economics is that cost is a direct function of supply and demand.  In the past few years, supply has dramatically increased relative to demand; ie. the number of lawyers has increased relative to the number of legal jobs available.  Lawyers are already willing to work for less than they were before, but the plethora of "budget" firms has not materialized.

The idea that more lawyers would make it cheaper simply isn't true, and the proof of that is the last four years.

Of course, that's not entirely true either.  I've seen a lot of the larger firms, like Morrison Forester, downsize because large corporations can't afford to pay them in these lean economic times.  A lot of those ex-MoFo attorneys move to small or midsize firms, which can offer essentially the same quality of representation, but for a lot less money.  So if you're talking about a corporation with a $1 million legal budget, then yes, the cost of representation has gone down.  Meanwhile, the ranks at Legal Aid are swollen because of the scores of attorneys looking to keep their skills fresh any way they can.

What about the idea of corporations providing legal advice?  Well, turns out that already exists too.  Most attorneys form a PC, which stands for Professional Corporation, or an LLC, which stands for Limited Liability Company.  The practical effect of these business types isn't much different from the classical C-Corporation that you're used to seeing (like Coca Cola).  But are we going to see Walgreens-style legal corporations?  No, we're not.

Another reason for that is that there are legal standards for representation.  You are required to offer a certain level of service to your client, regardless of how much you charge them.  It's the same reason why doctors are never cheap.  (Sure, there are free clinics, but there are free legal clinics too; that's not what Winston was talking about.)

Bottom line: lowering the barriers to entry won't benefit ordinary people, but it will harm the hardworking professionals who are trying to make a living in what is already a very difficult market.

J<