First thing we do…

by Russ Roberts on September 5, 2011

in Legal Issues, Podcast

In this week’s EconTalk, Cliff Winston makes the case for deregulating the market for lawyers. The conversation is based on his new monograph with Robert Crandall and Vikram Maheshri, First Thing We Do, Let’s Deregulate All the Lawyers.

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Noontime Spender September 5, 2011 at 8:05 am

Shakespeare had a rather different idea.

JS September 5, 2011 at 8:51 am

I believe a high percentage of politicians are lawyers, so it’s unlikley deregulation of ‘the professions’ will start with them, although it’s a good place to begin. Every profession uses politics, (licensing, etc). to limit competition.

The entire legal system is set up for the lawyers to make money by making it too difficult for anyone to represent themselves.

Off topic a little, a problem with our legal system is with regards to the enforcement of judgments. The main ‘original’ purpose of government is to protect and enforce individual rights. Look at government now. It’s into every aspect of our lives, yet if you win a judgment in a law suit, you have to pay the lawyers and court costs without any certainty that you’ll collect anything from the defendant.

At any given time, for my business I have legal action against debtors that owe me money. I win all the judgments but then my lawyer, or lawyers, since we have to get different lawyers for each state that we’re involved in, says we can’t collect because we can’t find where the debtor has his assets. Now, if I have won a lawsuit, shouldn’t there be a police enforcement on my behalf? Don’t I have the right for my government to secure the judgment for me? Why should I have to hire a private investigator to see where assets are being kept? Why shouldn’t the debtor be forced to forfeit his assets to the court or be given a court order describing how to secure the funds in order to make payment if he is not able to at the time of the judgment? Why can’t there be a type of ‘probabtion officer’ assigned to make losers in lawsuits meet the demands of the judgments against them?

The answers to these questions is because the legal system is not set up for us. Its’s set up for the lawyers to make money.

Ryan B September 5, 2011 at 9:46 am

I work in the IT department at a large law firm and my salary is 15% higher than the best offer from other employers. So, I’m against deregulating the market for lawyers. Funny how that works.

Fred Smith September 5, 2011 at 10:10 am

I’m only about 20 minutes into the podcast, but I want to post this now so I forget to do it later. The discussion right now is about keeping the supply of lawyers low due to bottlenecks in the form of law school and the bar exam.

I highly recommend you check out the new blog by University of Colorado Law Professor Paul Campos “Inside the Law School Scam”. The main subject of the blog is how and why law schools today are producing many, many graduates who either can’t find employment or who can only find it for wages unsuitable for servicing their student loans. Law school costs an average of about 150K and the typical entry level job for a law school graduate pays about 40K. And they are very hard to get. Unemployment for law school graduates is very high right now. The recession has made it worse, but the problem has existed for a while.

There is no shortage of licensed attorneys and the bottlenecks don’t function to provide them jobs or high salaries. Law is a world of haves and have nots. The haves are rich and no amount of increased supply functions to compete that away. The have nots are poor, they are not able to leverage their credential into a paying job. Econ 101 is failing from both ends.

You hear about corporate lawyers (known as BIGLAW) making 160K right out of law school. That wage doesn’t fluctuate with supply. BIGLAW firms pay that salary to the most prestigious law school graduates and they want the salary to be high because it lends the appearance that these grads are better than they really are. It also lends the appearance that you’re a top law firm, if your first year associates are making as much as the other top firms pay. This only applies to about 5 or 10% of all law school graduates anyway. There is an enormous supply of law grads to compete down this wage and it just doesn’t happen.

The rest enter a market where they earn far less, as I said above, the typical starting salary is around 40. To some extent competition amongst these small-money lawyers is driving down the price of legal services. If you check Craigslist, for example, you’ll find plenty of lawyers to handle your small claims suit or your criminal conviction, etc. There are a couple of problems that happen at this level. The first is that most of these fresh grads don’t actually know how to practice, law school does not teach that. So while they may come cheap, they won’t be any good. The second is that legal services hasn’t really evolved in such a way that you have big law firms to services small-money clients. With a few exceptions, small-money clients need to go to small law firms and these small law firms don’t benefit from economies of scale, so they have to charge a lot. There is no Wal-Mart for legal services. It would be nice if we had one.

Deregulation would still be a very good idea, however. The mass of unemployed lawyers I mentioned above would be fine if they didn’t have 150K in debt to repay. If they had never been required to jump through the law school hoop, they could rebound from this failure much more easily and move on to do something else.

Check out Campos’ blog.

Dan J September 5, 2011 at 1:53 pm

See Thomas Sowell books on Univ. Of Colorado and why law degree is expensive……. Accreditation. The Bar will toss accreditation of schools who challenge the Ivy Leagues with low tuitions and high success.

Chucklehead September 5, 2011 at 11:53 am

Do we deregulate them before or after we shoot them?

kyle8 September 5, 2011 at 12:47 pm

Why waste a bullet on a lawyer? Just hang em. Then deregulate them, it will be easier because they won’t be able to hold up any objections.

Richard Stands September 5, 2011 at 12:53 pm

“The opposing attorney wasn’t able to file that brief. He got hung up in court.”

Michael E. Marotta September 5, 2011 at 2:30 pm

Without a law degree from an American Bar Association–sanctioned institution, a would-be lawyer is allowed to practice law in only a few states. ABA regulations also prevent even …

If you read the biographies of the present Supreme Court, you will see that several have LLB degrees, not JDs. In the long history of the nation’s highest court, many who served then would not be allowed to practice today.

GU September 7, 2011 at 10:35 am

An LL.B. from an American law school is the equivalent of a J.D. You are absolutely wrong. There are in fact still some old timers with LL.B.s who practice to this day. Moreover, judges need not be lawyers.

We originally called law degrees “LL.B.” because we were aping the Brits, who study law as undergraduates. Law has always been a graduate subject here, and to reflect that fact, the degree’s name was changed to “J.D.” The newly prestigious M.D. also had some influence on the change to the J.D.—if you can believe it, lawyers used to be FAR more prestigious as a group than physicians.

khodge September 5, 2011 at 4:47 pm

I used to think that this blog was utopian. Now I know that it is merely delusional.

vikingvista September 5, 2011 at 8:58 pm

Why is it that accusations of “utopian” are most common when it clearly isn’t true? It is a libel that seems common across the ideological landscape. I assume it is a function of gross ignorance. What do you think?

Jim September 6, 2011 at 10:16 am

First thing we should do, is not allow lawyers to control the law. In a few years, it will be unnecessary to regulate them.

There is a close synergy between creative destruction and the idea of seasons. Both ultimately tear down the status quo and re-simplify, which allows new growth.

It is one of the foundational issues with any bureaucracy in any institution. There is no natural enemy or force to over-building. There is no reason to tear down the growing labrynth and simplify.

Shakespeare's Debtor September 6, 2011 at 10:29 am

Professor Roberts,
So Crandall and Maheshri play Dick the butcher?
I’m not sure that’s a play I want to see.
John (Shakespeare’s Debtor)

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