In America, many things are regulated, far less for the benefit of the public than for the benefit of the group that’s being regulated. Many organized groups seek various kinds of government regulation because it suits their interests. Politicians often give in.
The legal profession is an excellent example. Government regulations serve to limit competition, thereby driving up the prices that attorneys can charge. One way that regulations limit competition is by restricting the practice of law only to people who have gone through all the expense and travail of obtaining a license to practice. These “unauthorized practice of law” statutes have been denounced by this writer here and by many others inside and outside the legal profession.
Another regulation that serves the interests of the profession but is contrary to the interests of the public is the law in most states that allows only those individuals who have graduated from a law school accredited by the American Bar Association to sit for the bar exam. North Carolina has such a law and it comes in for criticism in a new paper released by the Pope Center, “Legal Education in North Carolina: A Report for Potential Students, Lawmakers, and the Public,” by Andrew Morriss and William Henderson, who teach at the University of Illinois and Indiana University respectively.
The study surveys legal education in North Carolina and reveals the rather startling fact that this state has the lowest ratio of lawyers to population of any in the country. People who are fond of Shakespeare’s line in Henry VI (“First, let’s kill all the lawyers”) won’t be troubled by that, but Morriss and Henderson argue that it indicates that North Carolina is “under-lawyered.”
Is that a problem?
The authors maintain that it is, for two reasons. First, simple supply and demand analysis tells us that with a relatively low number of lawyers competing for business, the fees they charge will be relatively high. As I argued in the article referenced above, the legal profession figured out long ago that lawyers would enjoy higher earnings if the profession were less crowded. While the high cost of hiring a lawyer may not bother wealthy people much, it has a serious impact on the poor. In her book Access to Justice, Stanford University law professor Deborah Rhode points to surveys showing that about four-fifths of the civil legal needs of poor people go unmet, largely because hiring an attorney is too costly.
Second, Morriss and Henderson contend that the state’s economy may not be growing as rapidly as it could if there were more lawyers with “the expertise and sophistication necessary to service the legal needs of high-end corporate clients. As a result, the state exports lucrative legal work to law firms in Atlanta, New York, and Washington, DC.” Although the public rarely thinks of lawyers as professionals who are part of the productive process, the authors point out that they are necessary in the facilitation of many business transactions. Therefore, the state’s economy might benefit if we had more lawyers – at least the kind who do transactional work.
That leads to the most interesting part of the paper — the analysis Morris and Henderson give as to the reasons why the state seems to have an unduly low number of lawyers. Just as shortages of any kind of good or service don’t long persist in a free market, the shortage of lawyers wouldn’t persist if North Carolina had a free market in legal services. The authors point out that, like most states, North Carolina does not have a free market in legal services. Changes in that direction would be beneficial.
For one thing, the state could make it easier for lawyers located in other states to practice in North Carolina. Lawyers who might see relocating to our state as advantageous must pass the state bar exam, no matter how well they know their particular areas of expertise. Furthermore, only graduates of American Bar Association accredited law schools are eligible to take the exam, even though, Morriss and Henderson observe, ABA accreditation is no guarantee of quality education.
California has several non-ABA law schools that do a perfectly satisfactory job of educating prospective lawyers. North Carolina law keeps them (and other lawyers who don’t have the right educational credentials) from practicing here.
And why not copy the California model altogether? The authors write, “California has shown the viability of a state-accredited system of legal education, and California’s non-ABA-accredited schools offer many residents opportunity for a legal career that would otherwise be unavailable to them.” The ABA standards make legal education needlessly long and costly, a point I made in this Forbes article.
The state should develop its own standards for legal education – ones that emphasize competence to serve the needs of clients, not that guarantee law schools a great income stream. I wish that the authors had gone into more detail here, setting forth their ideal set of standards.
Just to suggest a few ideas that would greatly reduce the cost of getting into the legal profession, I would recommend that duration of law school be cut to no more than two years, that students be allowed to enroll even if they haven’t completed a bachelor’s degree, and that the requirement of a heavy investment in library materials be dumped.
If some law schools want to continue offering the gold-plated sort of education that is customary, fine, but there is no reason to prevent others from going with stainless steel. It’s time that North Carolina opened legal education up to competition.
George C. Leef is the vice president for research at the John William Pope Center for Higher Education Policy in Raleigh.