Should the law be a regulated practice?

Dallas County Courthouse Divorce Employment Consumer QDROEvery few years, articles surface calling for the deregulation of the practice of law. Citing arguments from making it easier to get into the practice of law to making it more affordable, lawyers walk away looking pretty bad operating in a regulated environment. While these arguments frequently raise some valid points, there are a lot of overlooked dangers in deregulating attorneys.

Deregulation of attorneys and lawyers

Deregulation is typically a political issue steeped in ideology and economic theory. For anybody who lived through the late 90s and saw energy deregulation policies – that promised lower electric bills – cause electric bills to rise should have a clear example of how deregulation does not result in lower prices.

The argument, so it went, was that without prices set through regulation, competition would drive prices down. Well it did, for a few months. Then prices rose with no upper limit set. (Curiously, no deregulation advocate, to my knowledge, asserted that deregulation should include allowing competition and no floor on prices but should include a ceiling to protect the public from price collusion.) The same argument applies to most areas of deregulation and most often the public ends up with higher prices.

You might, quite accurately, draw a distinction between the law and electricity: very few people or businesses have the funds to build power plants and market electricity to the nation. So even though deregulation unleashed prices, there was still a natural bar to entry into that industry. (The effect of having so few players unregulated is that they don’t have to compete much for prices. They all end up setting prices almost identical to one another.)

If you deregulate the law – removing or easing the bar and law school requirements – there would be a much lower bar. Many more people and businesses could, and would, get into the practice of law. Let’s turn to the common advantages asserted to deregulate the practice of law.

It would be easier to get into the practice of law

Yes, naturally, with lower standards you create more access. However the underlying question must be asked: is this a good thing? Lawyers deal with many of the incredibly important events in a person’s life. It seems highly risky to leave those events up to somebody with little or no legal education.

The reason why minimum standards act as a bar (no pun intended) to entry to the practice of law is because it requires specific knowledge, skills and carries tremendous risk. Deregulation deemphasizes the risks involved; the risk to the client, of course, not the practitioner. Deregulation ultimately would have the effect of opening the door not only to well intentioned and bright people scared away from practicing law by the law school debt, but to businesses looking to get a piece of the action.

Businesses like the banks who robo-signed people into mortgages-turned-foreclosures, debt “solution” companies that took client funds with the promise of help stopping foreclosures but did nothing, and online providers of legal forms that tend to be so poorly drafted and inaccurate the money saved up front is less than the money that will be spent to correct those bad forms on the back end. Without regulation, nothing stops bad businesses from abusing clients (except maybe legal malpractice litigation).

Outsourcing attorney work overseas

The real boom will come not for working class people who are seeking cheaper legal help but from businesses that would be able to jettison their internal lawyers for outsourced quasi-legal businesses or clerical employees. Although some legal work outsourced to India, there is a lot of document drafting and processing within businesses that require law licenses. This is particularly true in the banking, finance, mortgage and home buying industries.

If businesses could dump their $180,000/yr lawyers who push paper for a $30,000/yr clerical workers, that amounts to big savings across the board. There is also considerable risk-shifting that goes along with deregulating those positions.

If the businesses are not responsible for what occurs with the law licenses of their attorneys, and their employees do not have to carry licenses, it creates an opportunity to eliminate malpractice insurance and takes the company off the hook for malpractice, forcing plaintiffs wronged by the company to go to court. Again more profits are created at the expense of the public.

It would make access to legal help more affordable

Maybe. Lawyers certainly calculate their rates based upon their expertise and qualifications but that is not the only factor. While I might agree that deregulation would create some seemingly low-cost options, it would not bring down overall costs. What is more likely to occur is for those lawyers who go through a formal legal education will go into established law firms, general counsel positions, etc. where they will continue to charge the same kind of fees charged today (including those big firm partners who charge $1000 per hour).

Then you will have a second tier of lawyers with less education who might charge less (but might charge as much as lawyers with formal education, hoping the public won’t know the difference) but probably will offer help at a lower quality since they lack the training and expertise developed in law school and mentoring by experienced lawyers. Then when they screw up you can hire from the top tier to sue the lower tier. Essentially you can pay for the same legal result twice.

Problems of forms

Companies like LegalZoom are a good example of what goes wrong in an unregulated sort of legal practice. LegalZoom offers online legal forms but “not legal services” because they are “not lawyers,” just fill in the blank forms. Not only does LegalZoom frequently charge more than lawyers for some services; but many lawyers end up taking in clients fixing the damage caused by poorly drafted forms. More importantly, what LegalZoom does not offer is the counsel and research necessary to make informed decisions.

I know lawyers across the country who make cash taking the time to fix the problems created by those forms. So maybe it is cheaper, sometimes, to use LegalZoom or similar sites; but on the back end you risk paying a much bigger sum to fix problems. While I might agree that in a deregulated environment LegalZoom and its competitors might offer more customer support, consider whether you want your legal services to match the kind of pleasure you have calling other service providers.

It would create access for indigent clients

To an extent, yes. It would, as explained above, create more low cost but low quality options. I do not believe that what people who cannot afford lawyers need is low quality. They just need more low cost options. Most lawyers agree indigent clients need better access to legal help. It makes more sense to create opportunities to improve access qualified lawyers than pay for big box-style quasi-legal help.

Most states, including Texas, have legal aid programs that offer free or low-cost access to lawyers for truly indigent clients. When governments look at cutting costs, they frequently cut legal aid funding, which means fewer people get help.

Better funding for legal aid services would go a long way towards creating access. Some people may disagree that government involvement or spending is the right answer; but I hardly think creating a profit-motive and a motive to offer lower quality service is better for those clients. Poor people frequently suffer abuse in our society because they tend to be in desperate situations with few options. The ethically-challenged among us tend to abuse that desperation. The legal help they need is hardly the right place to let that abuse spread.

Remember, lawyers are not the only regulated, licensed field. Most of the critical services in our lives endure regulation at the professional level. I doubt many would feel comfortable going down the block to their neighbor’s garage for a little power tool dentistry. Why anybody would feel the same way about having their divorce handled in the same regard is beyond me.

error: Content is protected !!
Scroll to Top