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I'm posting two articles in this post. Here are the main points of the articles:
* Before the 20th century, you didn't need a government license to practice law. Most lawyers didn't attend law school, and instead, they learned their trade as apprentices working in law offices. And the people who hired lawyers were satisfied with the service that they received. During the 20th century, the biggest supporters of government licensing were lawyers who wanted to protect themselves from competition.
* Today, right now, in Arizona, you don't need a government license to practice law. And this is very beneficial to customers. For example, in the other 49 states, when you hire a lawyer, much of the time, the work is actually done by a paralegal. But you have to pay the much higher fee of a lawyer. But in Arizona, you can hire the paralegal without hiring a lawyer, and you get the same services for a fraction of the cost.
* On a number of occasions, lawyers and agencies that represent lawyers have tried to get the government to ban self-help law books. Why? Because if you buy a book for $50, then you might end up saving yourself $10,000 in lawyer fees.
* Here's a quote from one of the articles. This quote should be of concern to anyone who beleives in freedom, choice, and women's rights, and anyone who cares about letting low income people have access to affordable, quality legal servies:
"State and local bar associations are vigilant in ferreting out unauthorized lawyers. Robin Smith, of Portland, Oregon, provides a good case study. She had worked as a paralegal in a large law office for several years, but was disgusted by the fact that lawyers billed clients high fees for what was entirely her work, fees that many of them could scarcely afford. So she began a business of her own, People's Paralegal, Inc. For several years, her business grew steadily, offering lower cost services that were widely demanded, such as will drafting and divorce paperwork. She knew that she had to be good enough to pass the test of the market, that is, to do good work that would satisfy customers. She was."
"But success is perilous. The Oregon State Bar filed suit against Smith for violating the state's UPL statute and the case was a slam dunk for the legal cartel. Not only was People's Paralegal enjoined from ever violating the law again, but Smith was ordered to pay the State Bar for its expenses in litigating her out of business. Oregonians lost a lower-cost alternative source of legal assistance. Robin Smith and her employees lost the freedom to contract with people who wanted her services."
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http://www.cato.org/dailys/10-13-98.html
October 13, 1998
The Legal Profession Defends Its Turf
by George C. Leef
George C. Leef is president of Patrick Henry Associates and author of the just-published Cato Institute Policy Analysis "The Case for a Free Market in Legal Services".
Chances are that you've seen Norman Dacey's book, How to Avoid Probate! which has been helping Americans steer away from the shoals of probate for more than 30 years, without the expense of an attorney. Today, you will find this book and many other self-help legal books available in stores. But did you know that if the legal profession had had its way, Dacey's book would have been kept off the market?
The New York Bar Association sued to prevent sale of the book on the ground that it constituted "unauthorized practice of law." Fortunately, the New York Court of Appeals ruled in favor of Dacey and the freedom to publish. But the allure of using government power to stifle competition never goes away.
Currently, the state bar of Texas is waging war against Nolo Press, a publisher of self-help law books. A state bar committee has been "investigating" to determine whether the sale of Nolo's books and computer programs violates the Texas unauthorized practice statute. A hearing before the Texas Supreme Court is scheduled for October 21.
The case ought to be a slam-dunk win for Nolo Press. The First Amendment is an awfully clear statement that government must not interfere with freedom of the press. Even if one or more of Nolo's books were inaccurate or deficient -- and there is no evidence of it -- there are better ways of dealing with that than to open the Pandora's box of allowing the government to decide what books may be sold.
The best means of delivering affordable legal services to the public with minimal risk of harm is through a competitive marketplace, backed up with remedies for fraud and incompetence.
Nolo's travails ought to lead us to think not only about the First Amendment, however, but also about the very concept of "unauthorized practice of law" (UPL) itself. In every state except Arizona, there is a legal prohibition against practicing law without a license from the government. When bar organizations bring UPL cases, they almost always say that the laws are necessary to protect the public against dishonesty and incompetence. That's a weak argument.
To get a lawyer's license, you must pass the bar exam, and you're not allowed to take that exam unless you have graduated from law school. In many states, only an "approved" law school will do. The underlying assumption is that only those who have gone through this wonderful course of training can be relied upon to render good legal assistance to others. But that assumption doesn't stand up.
Many judges, law professors, and lawyers candidly admit that the prescribed route into the legal profession is neither necessary nor sufficient to ensure legal competence. Much of what is learned during three years of law school and crammed in for the bar exam is forgotten once a lawyer actually settles into an area of practice. That's when the real learning begins.
The problem is, not that the law school and bar exam gauntlet is bad preparation, but that the legal profession has made it the only preparation allowed. The cost of going through that gauntlet is very high, but, as many disinterested observers have pointed out, it does surprisingly little to get the would-be practitioner ready to practice law. The result is general overinvestment in legal education that drives up the cost of legal services.
Before the American Bar Association began its crusade for "high standards" in the 1920s, many capable lawyers attended law school for only a year or two, not the now-mandatory three, and the majority of lawyers did not attend law school at all. They learned law as apprentices in law offices. When lawyers had the freedom to choose the training they thought best, few decided that three years in school was worth the cost.
The best means of delivering affordable legal services to the public with minimal risk of harm is through a competitive marketplace, backed up with remedies for fraud and incompetence. Professionals want to succeed and will find the kind of training they need to do competent work for their clients. Fear of failure and financial loss is a stronger deterrent to incompetent work than any licensing scheme.
Arizona has had no UPL statute since 1986. Consumers can take their problems to lawyers or to clinics staffed by paralegals. The latter specialize in routine work they know well and perform for fees most people can afford. Consumers don't have to pay for more legal training than they need.
Competition works as well in legal services as in other markets. But we'll have to get rid of the UPL statutes to enjoy the benefits.
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http://www.mises.org/freemarket_detail.asp?control=51
The Free Market
November 1998
Volume 16, Number 11
The Lawyer Cartel by George C. Leef
In the nineteenth century, the legal profession was open. There were no mandates on the kind or duration of education a person had to have. No law restricted anyone from offering his services. The only complaints were from lawyers who wanted to force "higher standards" upon the market.
Today, the law profession is closed off to all but those who can afford the largely useless steps of obtaining a license, all thanks to the lobbying of bar associations. You cannot "practice law"--an extremely vague concept--unless you possess a license from the state. You cannot obtain a license without going through a very costly gauntlet of law school and the bar exam. In every state but Arizona, an "unauthorized practice of law" (UPL) prohibition (usually a statute, but in some states a judicial rule) protects the legal cartel from competition.
By artificially raising the cost of entry into the market, there are fewer competitors. Those remaining in the market can charge more. The American Bar Association has commissioned studies that conclude that a large number of Americans are priced out of the market for legal services. But instead of advocating a free market, it lobbies for more money for subsidized legal help for the poor. In 1987, the Chairman of the Legal Services Corporation, W. Clark Durant, actually gave a speech to the ABA in which he called for the abolition of his agency and all barriers to competition in the market. The next day, the president of the ABA called for Durant's resignation.
State and local bar associations are vigilant in ferreting out unauthorized lawyers. Robin Smith, of Portland, Oregon, provides a good case study. She had worked as a paralegal in a large law office for several years, but was disgusted by the fact that lawyers billed clients high fees for what was entirely her work, fees that many of them could scarcely afford. So she began a business of her own, People's Paralegal, Inc. For several years, her business grew steadily, offering lower cost services that were widely demanded, such as will drafting and divorce paperwork. She knew that she had to be good enough to pass the test of the market, that is, to do good work that would satisfy customers. She was.
But success is perilous. The Oregon State Bar filed suit against Smith for violating the state's UPL statute and the case was a slam dunk for the legal cartel. Not only was People's Paralegal enjoined from ever violating the law again, but Smith was ordered to pay the State Bar for its expenses in litigating her out of business. Oregonians lost a lower-cost alternative source of legal assistance. Robin Smith and her employees lost the freedom to contract with people who wanted her services.
Not only do bar associations go after the upstart individuals with the temerity to compete for legal business. They also go after people who publish books providing information to those who wish to handle their own legal problems. Thirty years ago, the New York Bar agitated against Norman Dacey's How To Avoid Probate! but the New York Court of Appeals refused to go along with the bar's effort to suppress the book.
In Texas, the State Bar has undertaken an "investigation" of Nolo Press of Berkeley, California, a publisher of self-help legal books. The Bar's UPL Committee told Nolo that it must appear and answer the charge that, by selling books and software that enable individuals to do their own legal work, the company is guilty of "practicing law" without a license. Texas precedents are on the Bar's side.
Licensing is neither necessary nor sufficient to ensure competence. Plenty of incompetent lawyers get through law school and pass the bar. What drives professionals, licensed or not, is the powerful market incentive to do good work and satisfy clients.
Marylander Paul Kurtz, for instance, was not a member of the bar and hadn't attended law school. But he represented as many as 100 clients in legal matters, including court proceedings. Many judges had assumed that he was a "real" attorney because his representation was so thoroughly professional. The New York Times quoted one lawyer as saying that Kurtz had "performed admirably in presenting a legal brief and arguments at a sentencing hearing."
Kurtz managed to learn enough about an aspect of the law--which is all that any lawyer can say these days --without going through the bar's prescribed gauntlet of law school and the bar exam. Kurtz is now under arrest, charged with violations of the Maryland unauthorized practice of law statute. As lawyers like to say, res ipsa loquitor: the thing speaks for itself.
In Arizona, unlicensed paralegals capably assist people with the kinds of legal needs they know they are competent to handle. For more difficult or unfamiliar work they recommend lawyers. The market functions smoothly and saves many consumers substantial amounts of money.
If lawyers want to do something to enhance their image and reduce the number of vicious lawyer jokes, they should start by demolishing the exclusionary walls they have built around the market for legal services.
* * * * *
George C. Leef, a graduate of Duke University Law School, is a scholar with the Mackinac Center for Public Policy.
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