Category Archives: Regulation

End Occupational Licensing . . . For Lawyers Too?

This New York Times article starts out with some well-deserved gushing over how Uber has disrupted the incumbent taxicab industry, but goes on to note the increasing skepticism over occupational licensing in general. The Obama administration has proposed sending some $15M in federal funding to the states to study the costs and benefits of occupational licensing.

As the article notes, there are a lot of weird anomalies in occupational licensing requirements, and a paucity of data showing that such requirements actually produce better consumer outcomes.

One thing we do know, however: occupational licensing is great for establishing a cartel that keeps prices high, and which fights viciously to keep competitors out.

Which naturally made me think of the Bars.

Uber is upsetting the cab cartels, and it’s pretty certain that some of the excesses of licensing expansion (license requirements for hair braiding, anyone?) are going to be pulled back. But what if we did something really outlandish and eliminated the occupational licensing requirement for lawyers? What would happen?

One belief held by many lawyers is that occupational licensing protects clients by ensuring a competency. If that argument sounds familiar, it should – it’s used by approximately 100% of all occupational licensing proponents.

Perhaps the Obama administration funding will get through and we’ll start seeing more hard data on this. But let’s pause for a moment and ask ourselves whether the claim of heightened competence is really true for the Bar.

To be sure, the necessities of going to law school (typically) and passing the bar act as gates to the completely vacant offering up legal services. But I’ve got news for you: it’s not that high of a gate. And it only tests one, narrow type of competence. There are a lot of really bad lawyers out there. Maybe not really bad in the knowin’ the law kind of way (although I’ve run across plenty of those), but really bad in the have-their-shit-together-and-can-communicate-with-real-people kind of way. Or can-run-their-business-effectively kind of way.

The state-based limitations on practice offer no particular help; I’m licensed in California, but I couldn’t tell you the first thing about most California law. The law has gotten so broad, so complex, that it’s illusory to think that someone licensed in a given state necessarily has any greater competence there.  But despite not having lived in the state for the last 14 years, and not having appeared in a California courtroom in nearly two decades, I could move there tomorrow and start representing clients.

Would it be so bad (for consumers) if law could be practiced without a license? Consumers could still choose to use someone who went to law school, or who met the membership requirements of a bar association. It just wouldn’t be their ONLY choice if they have anything remotely related to a legal question.

Or what if we adopted a system like the UK, where a license is only necessary to engage in certain “reserved activities,” such as representing clients in court, handling probate, and transferring real property?

I do think there are a lot of things that people need a “real” lawyer for. But I’m not convinced that our current system of state-based occupational licensing is really protecting consumers so much as it is protecting our cartels.

 

Time to Gut the Ad Rules

Avvo recently submitted its comments to the ABA’s “Future of Legal Services” Commission, and I wanted to highlight one of the specific suggestions we made:

Get rid of most attorney advertising regulation.

Or more specifically, eliminate everything other than restrictions on false advertising and real-time solicitation. Our suggested advertising rules would look like this:

Rule 7.1: A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.

Rule 7.2:  A lawyer shall not by in‑person, live telephone or real-time electronic contact solicit professional employment when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain, unless the person contacted:

(1)  is a lawyer; or

(2)  has a family, close personal, or prior professional relationship with the lawyer.

Everything else in the attorney advertising rules – prohibitions on specific forms of advertising, hard-and-fast disclaimer requirements, vague provisions about “lawyer referral services” and the like – is the crusty accretion of over-regulation. Many of these provisions pre-date Bates v. Arizona, and would be contrary to lawyers’ First Amendment right to advertise were it not for some begrudging exceptions language that’s been bolted on.

Other provisions found in the RPCs of many states, such as pre-review of advertising (by a committee that may include a law firm’s competitors) and limitations on many forms of legitimate advertising, are fundamentally anti-competitive and often highly arbitrary in application.

As anyone who pays close attention to this area knows, there is absolutely nothing in this dog’s breakfast of regulations that actually buys us any greater consumer protection. 1 Anything egregious and harmful in attorney communication can be enforced via the general prohibition on false and misleading advertising.

What’s more, this thicket of regulation is actively harmful. I’ve spoken with hundreds, if not thousands, of attorneys over the last seven years about this topic. There is a general level of concern and uncertainty over what attorneys are “permitted” to say to potential clients. And lawyers, being the risk adverse creatures they are, tend to clam up.

The Supreme Court has repeatedly noted in some two dozen advertising cases over the last 40 years that consumers have a very strong interest in minimally restrained commercial speech. As the court observed in Bates:

[T]he consumer’s concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue.

And yet, the Bar restrictions, with their often-byzantine level of detail and apparent reach into all manner of attorney speech, are preventing attorneys from providing consumers with the robustness of information necessary to make good purchasing decisions – or to get legal help at all. This is bad for consumers, and ultimately, bad for the Bar.

While there are other things that the profession can do to improve access to justice, one immediate and easy opportunity for improvement is to massively prune back attorney advertising regulation.

 

Notes:

  1. And consumers rarely complain about lawyer advertising violations; virtually all such complaints are filed by other lawyers.