An incompetent or dishonest attorney can visit irreparable harm upon his or her clients, and lessen the fairness and efficacy of the judicial system that is central to our democracy. Attorneys and physicians have a more compelling justification for a licensure requirement to practice than do barbers or astrologers (which California once seriously considered licensing). But these supply constraints have their own negative effects. They mean higher prices and diminished availability of needed services. So how do we reconcile these two legitimate and somewhat conflicting features? The question raised here is how to accomplish that balance, and just as importantly who should be doing the balancing.
It is critical to recognize that existing systems of entry in the licensed professions are controlled by those currently practicing in the professions. Although current practitioners may have advantageous knowledge about needed performance, the professions’ control of their own supply gives rise to the appearance of a serious conflict of interest. Our regulatory systems raise the proverbial drawbridge for the benefit of those already in the castle. Those with an occupational self-interest decide who will be allowed to offer services in the future. This article questions whether this process reflects functioning democracy—one in which the People control the state, not the special interests.
Two facts make this a timely legal and ethical issue.
First, supply control through licensure is a restraint of trade that artificially affects prices—a
Second, the U.S. Supreme Court in
This profound legal circumstance raises particular questions as to the supply of attorneys in an era in which an increasing number of people in the U.S. report that they cannot afford a lawyer—and in which an estimated 75% of litigants in civil court are unrepresented.
William D. Henderson,
We ended the medieval guilds that controlled entry into occupations with good reason. Have we now resurrected them without proper checks?
This article seeks to measure and evaluate the performance of the legal profession in its own regulation, not based on our self-interested notions of public-spirited dedication to the common good, but based on what actually happens, what it costs, and how its justifications may not exist by any good faith measure.
It is possible to have both enhanced supply of attorneys and assured competence. Currently, we have neither. Here we propose ten reasonable corrections to the existing system that will bring about much–needed reform to the legal profession.
It has been well-documented for quite some time that indigent populations cannot access the legal services they need. According to a 2017 report, 86% of the civil legal problems reported by low-income Americans over the scope of one year received inadequate or no legal help.
Legal Services Corporation, Henderson,
The diminishing ability of a majority of people in the United States to access legal services calls for a careful reexamination, starting with the origins of our current system. We can no longer ignore that onerous barriers to enter the profession, and ethics rules preventing the delivery of legal services through less expensive means, are the direct result of regulatory capture. Indeed, all of these artificial barriers—from exorbitantly difficult bar examinations to outright prohibitions on providing less expensive and more accessible legal services despite clear market demand—have been erected under the guise of “public protection” by those who directly benefit from their exclusionary outcomes: attorneys themselves.
Henderson,
How has this occurred? Attorneys are regulated on a state-by-state basis, in varying forms and with varying levels of oversight by the respective state supreme courts. But this state regulation necessarily involves state rules and practices that may violate federal antitrust law. By its very nature, licensing is a means of controlling supply; the profession is establishing through its admissions rules an artificial barrier to entering the legal profession. In doing so, it artificially affects prices. This is a form of price fixing, considered unreasonable “
As noted, this principle was cemented by the Supreme Court’s holding in
Limits on state-action immunity are most essential when the State seeks to delegate its regulatory power to active market participants, for established ethical standards may blend with private anticompetitive motives in a way difficult even for market participants to discern. Dual allegiances are not always apparent to an actor. In consequence, active market participants cannot be allowed to regulate their own markets free from antitrust accountability.
This is precisely what has been allowed to occur for decades with respect to the regulation of the legal profession, and the reason why the market for legal services is in desperate need of reform.
But state bars (and state supreme courts) across the country have been slow to recognize the anticompetitive implications of the landmark
The Court has identified only a few constant requirements of active supervision:
The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy; and the “mere potential for state supervision is not an adequate substitute for a decision by the State.” Further, the state supervisor may not itself be an active market participant.
State supreme courts—the state entities that are charged with “supervising” attorney regulation—are ill-equipped to actively supervise decisions by market participants. They are passive bodies, accustomed to resolving disputes brought before them. They lack the mechanisms for independent supervision, or for analysis as to the potential anticompetitive impacts of the policies adopted and implemented among the state bars.
Some have even questioned whether state Supreme Court justices themselves are “active market participants” since they are attorneys capable of returning to private practice and may stand to benefit from the protectionist policies adopted by the state bars. The
Furthermore, such courts tend to embody confidence in their own profession and its membership, particularly where those persons are respected leaders, and may have been appointed to their state regulatory posts by the court itself. For example, as discussed
In the four years since the Supreme Court issued the ACPE Joint Opinion 732, CAA Joint Opinion 44, UPL Joint Opinion 54,
Headquartered in Chicago, the American Bar Association (“ABA”) is a horizontal trade group of attorneys.
American Bar Association, American Bar Association, Law schools are free to choose not to pursue ABA accreditation, but their graduates will be unable to practice in nearly a third of the states in the union. Notably, the antitrust division of the U.S Department of Justice has, on occasion, brought actions against the ABA.
As this article will explore, many of the factors contributing to what can best be described as a “failed market” for legal services have at their origin policies that were developed, and in some cases enforced, by the ABA. From stringent standards for law school accreditation (including a minimum number of costly tenured faculty and a unique-to-the-U.S. bachelor’s degree requirement for all entering law students), to its model rules of professional conduct (prohibiting multijurisdictional practice, corporate ownership of law firms, and “fee sharing” with non-lawyers), the ABA has played a significant role in erecting the barriers to entering the legal profession and the high costs of legal services.
The full time tenured faculty requirement for law schools noted above is a typical example of an ABA-facilitated restraint of trade as it prevents law schools from hiring more adjunct faculty.
Undergraduate college education costs nationally continue to rise rapidly above inflation. In 1988, public college tuition cost an average of $3,360 per year.
Room and board has also increased. When including room and board with tuition those numbers jump from $9,480 per year in 1988 to $21,370 per year in 2018–19 for public schools and from $24,800 per year in 1988 to $48,510 in 2018– 19 for private non-profits.
CollegeBoard, Attendance at a public college for a non-resident of that state may be compelled based on limited facilities in a student’s home state—particularly in the many states of small population. It may also be compelled due to family, spousal, military or employment changes or needs. Some states will allow a shift into resident tuition status prior to the completion of four or more years of college there. Such students may incur tuition/room and board charges in the $70,000 to $90,000 range while attending over four years.
College education today puts an unprecedented burden on families. Students and their parents are borrowing and sacrificing pensions to pay for education. In contrast to the dramatic rise of college costs, median family income in constant dollars nationally went up marginally from $51,973 in 1987 to $57,617 in 2016—the most recent Census Department figure. Basic college costs have increased from 20.4% of median income in 1971 to 51.8% today.
Certainly there are benefits to a liberal arts education, including many of the courses discussed
Throughout the United States, law school entry is essentially barred to anyone without a full undergraduate degree.
As part of its accreditation process, the ABA requires four years of undergraduate education as a prerequisite to law school entry.
The United Kingdom teaches law as an undergraduate course of study lasting three years, followed by a one-year full-time practical skills training course, followed in turn by a one-year pupillage or apprenticeship in the case of barristers,
See
In contrast to this British model, the pattern of most other nations,
To be sure, there is value in a general liberal arts education and in courses separate and apart from a future occupation. But as time and expenses increase, more careful thought as to the connection between the required number of courses and an articulable end purpose is warranted. At some point, relevance becomes relevant. For example, a review of the undergraduate courses for recent applicants to the University of San Diego School of Law
Co-author Fellmeth has served on the University of San Diego School of Law Admissions Committee since 1993. These examples are from the transcripts of reasonably typical student applicants.
While many courses listed on some applicants’ transcripts do suggest law school relevance, such as courses in economics, sociology, history, and even direct law content choices in constitutional or criminal law subjects, they tend not to be the majority or even a substantial percentage of courses undertaken by law school applicants.
In light of the dubious relevance of many undergraduate courses to the practice of law, we must consider the costs to students’ families, the ever-growing burden of student debt,
Education loans are rarely dischargeable, even in bankruptcy, and can have a pervasive effect on the credit rating of delinquent borrowers, including employment, apartment rentals, and other needed borrowing.
Adding to the sobering financial situation facing many of today’s entering law students is an even more extreme upward trend—the cost of law school itself. Often starting out with debt from four years of mandatory undergraduate education, students without independent sources of funding must borrow three more years’ worth of tuition and housing, in addition to other expenses. Law school is thus a substantial financial barrier to entry into remunerative attorney employment in the U.S.
The total cost of a legal education now approaches or exceeds the median cost of a home in the United States.
As of December 2018, the median home price in the United States was $240,000.
This tuition increase is not a product of inflation. A recent study concludes: “[L]aw school tuition increases exceed the inflation rate between 1985 and 2018. In 1985, the average private school tuition was $7,526 (1985 dollars), which would have cost a student $17,520 in 2018. Instead, average tuition was $47,754 (2018 dollars).”
In 1985, the average public [law] school tuition was $2,006 (1985 dollars) for residents, which would have cost a student $4,670 in 2018 dollars. Instead, average tuition is $27,160 (2018 dollars) for residents. In other words, public [law] school [tuition for in-state students] was 5.82 times as expensive in 2018 as it was in 1985 after adjusting for inflation.
In addition to law school tuition, students must find a way to pay for three years of living expenses. A survey of the 203 ABA-accredited law schools nationally from 2011–12 to 2018–19 found only 43 with small decreases in living expenses, whereas 153 had increases—104 of which exceeded the 11.4% cost of living (CPI) increase for this period.
On average, a law student can expect to spend $20,000 to $24,000 per year on living expenses, with California school living expenses often between $30,000 and $37,000.
In short, the seven-year cost of public education for attorney licensure, including only tuition and housing, is now an expected $190,000 at public schools for in-state students
As discussed These totals assume maintenance of low-cost room and board for undergraduate education and assume no further increases above inflation for tuition or law school living expenses. Both of these assumptions are unlikely. As noted above, these numbers do not include many other costs, including books, loan interest, clothes, or transportation.
Assuming a competitive market, how do prices of this type increase at levels largely disparate from cost factors? The adage “competition drives prices toward costs,” with higher demand rewarding those who offer a comparable product at a lower price, does not seem to apply to this service market. Costs have increased somewhat for faculty salaries, but at no level close to tuition increases.
This perception, that comparative quality is manifested in price, is a core part of law school tuition increases. It is common for the administration and faculty of law schools to measure their tuition levels based on those of their competitors, with subjective quality of the school a major factor. Hence, when law school faculties consider increasing tuition by two-to-three times inflation levels, the discussion is invariably as follows: “We would note that our three rival law schools, not up to our caliber, have increased their tuition 3–5% and will be at a higher level than are we. We risk a public impression that we are of inferior quality if we fail to match or exceed their tuition levels.” And the pattern of such effective “price leadership” increases suggests that this same conversation is hardly unusual.
The “Cuisinart effect” in its original application involved a vertical price fixing case, but its anticompetitive impact in the horizontal context has a much more deleterious impact. It allows these prices to be raised well above theoretically competitive levels through a pattern of price leadership and replication. Any one competitor who raises tuition then causes other law schools to move up in price by a similar degree. The normal drive of competition seeking to win customers through efficiencies or reducing costs—and hence prices—is not a predominant factor.
David Segal, Applicants per year fell from 100,000 in 2002 to 82,900 in 2009–10 to 56,500 in 2015– 16.
With demand reduced, the typical competitive response would be to lower prices to generate additional business (applicants). This would be particularly true for any high fixed-cost enterprise, such as law schools.
Law schools have a high percentage of fixed costs that do not vary with added students (e.g., real estate, staff and faculty with tenure who are not easily reduced in size notwithstanding fewer students). Indeed, when a law school’s attendance drops 20% to 30%—as has occurred in many campuses after 2010—a natural response in an assumed competitive market would be to lower prices as necessary to fill the empty seats, each one of which involves little additional marginal cost. A tuition of just $5,000 would add significant net income to such an enterprise. Note that such reductions and bargains are part of the fabric of other high fixed cost service industries, Law schools are convinced that price is not the factor that influences choice, and, in fact, its reduction is viewed as a competitive problem consistent with the
A law school advertising $50,000 in annual tuition does not necessarily charge $50,000 per student. According to a 2017 study analyzing ABA grant and scholarship data, the median private law school discounted tuition by 28.3%, with an average scholarship of $20,129.
Tyler Roberts, How Much Law Schools Are Discounting Tuition, 21 The degree of influence of these rankings is extreme. Many law schools have staff and faculty focusing substantial time and resources to the ratings of this publication and believe that it is a major factor in school selection by students. The direct ranking Co-author Fellmeth has been on his Law School Admissions Committee since the 1990s and contends that there are many factors properly relevant apart from the GPA raw number. They commonly include obstacles: A student achieving a 3.3 GPA while having to work full time and/or take care of a child or ill grandparent might be more impressive than a 3.5 from a full time student at a school with a relatively liberal grading pattern. Another student may have suffered a major injury or disease and managed to overcome it, manifesting courage and tenacity. Or a student may have had a weak freshman year, a first year away from home, and then recover to sequentially increase the GPA every year thereafter to a 4.0 senior year performance. In addition, difficult courses may warrant more consideration, but the overall GPA is not so adjusted in the
The over-emphasis on two numbers distorts student evaluation and inhibits a more balanced judgment. But those two numbers make up 90% of the This is not to say that equitable factors enjoy no consideration. For those with LSAT and GPA scores on “the bubble” (not as high as desired but close) there will be more particularized consideration. But the ranking based on the two numbers must be overcome with a burden not easily met. In contrast, unless there is a criminal or ethical issue, a high score will usually qualify an applicant for admission
Law school graduates carry record debt into their bar examination crucible. Of the 181 law schools tracked by
These education loans are rarely dischargeable—even in bankruptcy. Available and secured federal and non-federal loans for law students (and indeed all graduate students) have declined markedly since 2010.
As discussed above, undergraduate education does not necessarily have the same connection to law school as does the typical academic record of those seeking engineering, science or medical advanced degrees. Then, once a student is admitted, the law school curriculum itself lacks correlation to the actual practice of law.
Most law schools present a core of required courses that consume the first year and sometimes part of the second year. Traditionally, required courses include contracts, torts, property, civil procedure, constitutional law, legal ethics, and several other courses varying by school. But there are several deficiencies in most curricula. First, the courses tend to focus on the judicial branch, with most of them revolving around a “casebook” text. The adjustment of curricula to changes in society, including our political and legal systems, is glacial.
Law school administration and faculty are understandably influenced by their own experience. We all have a tendency to project our own model onto those we wish to teach. But practical legal experience is not common among tenured law faculty. Not many have conducted a trial, argued appellate cases or had to deal with a caseload of clients. Their concerns are with important ethical and philosophical issues, which do facilitate legal and citizen intelligence. But we are not educating large numbers of future appellate justices or law professors. Even for these latter functions, professors also specialize in only one or several subject areas themselves. The vast majority of graduates will be practitioners faced with client problems such as an unruly child, a fraudulent business partner, or a grandfather who wants to emigrate from South Korea. The skills to enable competent services in this latter domain of real world problems warrant high priority in law school education.
Second, the courses typically do not lead students into actual areas of practice in terms of functional knowledge. The era of Abraham Lincoln, where an attorney practices “law” and will draft a will, defend a client in criminal court, and then litigate a divorce, is no longer practical. We present 24 areas of law commonly practiced in the United States, as follows: (1) immigration law; (2) criminal law; (3) property law; (4) probate, trust and estate planning law; (5) general corporate, securities and commercial law; (6) family law; (7) environmental law; (8) civil rights law; (9) administrative and regulatory law; (10) antitrust and economic crime law; (11) personal injury and consumer law (including product liability, property damage, and class action law); (12) labor/employment law and worker compensation; (13) real estate and construction law; (14) insurance law; (15) admiralty law; (16) bankruptcy law; (17) elder law; (18) education law; (19) health care law; (20) medical malpractice; (21) legal malpractice; (22) military law; (23) patent and trademark law (IP); and (24) tax law.
It is possible for some attorneys to practice in two, or perhaps three, of these 24 areas. But each involves substantial differences. An attorney who practices as a criminal defense attorney (or prosecutor) follows very different precedents and procedures from one handling divorces in family court. An attorney in bankruptcy court will have little in common in terms of the “what” or the “how” of practice with one practicing in juvenile dependency court. Many of these areas involve entirely disparate courts, with their own complex rules and procedures: juvenile dependency or delinquency court, bankruptcy court, probate court, Offices of Administrative Hearings adjudicating regulatory cases, immigration courts, military JAG proceedings and others—have marked differences. Each requires substantial specialized knowledge and experience to practice competently.
The generality of law school coursework is based on a collegial ethic that the Socratic Method (the practice of challenging students in class with repeated and pointed questions) leads to a superior mind—one able to identify inconsistencies. It facilitates the ability to pierce shallow rhetoric and sophistry. It allows students to “think like a lawyer.” These fundamentals are undoubtedly valuable. But they begin only in the fifth year of American legal education—after four years of potentially unrelated (but still mandatory) undergraduate coursework. The assumption that the Socratic Method alone constitutes an effective means of educating 21st century attorneys seems dubious. Skyrocketing education costs, increasing practice specialization, technology, and the need for attorneys who are ready to begin practicing upon licensure should prompt a reevaluation of the way our country teaches law. How should we balance doctrinal coursework and practical skills training?
Moreover, even after four years of potentially irrelevant college coursework, three years of substantive law classes, and life-altering debt, aspiring attorneys are not even finished with doctrinal work. For the vast majority of bar applicants, existing law school coursework is insufficient to prepare graduates to take and pass the required state bar examinations. As described A typical charge ranges from $1,000 to $4,200, with several months of study—including lectures, written material and practice examination.
In the spring of 2012, the State Bar of California created the Task Force for Admissions Regulation Reform (“TFARR”), to examine whether the State Bar should develop a regulatory requirement for a pre-admission practical skills training program. In finding that the Bar should adopt a new set of regulations to focus on competency and professionalism, TFARR’s Phase I report observed that “the rapidly changing landscape of the legal profession, where, due to the economic climate and client demands for trained and sophisticated practitioners fresh out of law school, fewer and fewer opportunities are available for new lawyers to gain structured competency training early in their careers.”
Ultimately, TFARR recommended three new requirements to practice law in California: (1) fifteen units of practical coursework before bar admission;
Around the same time, the ABA adopted a new experiential learning requirement, requiring six hours of study for ABA-accredited law schools, as articulated in Standards 303 and 304. P
These recommendations superficially addressed some problem areas. But they left untouched a system that foists deeply indebted, brand-new market entrants with no experience onto the most vulnerable segments in our society—and only for brief stints, so they could avoid meaningful commitments to client service. Indeed, the new recommendations would make it even more difficult to become a lawyer, without addressing the root causes of harm to consumers as a result of the supply reduction imposed by the current regulatory framework.
TFARR’s final recommendations were released just as the Bar was facing a period of political and internal turmoil as the Board of Trustees voted to terminate the Bar’s Executive Director, Joseph Dunn, just two months later. With long and protracted litigation pending, as well as new executive leadership and increased scrutiny from the legislature, these recommendations largely fell by the wayside for several years. Ultimately, the
Today, all 50 states require that applicants pass some version of a bar examination to qualify for attorney licensure.
Four states (California, Vermont, Virginia, and Washington) permit individuals who have worked a designated period of time as an apprentice to a licensed attorney to skip law school all together and sit for the bar exam using their experience as a substitute for the law school experience.
The conflict of interest in our system of attorney regulation is apparent. When a profession is allowed to regulate itself—to gauge the appropriate incoming supply and the amount of competition it will encounter (i.e., the number of new attorneys admitted with each bar exam administration)—it runs afoul of both the Sherman Act and also fundamental principles of our democracy.
Generally, bar exams are administered by each state twice a year for two days, and include the MBE, a 200-question multiple choice test developed by the National Committee of Bar Examiners (NCBE),
The MBE covers seven core subjects: civil procedure, constitutional law, contracts, criminal law, evidence, real property and torts.
Even though the MBE and UBE are nationally-administered tests, each state sets its own “cut score” that will ultimately determine who passes the exam, and what the level of new attorney supply will be in that state.
California’s pass rate, which has been consistently declining and hit a record low in July 2018 at 40.7% overall,
For a detailed history of the controversy spurred by the July 2016 bar exam results, and the studies conducted during this period, 23:1 Cal. Reg. L. Rep.,
While these studies were ongoing in 2017, the California legislature added section 6064.8 to the Business and Professions Code, directing the Bar to “oversee an evaluation of the bar examination to determine if it properly tests for minimally needed competence for entry-level attorneys” and mandating that it “shall make a determination, supported by findings, whether to adjust the examination or the passing score based on the evaluation” at least every seven years or more frequently if so directed by the California Supreme Court. The Supreme Court likewise added California Rule of Court 9.6, effective January 1, 2018, which also requires a regular evaluation of the bar examination’s validity. The California State Bar announced that it was commencing a California-specific Attorney Practice Analysis in December 2018 to “ensure that the California Bar Exam is relevant and tests what is needed by entry-level California attorneys.”
Also in December 2018, the Bar released the results of its fourth study on the California Bar Examination, Roger Bolus, PhD.,
As these studies —which are likely to take years—continue, the Bar is continuing to administer the same exam, with the same cut score, with no imminent plans to make further changes.
As noted at the outset above, the core purpose of public regulation of attorneys (and many other trades and professions) is to assure practitioner competence and honesty. This assurance is paramount for members of the public, who rely on the state to keep incompetent and dishonest people—who may impose irreparable harm on unsuspecting clients—from practicing law.
Consider the following questions in evaluating whether a single examination (in the present format of bar examinations across the country) is properly achieving that stated purpose:
1. While a bar examination may have some relevance to competence, to what extent does it actually measure the knowledge, skills, and abilities that new lawyers entering the profession actually need to competently practice? This is a central tenet in justifying occupational licensure, and requirements to regularly validate the content of licensing exams via psychometric evaluation have been in place for all other occupations—from physicians to architects—(at least in California) for decades.
The National Committee of Bar Examiners also established a “Testing Taskforce” in 2018, that will similarly conduct a three year comprehensive study of the bar exam.
2. In determining their respective bar examination “cut scores,” are state bars appropriately ensuring that they are only excluding from admission those who are not “minimally competent” to practice law? While this is the psychometrically appropriate standard by which to measure and set the cut score for a licensing exam, state bars across the country have not typically adhered to this “do no harm” standard of entry into our profession.
3. What are the implications of a system of undergraduate and then law school education now extant, in which graduates must pay thousands of additional dollars and three months of intense study to pass a purported general competence examination? In addition, should law students be forced to choose between courses on subjects that will be tested on the bar and courses covering the subject matter in areas where they intend to practice?
4. All practice areas are not equal in their potential to impose irreparable consumer harm. A criminal prosecutor is usually supervised by expert guides; a corporate contract attorney often has models and supervision, and sophisticated clients who are able to determine for themselves whether their attorney is performing competently. So which specialties deserve attention for competence assurance? Arguably, these would include areas where: (1) the client is not in a position to gauge competence; (2) the attorney is not subject to assured training and review before or during legal practice; and/or (3) counsel may engage in a single case or task that, standing alone, portends irreparable harm. What test for assurance of competence is provided for immigration law, juvenile law, family law, or landlord/tenant law—topics not tested on bar examinations, yet practice areas with enormous potential for consumer harm?
5. Do any states have any mechanism to ensure continuing competence in any given practice area over the entire 50-year career of an attorney? Do any require a minimum body of continuing legal education in the area of actual practice? Do any ever provide tests relevant to competence in such areas of practice relied upon by consumers?
6. Are supplemental tests designed for state certified “specializations” designed to protect consumers or do they serve as marketing tools enabling these specialists to charge higher prices to willing (and well-heeled) clients?
Many states offer “certification” programs for practitioners in various legal specialties. Such specialization, with required examinations, work experience, etc. can contribute to market knowledge about a given practice area. However, that “label” is separate and apart from licensure, and is not required to practice in that area of law. Equally troubling is that the criteria for certification are overwhelmingly controlled by individuals who have already obtained these specializations—giving them a profit stake interest in raising the barriers for new market entrants. By way of illustration, the following are specialties certified as such by the California State Bar or its recently devolved associations: 1. Admiralty and Maritime Law, 2. Appellate Law, 3. Bankruptcy Law, 4. Criminal Law, 5. Estate Planning, Trust and Probate Law, 6. Family Law, 7. Franchise and Distribution Law, 8. Immigration and Nationality Law, 9. Legal Malpractice Law, 10. Taxation Law. In addition, the Bar “accredits” private attorney associations to certify attorneys in 11 additional areas of specialization, including: 1. Business Bankruptcy Law, 2. Consumer Bankruptcy Law, 3. Creditors’ Rights Law (American Board of Certification) 4. Civil Trial Advocacy, 5. Criminal Trial Advocacy, 6. Family Law Trial Advocacy, 7. Social Security Disability Law (National Board of Trial Advocacy), 8. Elder Law (National Elder Law Foundation), 9. Legal Malpractice, 10. Medical Malpractice (American Board of Professional Liability Attorneys), 11. Juvenile Law (Child Welfare) (National Association of Counsel for Children).
The answers to these questions at this time are not favorable to the public interest.
Analyses of attorney employment divide the market into three basic parts: (a) the “legal services market” offering legal services to the public directly, (b) “in-house” attorneys working directly for corporations or other entities, and (c) government lawyers.
The first market, offering services to the public, primarily work in law offices (95.1%); only 1% work for non-profit legal aid entities.
U.S. Census Bureau 2012 Economic Census; Henderson,
Of the 1.3 million practicing attorneys in the U.S. in 2018,
According to ABA statistics, there are 1,338,678 resident attorneys in the United States in 2018. Henderson, U.S. Census Bureau 2012 Economic Census; Henderson,
Meanwhile, the price of legal services has been increasing markedly. From 1987 to 2016, the cost of legal services rose nearly twice as fast as the overall Consumer Price Index-Urban.
In economic terms, the decline of the PeopleLaw sector of the legal services market can be attributed to higher relative cost, shrinking demand, and an emerging market of “substitutions” for traditional attorney services in the form of “legal tech” services.
Henderson,
As of 2017, 12.3% of Americans lived below the federal poverty line.
See
One manifestation of the attorney services collapse is the growth of unrepresented parties in court. This is one setting where most citizens would want some attorney representation. One study by the National Center for State Courts looked at 925,344 cases—a sample drawn from a variety of ten urban counties nationally and representing 5% of the total court cases during the one year surveyed. It found that 76% of those cases involved at least one party who was “self-represented”—appearing without counsel. The range of costs in most of these cases was $40,000 to $120,000. The median value of a judgment obtained was $2,441.
The time period of the study was July 1, 2012 to June 30, 2013,
What is the relationship between the current and increasing inability for most individuals in the U.S. to pay for and obtain legal representation and recent underlying trends? The data suggest three interacting dynamics: (a) a shift to high-profit organizational (predominantly corporate) representation, (b) the trend towards high-remuneration “partnership status” as the ambition and focus of attorneys, and (c) a failure to lower prices to generate demand—the normal market response where unmet demand remains. Underlying these factors is a setting of supply restriction—barriers to entry that are imposed by the current system of high and increasing tuition costs and time covering seven years of higher education, followed by a bar examination obstacle of unclear relevance to on-point competence.
One new grouping of legal services has not been included in the surveys discussed above. They are commonly referred to as alternative legal services providers (“ALSPs”).
Thomas Reuters,
These efforts and many more potential ventures of this type are impeded by two ABA Model Rules of Professional Conduct adopted by virtually every state: Rule 5.4, prohibiting non-lawyer ownership of a law firm,
American Bar Association Model Rules of Professional Conduct, Rule 5.4 (professional independence of a lawyer), American Bar Association Rules of Professional Conduct, Rule 5.5 (unauthorized practice of law),
There are some legitimate concerns related to these rules, but circumstances have made them largely disingenuous. In fact, private non-attorney ownership and control inhabits every corporation or other for-profit entity hiring an attorney as one of its officers or employees. If someone believes such persons are truly exercising “legal advice” separate from the profit-making purpose of the corporation, they are unfamiliar with the realities of law practice. Indeed, in the starkest example, the Big Four accounting firms employ attorneys providing legal services to all sorts of clients—individuals and entities. They are private corporations with investors and are not attorney-owned or controlled. They are in theory “under the supervision” of the client’s other attorneys. Such other attorneys have the private interest of their client as a preeminent concern. And that reality is separate and apart from principles of legal ethics, which dictate attorneys’ various duties to their clients.
Three aspects of this new dimension for legal services warrant consideration. First, AI and the Internet are increasingly used for consumer benefit in many contexts, and across many professions, from automatic car braking to the reading of complex MRIs (possible for examinations 10,000 miles away). Second, given the extreme supply constriction from barriers to entry and the depletion of services for individuals discussed above, there is substantial unmet need likely reachable through modern technology.
While it would make sense for those regulating the legal industry in the U.S. to recognize these overwhelming market signals and embrace new and innovative methods of increased access to legal services, the pattern thus far is to seek their limitation or elimination.
Daniel Conte, Co-author Gramme is serving as an attorney member of this task force, as well as the Association of Professional Responsibility Lawyers’ Future of Lawyering Committee studying similar issues with respect to the ABA model rules.
Emerging developments in the legal technology space also raise issues with respect to attorney continuing competence and law school curriculum. With technology’s increasing ability to replicate work that attorneys have traditionally performed (document review, contract drafting, legal research, etc.), regulators and law schools alike must reconsider the knowledge skills and abilities that lawyers as humans can uniquely deliver. Are existing continuing legal education models ensuring that attorneys are keeping up with this technology, and offering their clients the most efficient and accurate method of services?
The data support increasing the supply of attorneys by multiple measures: the need for indigent representation, the lack of attorneys providing services to individual (as opposed to corporate) clients, and the high price of legal services—which now often places quality (or any) legal representation out of the reach of even the middle class. The dilemma becomes “how do we increase the supply of attorneys to address increasingly unmet legal needs without compromising competence?”
It is beyond time for us to recognize that the existing cartel-controlled legal profession in the United States is ill-equipped to address this dilemma. It does not stimulate supply, competitive pricing, or any kind of competence assurance (or other consumer protections) in actual areas of attorney practice. A review of the problems and available cures commend the following ten major reforms in legal practice regulation.
As a rational issue examined
Today, law schools do not accept applicants without bachelor’s degrees, and the American Bar Association will not accredit schools that do.
A
The first two years would include liberal arts or other courses of interest to students. But of these likely 16 to 20 courses, three to five would have some colorable relationship to law: political science, economics, legal history, et al. Such college students could be admitted to law school following their second year.
Law school would occupy the final three years, with the first year including Socratic Method teaching of fundamental subject areas (contracts, torts, civil procedure, constitutional law, property, legal ethics, evidence). Moreover, existing law school courses reflect an arcane mindset that elevates judicial precedents to the exclusion of other areas of legal practice. In particular, the legislative and executive branches are largely ignored, despite their obvious relevance to legal practice. Courses on legislation and on administrative law
State regulatory agencies are particularly ignored, with few law schools teaching anything about a subject that determines the regulation of all trades and professions (including attorneys), the environment, education, and health. These agencies function primarily at the state level and knowledge of what they do and the procedural rules determining their transparency, accountability, and legality should be a part of the curriculum of all schools.
The law school would formulate “majors” or areas of “concentration,” consisting of collections of properly-sequenced courses and practical skills training relevant to an area of law.
An example is the University of San Diego, offering concentrations in: (1) Business and Corporate law, (2) Children’s Rights, (3) Civil Litigation, (4) Criminal Litigation, (5) Employer and Labor Law, (6) Environmental and Energy Law, (7) Health Law, (8) Intellectual Property, (9) International Law, and (10) Public Interest Law.
The antitrust division of the U.S. Department of Justice should create a monitoring enforcement team to detect any and all indicia of price fixing in higher education, including law schools. This includes patterns of “price leadership,” and other coordination by law schools, whether though the American Association of Law Schools, the American Bar Association, or any other mechanism.
Furthermore, law schools and other institutions of higher learning should be open and transparent to their prospective students about differential pricing options and data, including number and amounts of tuition “discounts” based on pre-admission statistics such as GPA or LSAT scores. These strategies, and the extent of their influence, must be disclosed to accomplish pricing information and tuition competition. Prospective students should know how much they are paying relative to other admitted students and the variables dictating those differences. Actual tuition, including net tuition amounts after “individual scholarship” reductions by the law school (not involving actual gifts or outside funded accounts) should be comparatively reported and published.
One way to ameliorate high education costs, while simultaneously addressing the widespread unmet legal needs in our country, is to provide loan forgiveness (also known as “loan repayment assistance programs”) to attorneys who may be working to address those legal needs but earning a lower salary than they would if they chose to represent corporate clients.
Other professions have established systems for such assistance. Nationally, the Public Service Loan Forgiveness Program has been in effect since 2007, although its future is in doubt.
The program allows people working for qualified organizations to repay some of their federal student loans based on a portion of their monthly income. After making 120 monthly payments, the remaining federal student loans are forgiven, with no cancellation-of-debt income tax consequences. Private loans are not eligible for PSLF. At this writing the program is still in effect, although there are competing bills pending in Congress to limit it (Promoting Real Opportunity, Success, and Prosperity through Education Reform Act (the “PROSPER Act”), 115th Congress (2017–2018), H.R. 4505, Rep. Foxx,
More relevant, particularly for California, is the example provided by and for the medical profession: the California State Loan Repayment Program (SLRP).
Specifically, in 2002, the California Legislature established the Physician Corps Loan Repayment Program within the Medical Board of California.
AB 982 (Firebaugh) (Chapter 1131, Statutes of 2002). The Health Professions Education Foundation (HPEF) is a non-profit 501(c)(3) public benefit corporation housed within the Office of Statewide Health Planning and Development (OSHPD). Pursuant to Health & Safety Code sections 128330-128370, HPEF is required to submit an annual report to the California State Legislature documenting the performance of the Steven M. Thompson Physician Corps Loan Repayment Program (STLRP). This fund is administered by the Department of Managed Health Care in California and consists of administrative fines and penalties assessed in the process of licensing and regulating Health Care Service Plans. STLRP guidelines are in California Health and Safety Code Section 128550–128558 and the California Code of Regulations are in Title 22, sections 97931.01–97931.06.
In contrast, attorney loan forgiveness has a very different record. Nationally, over 100 law schools do offer Loan Repayment Assistance Programs (LRAP) for graduates who pursue public interest work.
See ABA description at Based on the authors’ survey of individual law school programs, amounts obtained in these programs vary under complicated formulae but are generally at or below $7,000 per year. These amounts here are generally less than one fifth the amount paid to physicians. Some LRAP programs may provide benefits for a longer period (many for up to five years and some for up to 10) where public interest law practice continues and with total income below $60,000 per year (with benefit reductions common where income is above $40,000). The average amounts provided are relatively small, particularly in relation to the over $140,000 in average accrued law school debt for graduates, and in relation to the benefits afforded by the professions. The percentage of a law school’s graduates receiving assistance is typically less than 2%. They depend on law school created “funds” fed from charitable contributions and other limited sources. AB 935 (Hertzberg) (Chapter 881, Statutes of 2001).
Subsidies for law school education should be enhanced from both public and charitable sources. Using the STLRP program as a model, the bars of every state should identify specific geographic and practice areas with the lowest rates of access to legal services and establish substantial loan forgiveness programs for attorneys who work to meet those needs. These programs should be funded with a mandatory surcharge on annual attorney licensing fees. They should also work with their respective state Attorneys General to earmark a percentage of civil penalties assessed to stabilize this fund, similar to the Managed Care Administrative Fines and Penalties Fund.
Each state should undertake, as California and the NCBE are now (and as other professions have done for decades), a regular psychometric evaluation of its licensing exam to ensure that the cut scores are properly evaluating minimum competence to practice law as it is currently being practiced.
Specifically, the bar examination should test basic legal vocabulary and concepts, including the concept of judicial “precedents,” and overarching legal principles pertinent to all practice areas: professional responsibility, contract law, torts, civil procedure, constitutional law, basic rules of evidence, and remedies. The additional competence assurance required for certain actual areas of practice requiring particular knowledge and where negligence will portend serious harm, should have additional qualification respectively, and regularly evaluated to ensure continuing competence.
Public protection, the purported justification for this arbitrary and notoriously difficult-to-pass examination, will be better achieved without an extreme barrier entry into the legal profession.
Once states have undertaken the appropriate analyses to ensure that the content and cut score of their respective bar exams are valid, they should then take measures to ensure that law schools within their jurisdictions are achieving a minimum pass rate.
At this writing, the ABA has been engaged in a three-year debate as to whether to amend Standard 316 of its Standards and Rules of Procedure for Approval of Law Schools to require 75 percent of a school’s bar exam takers to pass within two years of graduation, rather than the five years currently allowed.
Such a standard is designed to ensure that schools not be tempted to admit students who do not have the skills necessary to pass the bar exam. The purpose of a law school is not to generate tuition, academic positions, law review articles, or conference gatherings. It is to prepare students for practice as ethical, competent attorneys serving the public. If their operation instead takes many thousands of dollars from youth and their families, incurs momentous debt, and yields little or no remunerative opportunity, that institution is not meeting the
Rather than require a rigorous bar examination spanning multiple specialized practice areas as a requisite condition for all bar applicants, states should instead offer a basic examination (as described above), and then design a certification mechanism for attorneys who choose to practice in areas which pose the greatest risk of irreparable harm to the public. Indeed, some areas of law, such as immigration, juvenile dependency, criminal defense, landlord/tenant, and family law, are fields which may have devastating results on a client with just one case (i.e. deportation), and in which clients generally lack the ability to judge attorney competence for themselves (unlike corporate clients with general counsel who may more easily determine whether their attorneys are best serving their interests).
The bars of each state should consider which practice areas have the potential to impose the greatest harm to consumers, and then require attorneys who choose to practice in one of these areas to demonstrate minimal competence in their chosen field. This could include a state-issued “certification,” which attorneys may achieve by passing a psychometrically-sound, practice area-specific examination, and/or working under the direct supervision of a current practitioner for a specified number of hours as an apprentice.
Note that these proposed certifications are different than the existing “specialization” models, which currently serve as marketing tools, enabling attorneys to charge higher prices to sophisticated clients for the privilege of being represented by a legal specialist. Indeed, to maintain certification for Cardiopulmonary Resuscitation (“CPR”), one must take a refresher course every two years. Why do we not require the same for licensed professionals? Flexible standards for practice in the event that a longstanding practitioner fails the re-certification exam could be available; for example, a 90-day probationary period could be imposed to allow time for a retake. This flexibility can be important for the clients of practitioners who might be harmed by the interrupted practice of their attorney. If competence cannot be demonstrated at the end of 90 days, the specialized practice in that area would cease.
Many state bars require that attorneys complete a certain number of hours of “continuing legal education” (“CLE”) over a specified number of years as a condition of license renewal. However, many do not require that these courses coincide with an attorney’s area of actual practice, nor do they typically require any kind of assessment demonstrating retention of the information.
Such CLE requirements should be amended to require that at least half of the CLE hours be taken in the attorney’s designated area of actual legal practice. Additionally, state bars should administer a psychometrically-sound, basic test in an attorney’s chosen practice area at least every ten years as a condition of license renewal. If the attorney cannot initially pass the exam, he or she may be placed on probation for 60 days to retake the test. If unable to pass such a test in that specialty area after repeated attempts, the attorney should move to another area of practice where client reliance will not have the same consequences or where relevant competence is demonstrated.
The use of modern technology is growing and permeating many trades and professions, including legal practice. As discussed in Section IV.B. above, the challenge facing all state bars is how to embrace emerging technologies to benefit those in need of legal services. Two variables are at issue which must be appropriately balanced: the advantage of additional services meeting demand, and the danger of abuse or malpractice with consumer harm resulting.
It is important that those regulating attorneys not over-enforce the “unauthorized practice of law” mantra in order to protect attorneys’ “turf” and preserve their ability to charge higher hourly fees.
The North Carolina State Board of Dental Examiners was seeking to sanction and halt the practice of teeth whitening as the unauthorized practice of dentistry and to confine such brightening to practicing dentists.
Each state should appoint a commission, including (and perhaps a comprised of a majority of) non-attorneys to revisit rules governing the unauthorized practice of law, multijurisdictional practice, advertising, fee sharing, corporate practice, etc. Specifically, the commission should assess the historical purpose and impetus behind these rules, determine whether existing rules are achieving the aforementioned balance of access to legal services and public protection, and assess whether these rules are stifling the innovative delivery of legal services to a public which is in great demand of these services. Moreover, such a commission should consider not only potential reforms to business structures and technological innovations, but also consider whether new categories of licensure (akin to nurse practitioners in the medical profession) may be implemented in order to maximize access to legal services.
Another measure that would protect the public from incompetent and unethical attorneys—but has been largely opposed by attorney-dominated state bars—would be to require attorneys to carry liability insurance as a condition of licensure. Indeed, existing attorney discipline systems across the country generally do not police negligent acts that may cause harm to consumers, and consumers are generally unable to recover against attorneys who do not carry insurance.
The result of a lack of coverage is effective immunity from damage or restitution assessment for the vast majority of such attorneys. Plaintiffs’ malpractice attorneys will not normally pursue cases where payment of judgments obtained is unlikely or uncertain. Further, states do not generally assure payment of malpractice judgments. In the case of California, the State Bar has a Client Security Fund, but it deliberately includes only dishonesty or damages arising from disciplinary proceeding proof, and excludes negligence or malpractice judgments.
While many countries require attorneys to carry liability insurance to protect clients from precisely these harms, only two states in the U.S., Idaho and Oregon, maintain the same requirement.
Antitrust policy and compliance is a major issue for all state regulatory agencies; licensure decisions directly control the supply of legal services, with See detailed discussion in Section II,
Several bars across the country maintain a “unified” or “integrated” governance structure. Under this structure, a state bar serves as a trade association and also as a regulatory agency—in a single entity. This model gives rise to the appearance of impropriety. It poses an inherent conflict of interest between acting in the best interests of the legal profession and acting in the best interests of the public. This is a profound ethical problem. Recently, it has started to be addressed.
By way of example, in 2018, after 25 years of study and consideration of this proposition, the State Bar of California was statutorily required to “deunify,” spinning off its 16 practice area-specific sections and other aspects that constitute direct trade association activities into a separate trade association, the California Lawyers Association.
States that maintain an integrated structure should follow California’s lead.
Ideally, governing boards charged with making decisions impacting the regulation of the legal profession should not be controlled by practicing attorneys who stand to benefit from the policies they adopt. Instead, boards should be comprised of a “public member” majority—who may consult attorneys for their expertise in the field, but whose ultimate allegiance is to public protection alone.
The landmark 2017 California legislation deunifying the State Bar of California also revised the composition of the State Bar Board of Trustees—eliminating six positions which were elected by California attorneys, and providing for more even distribution of attorneys (7) and non-attorneys (6).
If this option is not exercised, and the states opt to maintain an attorney-member majority, the only way to ensure that the boards are not acting anticompetitively and to guarantee state action immunity from federal antitrust laws is to establish a supervisory entity that reviews the board’s decisions for anticompetitive effect. That review must explicitly not be symbolic or perfunctory, but must include analysis of anticompetitive impacts and have the clear authority to amend or reject all or any part of any decision being made.
For example, state supreme courts could appoint a body of experts, ideally including economists with antitrust expertise, educators, and others, to evaluate complaints, gather relevant evidence and advise the justices accordingly as to the potential anticompetitive impact of policies adopted by an attorney-controlled board.
There is little doubt that those involved in public regulation, including attorneys, generally believe that they serve the public interest, usually receiving little or no compensation. They subjectively believe that their mission is to serve the public interest. But the accumulation of persons into trade associations creates empathy lines that are rarely discussed openly. To illustrate, how often does a state bar discipline attorneys for over-billing? How often is the issue of knowing deceit in points and authorities, et al. subject to sanction or professional approbation? Or even discussed? How often do state bars study the impact of supply limitations
The purpose of state licensure is to assure access to competent practitioners, especially when incompetence threatens irreparable harm. It is not to serve as a means for professions being regulated to artificially restrict supply so as to drive prices out of reach of the lower and middle classes.
As the 21st century ushers in a new era of technology and innovation, we find ourselves at a crossroads. Both the legal profession and the several states must choose whether they will continue to allow special interests to capture professional regulatory bodies and infect them with abject self-interest. Or, will they truly act in the best interests of the public?
As it stands, the fox guards the henhouse. There is little question that lawyers govern the legal profession for lawyers. The American Bar Association decides what law schools can and cannot do from sea to shining sea. This lawyer monolith all but decides how to become a lawyer, on behalf of lawyers, for the people of the United States.
And the cartel has acted exactly as one would expect—in line with its own interests. It has made it exorbitantly expensive to become a lawyer. A legal education takes seven years—four of which are unrelated to law. A law student must mortgage his or her future, at a total cost ranging from $190,000 and $380,000. And perhaps most disturbingly of all, the legal training that students do receive (in their final three years of those seven) often leaves them woefully unprepared. A student’s textbook legal education is tangentially relevant at best to the one or two of 24 heavily specialized practice areas of modern law in which that student will eventually practice. Even the doctrinal classes are insufficient—students are almost universally funneled into expensive “bar preparation” classes to get them through licensing exams.
Those licensing exams have virtually nothing to do with the practice of law. They consist almost entirely of memorized subject matter that bears little resemblance to what lawyers do on a daily basis, scored by an arbitrary “cut score” to guarantee a high percentage of failures—in California, 60%.
Meanwhile, the state bars:
Do not rank negligent acts as a normal basis for discipline (outside of extreme incapacity); Do not require malpractice insurance—allowing attorneys to effectively escape sanctions or the obligation to pay for harm caused to their clients; Ensure that their “client security fund[s]” compensate injured clients for only theft, not malpractice (even where a judgment exists); Do not require continuing legal education to be in the areas in which attorneys practice; Most significantly, never test any attorney in any area of actual practice relied upon by consumers—ever, even in areas of law where clients are unable to gauge competence and a single case can mean ruination; and Confront and attempt to dismantle artificial intelligence and other technological solutions to legal problems, as an affront warranting elimination—even in situations when these solutions could be cheaper and more effective to clients than live lawyers.
The societal costs of lawyers regulating lawyers are dire. Legal services are so expensive that three quarters of legal cases involve an unrepresented party. The poor have token access to legal representation at best, and the situation is not much better for the middle class. At a certain point, it starts to look like the sticker price of legal education is rather the point of this endeavor—to drive up the cost of becoming a lawyer and to reduce competition for existing practitioners. The point of regulation should be to help the people who hire lawyers, not the lawyers themselves.
Critically, no area of state regulation more consistently overlooks the specter of federal antitrust liability than does the legal profession itself. The Supreme Court of the United States unambiguously held in 2015 that any state body controlled by “active participants” in the profession being regulated is not a sovereign entity for antitrust purposes. And yet the legal profession continues to use state machinery to regulate itself without active state supervision. Licensing without state action is supply control—price fixing, a
The question remains. Will states seize upon the momentum of the 2015