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          http://www.cato.org/pubs/regulation/reg20n1c.html

 

          This article is posted on the Cato Institue’s website.  Cato is a think thank in Washington, D.C. that has

          approximately a twenty-five member policy staff.  Mr. Leef’s articles on UPL say everything that we have

          been saying to the court, so we are not alone.  The truth is out there.  (Bold or red emphasis is added.) 

         

 

          Lawyer Fees Too High? The Case for Repealing Unauthorized Practice of Law Statutes

 

          by George C. Leef

 

          George C. Leef is president of Patrick Henry Associates and an adjunct scholar with the

          Mackinac Center for Public Policy. He earned a J.D. from Duke University in 1977.

 

 

          Lawyers are not a popular group among the general public, and the high price of legal services in

          part accounts for their poor reputation. A principal reason for those high prices is the lawyer’s

          monopoly on providing legal services. Every state except Arizona has an "unauthorized practice of

          law" (UPL) statute that makes it illegal for anyone who does not meet the requirements set by state

          bars to render legal assistance. Lawyers invariably argue that UPL statutes serve the public interest.

          Wrote F. M. Apicella, J. A. Hallbauer, and R. H. Gillespy II in the American Bar Association

          Journal (1995), repealing UPL statutes "would result in the most unwary, guileless members of the

          public being incompetently represented and advised, if not victimized and defrauded."

 

          But the notion that the best or only way to protect consumers of legal services is to prevent them

          from hiring people without bar membership is based on fundamental fallacies. First, it assumes that

          only governments can protect consumers. Second, it assumes that a government-sustained monopoly

          has no adverse effects that might offset purported benefits. And third, it ignores the mechanism that

          best protects the interests of all consumers—the free market.

 

          All UPL statutes prohibit individuals from legally practicing law without bar membership. Bar

          membership, in turn, has four prerequisites for aspiring legal practitioners: (1) they must earn a

          college degree; (2) they must graduate from an approved law school; (3) they must pass the state’s

          bar exam; and (4) they must convince the bar that they are "of good moral character." Such criteria,

          however, did not always hold. According to Dietrich Rueschemeyer in Lawyers and Their Society,

          as late as 1951, 20 percent of American lawyers had not graduated from law school and 50 percent

          had not graduated from college.

 

          Consumer Welfare

 

          Lawyers argue that licensure protects consumers from unqualified or unscrupulous practitioners, but

          it is more likely that licensure protects lawyers from competition. Many economists and even some

          lawyers have assailed licensing laws as special interest legislation that is supported by those who

          want to restrict competition, not protect the public interest. As Professor Walter Gellhorn of

          Columbia Law School wrote in the University of Chicago Law Review (1976):

 

               Licensing has only infrequently been imposed upon an occupation against its wishes . . .

               Licensing has been eagerly sought—always on the purported ground that licensure

               protects the uninformed public against incompetence or dishonesty, but invariably with

               the consequence that members of the licensed group become protected against

               competition from newcomers.

 

          Gellhorn’s comments apply to members of the legal profession who sought licensing laws. While they

          argued that licensing was for the public’s benefit, no test of competence was imposed on those who

          were practicing law when the UPL statutes were passed.

 

          Judge Richard Posner likens the legal profession to a medieval guild with an elaborate structure of

          internal and external controls designed to suppress the kind of marketplace competition that it claims

          is "unbefitting." In the Indiana Law Journal (1993) Posner wrote:

 

               [The legal profession] was an intricately and ingeniously reticulated, though imperfect,

               cartel. Governmental regulations designed to secure the cartel against competition and

               new entry from without, and centrifugal, disintegrative competitive pressures from

               within, held the cartel together against the dangers that beset and ordinarily would

               destroy a cartel of so many members.

 

          Cartels hold together better when there are fewer members and the cost of meeting membership

          requirements is high. Professor Roger Cramton of Cornell Law School wrote in the Case Western

          Law Review (1994), "When the opportunity costs of foregone income are taken into account, the

          investment in human capital presently required to become a lawyer amounts to at least $100,000."

          That cost prices many potential practitioners out of the field and requires those who can afford a

          legal education to charge high fees.

 

          Licensure is not the sole cartel-protecting device used by the bar. In the past, the bar restricted

          competition by prohibiting advertising and requiring adherence to bar-established fee schedules.

          Those restraints, however, have been swept away. In Goldfarb v. Virginia State Bar (1975) the

          Supreme Court struck down bar-imposed fee schedules, and in Bates v. State Bar of Arizona

          (1977) the Court ruled against advertising restrictions; both cases were argued on antitrust grounds.

          UPL statutes, however, are still a major barrier to competition in legal services.

          

          The English Example

 

          The practical case for permitting a free market in legal services is supported by several case studies.

          In England, for example, conveyancing services—that is, the legal work associated with transferring

          real estate titles—had been a legal monopoly for over a century. But in the 1970s, the public

          complained about the high cost of those services. Like bar associations in the United States, the

          English Law Society had restrained competition with recommended fee scales and a prohibition

          against advertising. As Avrom Sherr and Simon Domberger wrote in the International Review of

          Law and Economics (1989), "The conveyancing monopoly came to be viewed with increasing

          hostility by aspiring homeowners and by a government committed to greater competition."

 

          Consequently, in 1984 Prime Minister Margaret Thatcher’s government announced that, beginning in

          1987, the market would be opened to "licensed conveyancers" who were not members of the legal

          profession. That edict began what Sherr and Domberger call "a unique, controlled experiment in the

          liberalization of the supply of legal services." The result was that the market for conveyancing

          services was transformed even before licensed conveyancers entered the market. The authors wrote:

 

               Fees started to fall in 1984 . . . a full three years before licensed conveyancers entered

               the market. By 1986 the discriminatory element in the combined fees charged for sales

               and purchases of property had fallen by one-third. . . . The threat of competition has

               yielded significant welfare benefits. Price discrimination has been reduced,

               conveyancing costs have fallen in real terms, and there has been a measurable

               improvement in consumer satisfaction.

 

          The market for legal services clearly responds to economic laws. More competition, brought about

          by eliminating artificial barriers to market entry, lowers prices and increases the quality of available

          services.

           

          The Arizona Example

 

          Arizona has also opened up its market for legal services. In1986, Arizona’s UPL statute expired and

          the legislature declined to reenact it. Since that time, many businesses offering legal assistance by

          nonlawyers have opened. The benefit to consumers of having the option of contracting with

          unlicensed practitioners is illustrated in Arizona Attorney (1994):

 

               Bob Haves knew he needed help in filing for a divorce when a nine-year search finally

               turned up his wife in Georgia. But when the air-conditioning and heating mechanic was

               told by an attorney that he needed to pay an $800 retainer up front, Haves balked.

               Instead he turned to one of a growing number of legal document services in Arizona

               that helped him prepare and file his divorce and even sort through child support, child

               custody, and spousal maintenance problems. Haves believes that the $175 he paid for

               the service was a bargain.

 

          Haves saved $625 because he was able to shop around for the help he needed.

 

          In California there has been a de facto move away from the lawyer monopoly. The California bar

          has stopped taking action under the state’s UPL statutes against unlicensed practitioners, for

          example, those offering divorce and other services in low-income neighborhoods. So far there has

          been no outbreak of customer complaints about unlicensed practitioners providing low-quality

          service.

 

          Repealing UPL statutes would be particularly beneficial for low-income Americans. A study

          commissioned by the American Bar Association found that in 1987, 40 percent of Americans near

          or below the poverty line experienced civil legal problems for which they had no legal assistance.

          With a free market in legal services, those individuals could patronize an affordable, unlicensed legal

          practitioner. The success of such businesses in Arizona indicates that many people regard that

          option as a good alternative to lawyers.

          

          The Bar’s Defense

 

          Bar supporters argue that without UPL statutes, incompetent or dishonest practitioners would harm

          consumers. But that is a case of looking only at the supposed hazards of a free market while ignoring

          the palpable benefits. For example, the president of the Michigan bar, Thomas G. Kienbaum, wrote

          in Michigan Lawyers Weekly (1995),

 

               [George Leef] would no doubt not allow a member of his family to be operated on by

               a nurse any more than he would have a will or estate plan prepared by an insurance

               agent. Yet, he appears to advocate a legal system that would leave the fates of children

               and families—particularly the poor—to the whims of an unregulated, incompetent or

               even unscrupulous marketplace.

 

          But most individuals, including those who are poor, are careful decisionmakers. Few individuals

          would ask a nurse to perform a heart operation, a bookkeeper to perform a difficult accounting

          analysis, or a patent lawyer to defend against a murder charge even if doing so appeared cheaper

          than the alternatives.

 

          Moreover, the consumer’s self-interest is not the only protection against incompetent practitioners;

          the provider’s self-interest is also important. It is very much in the provider’s interest to perform the

          tasks for which he has contracted and not to leave dissatisfied clients in his wake. A bad reputation

          will lose customers and money. Professionals who fail through incompetence lose the investments

          they made in their enterprises and their prospects for future success.

 

          Nonlawyers routinely refer cases that are outside their competence to lawyers, even though they are

          not bound by law to do so. In Arizona and California referrals from paralegals to lawyers are

          common. That indicates that nonlawyers tend not to take cases that they feel are beyond their level

          of competence. In a leading Michigan unauthorized practice case, State Bar v. Cramer (1976), the

          record disclosed that the defendant had referred over six hundred cases to lawyers. Referrals,

          another filter against foolish contracting, work to protect consumers from incompetent practitioners.

 

          Experience shows that the vast majority of UPL cases are brought by bar organizations, not injured

          consumers. Actual cases of harm to clients due to incompetent or dishonest nonattorney assistance

          are rare. Professor Deborah Rhode wrote in the Stanford Law Review (1981) that of all UPL

          inquiries, investigations, and complaints in 1979, only 2 percent arose from consumer complaints and

          involved injury.

 

          The Canadian experience is similar. In particular, the province of Ontario reserves most legal

          services for bar-approved attorneys. The Report of the Task Force on Paralegals, prepared for

          Ontario’s Ministry of the Attorney General in 1990, analyzed the 155 cases of unauthorized practice

          brought from 1986 to 1989. The task force found that 87 percent of the cases had been brought by

          lawyers, governmental agencies, or the Law Society. Moreover, the report stated, "Those few

          complaints of incompetence or fraud related to one independent paralegal business [that is] no longer

          in operation." The report concluded:

 

               The great majority of clients of independent paralegals feel that they have received

               satisfactory legal services. In fact, the information assembled by the task force suggests

               that any intimation of large scale incompetence or fraudulent activity by independent

               paralegals is incorrect and misleading.

 

          Consumers and Information

 

          Supporters argue that UPL statutes help the public assess the competence of service providers.

          Supposedly, in a free market consumers of legal services generally would be unable to judge the

          quality of prospective unlicensed practitioners.

 

          There is an element of truth in that argument. It is difficult for consumers to obtain information on the

          quality and reliability of one-time purchases of certain goods and services. How does one know who

          is a good architect, accountant, or lawyer?

 

          But the market for legal services is no different from markets for other services when it comes to the

          problem of uncertainty, and consumers would approach the problem in the same way. Consumers

          would ask friends, relatives, and associates to recommend a service provider. They might also be

          aided by various indicators of success, such as business location. Consumers might also contact

          agencies, governmental and nongovernmental, that maintain records of complaints against businesses.

          Finally, consumers might choose to use certification as a screening device if they have reason to

          believe that possession of a certain certificate shows a level of competence relevant to their needs. In

          a free market for legal services, consumers would use the same information-gathering techniques to

          assess the competence of unlicensed practitioners that they now use to assess the competence of

          licensed ones. The only difference is that they would have a wider field of choice than they do now.

 

          Competence and Credentials

 

          Supporters of UPL statutes contend that only practitioners who have the right credentials can

          properly assist people with legal problems. "Members of the bar are required to pass a state bar

          examination which insures a minimum level of legal competency," contends Ryan Talamante in the

          Arizona Law Review (1992). And the Michigan Supreme Court decision in State Bar v. Cramer

          wrote:

 

               Those persons offering advice on legal matters regarding child custody, contract and

               property rights, inheritance, separate property, and support, to name the more

               significant, must possess a measure of competency and judgment to insure proper

               representation.

 

          The implicit assumption behind those statements is that the only way a person can demonstrate the

          degree of knowledge and judgment needed to render legal assistance is by taking all of the steps

          required for bar membership. That assumption does not withstand critical examination.

 

          Law school provides a broad but shallow education. Would-be lawyers learn a smattering of many

          subjects but none in depth. In-depth training usually does not begin until graduates land a job and

          enter an area of specialization. In the Georgetown Journal of Legal Ethics (1990) Rhode notes:

 

               An increasing specialization in legal work, coupled with a growing reliance on

               paralegals and routinized case-processing systems, undercuts some of the traditional

               competence-related justifications for banning lay competitors. Law school and bar

               exam requirements provide no guarantee of expertise in areas where the need for

               low-cost services is greatest: divorce, landlord/tenant disputes, bankruptcy,

               immigration, welfare claims, tax preparation, and real estate transactions. In many of

               these contexts, secretaries or paralegals working for a lawyer already perform a large

               share of routine services, and this experience has equipped a growing number of

               employees to branch out on their own.

 

          A law school education, while valuable, does not guarantee competence. For example, a

          fresh-out-of-law-school attorney is incapable of handling many complex legal matters. A newly

          admitted bar member is almost never equipped to handle, for example, worker’s compensation

          litigation, but there is no law against "unauthorized worker’s compensation practice." Such a law is

          unnecessary. The legal profession and the public rely on market incentives and disincentives to see

          that attorneys who claim to have worker’s compensation or any other type of expertise have

          acquired it.

         

          The Federal Example

 

          Another indication that individuals without bar approval can adequately render legal services is that

          most federal administrative agencies permit unlicensed practitioners to represent parties in cases

          before them, both adversarial and nonadversarial. According to the Results of the 1984 Survey of

          Non-Lawyer Practice Before Federal Administrative Agencies, published jointly in 1985 by the

          ABA Standing Committee on Lawyers’ Responsibility for Client Protection and the Center for

          Professional Responsibility, there have been few reports of problems with lay advocates.

 

          The U.S. Patent Office administers a competency test that both attorneys and nonattorneys must

          pass before they can bring cases before the office. There is no evidence to suggest that the

          nonattorneys are any less capable than the attorneys in dealing with the complexities of patent law

          and procedure. And in the case of Sperry v. Florida Bar (1963), the Supreme Court rebuffed an

          attempt by the Florida bar to prevent a non-bar member from representing Florida clients in

          patent applications.

 

          Accountants, who are usually not bar members, frequently advise their clients on tax matters, and

          "enrolled agents" are permitted to appear before the U.S. Tax Court on behalf of their clients in

          disputes with the Internal Revenue Service. Accountants usually understand tax law as well as or

          better than many lawyers. As Barlow Christensen argues in the American Bar Foundation

          Research Journal (1980):

 

               The accountant who lives every day in the field of tax law almost surely has an

               understanding of that field comparable to a lawyer’s understanding. Indeed, a proficient

               accountant probably knows and understands the tax laws far better than does the

               general practice lawyer.

 

          In Michigan, nonlawyers are permitted to represent parties in proceedings before the Michigan

          Employment Security Commission (MESC). That requires considerable knowledge of the relevant

          law, but there is no evidence that claimants or employers have been ill-served by nonlawyers. The

          Michigan bar in 1985 fought to have a slight ambiguity in the wording of the Michigan Employment

          Security Act interpreted in a way that would place MESC cases under Michigan’s UPL statute, but

          failed.

 

          In many states, nonlawyer real estate agents have been successfully preparing legal conveyancing

          documents for years. In Arizona, for example, a state supreme court decision in 1961 ruled that such

          work constituted the "practice of law" and was therefore illegal (State Bar of Arizona v. Arizona

          Land Title & Trust Co.). The realtors mounted a campaign, vigorously opposed by the state bar, to

          overturn that decision by amending Arizona’s constitution. The public voted in favor of the

          amendment by almost four to one. Since the adoption of that amendment, no evidence of consumer

          harm from incompetent document preparation has come to light.

 

          The Discipline Argument

 

          Defenders of UPL statutes make much of the fact that licensed attorneys are subject to disciplinary

          actions, such as disbarment or sanctions. One objection to this argument is that the bar’s disciplinary

          system is an inadequate consumer protection mechanism. In the Loyola Consumer Law Reporter

          (1991) attorney Deborah Chalfie wrote:

 

               Nationwide, more than 90 percent of all discipline complaints are dismissed. The bulk

               of these complaints are dismissed at the screening stage because they are considered

               outside the agency’s jurisdiction, which is confined to enforcing the ethical rules that

               govern lawyers. Thus, even if all the complaints about over-charging, neglect, and

               incompetence are true, they state no violation of the ethical rules and are therefore

               dismissed.

 

          The bar’s discipline system does little to deter poor service because sanctions are almost never

          levied for anything less than criminal behavior, gross and repeated negligence, or unconscionable

          overcharging.

 

          Supporters of UPL statutes also argue that bar membership is a seal of approval that guarantees

          quality for consumers. That argument is belied by the fact that when the bar administers sanctions, it

          often does so secretly; thus, the public gains no valuable information on the reliability of the

          attorney who has been the subject of disciplinary action. Moreover, bar sanctions seldom redress the

          financial loss to the client. The alleged efficacy of the bar’s disciplinary system to protect consumers is a

          very slender reed upon which to base the prohibition of legal practice by non-bar members.

 

          Moreover, the absence of a formal system for disciplining unlicensed legal practitioners does not

          mean they are not subject to disciplinary forces. The competitive marketplace has powerful, built-in

          incentives for providers to supply high-quality goods and services, which minimizes the need for a

          formal disciplinary apparatus. As Professor Richard Epstein of the University of Chicago Law

          School wrote in Simple Rules for a Complex World (1995):

 

               There’s a regrettable tendency among lawyers to say that if there is no legal remedy,

               there is no constraint on human behavior at all. Social sanctions cannot be ignored in

               determining the institutional value of any legal arrangement. No one is socially a free

               agent where others depend on him, and customers should not be treated as strangers

               whose preferences are to be disregarded simply because they are unable to win a

               lawsuit . . . . Virtually everybody involved in business recognizes the enormous

               importance in business affairs of preserving a reputation for fair and honest dealing. . . .

               Where the reputational bond is strong, the legal bonds may be weak, because the

               incentives for good conduct can be secured without having to incur the extensive

               administrative costs of any system of liability.

 

          Finally, even if the bar’s system of attorney discipline were effective, it would not follow that people

          should be deprived of the option of contracting for legal services with unlicensed practitioners. The

          bar’s discipline system is arguably one reason why consumers may prefer to deal with licensed

          attorneys. But just because one product has a superior feature does not mean that consumers should

          be prohibited from choosing other products.

 

          Local bars presumably will attempt to convince consumers that they will be served better by highly

          educated, licensed attorneys who are subject to professional disciplinary action for malfeasance. In

          that way, bar membership could serve as a seal of approval similar to the Underwriters Laboratories

          label for electrical appliances. If consumers regard the "protection" afforded by the bar’s disciplinary

          system as worth the added cost, they will act accordingly. They should not, however, be deprived of

          freedom of choice merely because the bar has an established disciplinary system.

 

          An Alternative to UPL Statutes

 

          Certification is a sound alternative to licensing that does not restrict consumer choice. It is a means of

          informing consumers that a service provider possesses one or more specific qualifications, and it

          need not involve the government. For example, the Certified Public Accountant designation is earned

          by those who can pass a rigorous accounting examination, but the exam is voluntary. There is no

          "unauthorized practice of accountancy" statute. Consumers of accounting services are free to hire

          accountants who come with the private seal of approval and a higher price tag, or they may use a

          non-CPA who they believe will meet their needs at a lower cost. Certification provides information

          without restricting consumer options. In Capitalism and Freedom (1962) Milton Friedman wrote:

 

               The usual arguments for licensure, and in particular the paternalistic arguments, are

               satisfied almost entirely by certification alone. If the argument is that we are too ignorant

               to judge good practitioners, all that is needed is to make the relevant information

               available. If, in full knowledge, we still want to go to someone who is not certified, that

               is our business; we cannot complain that we did not have the information. . . . I

               personally find it difficult to see any case for which licensure rather than certification can

               be justified.

 

          Bar membership too is a form of certification. Without UPL statutes, bars might make this

          informational device more useful to consumers by certifying attorneys in various subfields of law.

 

          The great advantage of certification is that it is subject to the test of the market. Consumers decide

          whether the higher fees that typically accompany contracts with certified practitioners are worth the

          service. Without UPL statutes, the bar’s steps to certification would be put to the test of the market

          as well. Are three years of law school really necessary? Are two years sufficient? If one can pass the

          bar exam, is graduation from law school necessary? The need to serve consumers should force bars

          to review and probably refine their requirements and rating systems.

          

          Restoring Freedom

 

          Whatever the purposes of UPL statutes, their principal effect is to limit the freedom of individuals to

          engage in voluntary transactions. UPL statutes restrict free exchange against the will of those who

          would sell legal services without bar certification and the customers who would purchase those

          services.

 

          The nineteenth century French political and economic thinker Frederic Bastiat proposed this test for

          bad laws: "See if the law benefits one citizen at the expense of another by doing what the citizen

          himself cannot do without committing a crime." UPL statutes certainly fall into this category.

 

          Consumers are better-off if they can shop for the goods and services they want in a free market. By

          imposing a very high and costly barrier to entry, the state makes consumers worse off. The case for

          repealing UPL statutes was summarized well by W. Clark Durant, former chairman of the Legal

          Services Corporation, in a speech before the ABA in 1987:

 

               We should encourage at every turn the ability of entrepreneurs, para-professionals and

               lay people to be a part of the delivery of legal services to the poor and for all people.

               I’ve met many eligible clients around the country who can quite capably be advocates

               in resolving disputes if barriers to practice did not exist. How can doors be opened to

               others to participate in this profession? In serving others, a private sector deregulated

               legal profession can deliver a good quality product in much the same way that a good

               commercial enterprise does. . . . We let the free competitive energies of creative and

               energetic people in the private sector provide and deliver for us. . . . Such people exist

               for the delivery of legal services but are blocked by UPL statutes and aggressive bar

               efforts to halt them.

 

          UPL statutes are inconsistent with the optimal price of legal services, and they are inconsistent with

          the freedom of individuals to peacefully interact. For those compelling reasons, all UPL statutes

          should be repealed.

 

 

http://www.cato.org/pubs/pas/pa-322es.html

 

Cato Policy Analysis No. 322 - October 9, 1998

 

The Case for a Free Market in Legal Services

 

                                         by George C. Leef

 

           George C. Leef is president of Patrick Henry Associates in East Lansing, Michigan,

           and adjunct professor of law and economics at Northwood University.

 

                                        Executive Summary

 

           Every state except Arizona prohibits the unauthorized practice of law (UPL); a person must possess

           an attorney's license to hold himself out as a lawyer. UPL prohibitions restrict the right to pursue a

           legitimate occupation and the right to contract with others. By imposing a costly barrier to entry,

           they distort the market for legal services. Consequently, consumers face higher prices and fewer

           choices.

 

           UPL prohibitions are part of a wider phenomenon: governmental limitations on freedom to engage

           in voluntary economic transactions. Before the New Deal, the Supreme Court regarded economic

           liberty as worthy of constitutional protection. Since 1937, however, the Court has drawn a

           distinction between "fundamental" and "nonfundamental" liberties, with economic liberties consigned

           to the latter category.

 

           Governmental interference with fundamental liberties faces "strict scrutiny" from the courts and is

           frequently invalidated, whereas interference with economic liberties receives only minimal scrutiny,

           implying that legislatures may do virtually anything in the field of economic regulation. That distinction

           is without any constitutional basis.

 

           UPL prohibitions are neither necessary nor sufficient to protect consumers from incompetence.

           A competitive market, reinforced by remedies for fraud, breach of contract, and negligence, offers the

           optimal combination of price and quality.

 

           Because they infringe upon individual freedom and serve no legitimate public purpose, UPL

           prohibitions should be repealed or struck down by the courts as unconstitutional.

 

 

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.

 

     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.