Posted by Todd Zywicki: CRACKS IN THE LAWYER CARTEL? A number of interesting occurrences over the past few days with respect to the efforts by lawyers to maintain and expand our cartel.
First, [1]this interesting paper by Mrio Pagliero on the effects of professional licensing in the US market for lawyers finds that the structure of lawyers' cartel entry-restrictions and rules tends is better explained by a capture theory of regulation, rather than a public interest theory of regulation. The author concludes taht licensing "increases annula entry salaries by more that $20,000" and that this implies a total transfer from consumers to lawyers of 36% of lawyer's wages and a total welfare loss of over $6 billion. Meanwhile, efforts by lawyers to increase those figures continue apace. Fortunately, the FTC has had two recent successes in trying to roll back overzealous efforts by lawyers to expand their cartel through expansion of Unauthorized Practice of Law (UPL) regulations, to try expand the definition of the "practice of law." In [2]Ohio this effort was defeated, as the state Supreme Court has just ruled that one need not be a lawyer to represent someone else in a proceeding before the state workers' compensation board. In [3]West Virginia the state Supreme Court of Appeals overturned an opinion of the state bar's unauthorized practice of law section which had attempted to require that lawyers perform many functions in real estate closings that are currently performed by title insurance companies and lay closers. These sorts of results explain the value of the FTC's competition advocacy program as I have explained in a forthcoming article on [4]"The Theory and Practice of Competition Advocacy at the FTC". Lawyers always have a narrow and parochial interest in expanding the domain of human activity subject to their cartel. This is especially dangerous in a situation such as UPL rules, where the rules are usually set by the state supreme court, rather than by a legislature. As Pagliero concludes, lawyers have been quite successful at this and the result has been a substantial wealth transfer from consumers to lawyers. By commenting on the competitive consequences of these sorts of regulations, the FTC can shine the light of economic reasoning on these self-serving laws. While not always successful, as the successes in Ohio and West Virginia indicate, they are often successful in preserving the benefits of competition and consumer choice for American consumers. References 1. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=622761 2. http://www.ftc.gov/opa/2004/08/ohioupl.htm 3. http://www.ftc.gov/opa/2004/05/fyi0434.htm 4. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=610586 _______________________________________________ Volokh mailing list [EMAIL PROTECTED] http://highsorcery.com/cgi-bin/mailman/listinfo/volokh
