Lawyers, Markets and Regulation

Lawyers, Markets and Regulation

Frank H. Stephen

Frank H. Stephen’s evaluation of public policy on the legal profession in UK and European jurisdictions explores how regulation and self-regulation have been liberalized over the past 30 years. The book surveys where the most recent and radical liberalization involving the ownership of law firms by non-lawyers is likely to lead, and appraises the economic literature on the costs and benefits of regulating markets for professional services. It challenges socio-legal views on professional legislation and highlights the limitations of regulatory competition, as well as the importance of dominant business models. The author reviews the empirical work underpinning these theories and policies. He also evaluates the effectiveness of regulatory competition as a response to regulatory capture.

Chapter 1: Introduction

Frank H. Stephen

Subjects: economics and finance, industrial economics, institutional economics, law and economics, law - academic, law and economics, regulation and governance

Extract

In many, if not most, jurisdictions representation before the courts and in some cases the provision of legal advice outside the courts is the prerogative of those holding particular qualifications who are members of a designated body which we call the ‘legal profession’. Traditionally members of the ‘legal profession’ have been required to adhere to particular ethical norms or codes of behaviour. In the second half of the twentieth century and particularly the final quarter of that century these ethical norms and codes of behaviour have been seen by economists as giving rise to restrictive practices which inhibit competition in the market for legal services to the detriment of consumers of these services. During this period and into the present century in many jurisdictions the promotion of competition in markets for goods and services has become a central plank of public policy. As the promotion of competition has developed, the professions and particularly the legal profession have been the last bastions in which ‘free competition in the market’ has been resisted under the protection of the law. Particularly as we have moved into the twenty-first century in some jurisdictions the legal profession has come under increasing pressure to remove these ‘restrictive practices’ and acquiesce to greater competition in markets for legal services. This has been particularly the case in those jurisdictions within what is now the European Union. However, the pace of reform has been different in each jurisdiction of the EU.