Chapter 4: Lawyers and incentives
One of the things which distinguish the views on legal profession regulation discussed in Chapter 2 is that, while the views of economists see the individual professionals and their self-regulators as being self-interested economic agents, the professions view them as being motivated not by self-interest but by the interests of their clients and society more widely. These different views are to some extent ideological or at least are based on a strongly held assumption. The present chapter examines evidence, which casts light on the motivations of individual lawyers and their self-regulatory bodies as revealed by their behaviour. This will give some insight into the relative merits of these competing views. Like most economists the present writer takes the view that the motivations of economic actors are better understood through their revealed behaviour than through their ex ante declarations. However, it should be recognized, following Gravelle and Waterson (1993), that the way in which lawyers respond to incentives will be determined by the relative weight in their utility functions given to their own financial interest and their client’s interests.1 So long as the lawyer’s financial interests carry some weight, there are implications for lawyer behaviour of changes in the incentives they face.
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