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 4: Lawyers and incentives

Frank H. Stephen

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


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.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information