Charting the Fragile Path of Progress
9. Professional regulation I. Normative Benchmarks A. The Role of Professional Regulation in Developing Countries Through regulation, governments have power to articulate norms to which legal professionals must adhere and to establish mechanisms to ensure such adherence. In so doing, however, governments limit the freedom of both individuals and organizations. Thus, regulation must be justified on principled grounds. The most important justification for regulatory intervention with respect to the legal profession is to correct market failure arising from the information asymmetries between legal professionals and their clients. While some clients such as large business will often have few information problems, an imbalance exists in many other cases due to the specialized knowledge required on the part of the professional. Given this knowledge imbalance, legal professionals generally act as agents for their clients, acting on their behalf in making informed decisions about the purchase of services. Such a relationship can be problematic because lawyers will often have a financial interest in advising their clients to purchase services from them or members of their firm. The knowledge imbalance also makes it difficult for clients to judge the value of legal services offered and supplied. Trebilcock, Tuohy and Wolfson find that informational problems in the legal market may be serious, and in the absence of a well-functioning professional agency relationship, market failure may result. They therefore find a prima facie case for regulatory intervention to the extent necessary to establish, maintain and monitor such agency relationships. Another, although less commonly cited, ground for...
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