Cartel Control of Attorney Licensure and the Public Interest*

Abstract The purpose of regulating any profession is to assure competent practitioners, particularly where its absence can cause irreparable harm. Regulatory “licensing” ideally achieves such assurance, while at the same time avoiding unnecessary supply constriction. The latter can mean much higher prices and an inadequate number of practitioners. Regrettably, the universal delegation to attorneys of the power to regulate themselves has led to a lose/lose system lacking protection from incompetent practice while also diminishing needed supply. The problem is manifest in four regulatory flaws: First, state bars—in combination with the American Bar Association—require four years of largely irrelevant higher education for law school entry. Most of this coursework commonly has nothing to do with law. Second, and related, these seven-years of mandatory higher education (that only the United States requires for attorney licensure) impose extraordinary costs. Those costs now reach from $190,000 to $380,000 in tuition and room and board per student—driven by shocking tuition levels lacking competitive check. Third, attorney training focuses almost entirely on a few traditional subjects, with little attention paid to the development of useful skills in most of the 24 disparate areas of actual practice (e.g., administrative, bankruptcy, corporate, criminal, family, taxation, et al.). And schools often pay scant attention to legislation, administrative proceedings, or the distinct areas of law that will be relevant to a student’s future practice. Fourth, state bars rely on supply-constricting bar examinations of questionable connection to competence assurance. In the largest state of California, the bar examination fails about 2/3 of its examinees. This system has fostered an opportunistic cottage industry of increasingly expensive preparatory courses that further raise the cost of becoming an attorney—even after 7 years of higher education. Meanwhile, the bars regulating attorneys in the respective states: a) Do not treat negligent acts as a normal basis for discipline (outside of extreme incapacity); b) Do not require malpractice insurance—effectively denying consumer remedies for negligence; c) Do not allow clients injured by malpractice to recover from “client security funds”; d) Do not require post-licensure “legal education” in the area of an attorney’s practice; e) Do not test attorneys in the area of practice relied upon by consumers—ever; and f) Respond to cost-effective, technology-centric solutions to legal problems not by regulation to assure consumer benefit, but by attempts to categorically foreclose them in favor of total reliance on often unavailable/expensive counsel. No area of state regulation has more openly violated federal antitrust law than has the legal profession. The United States Supreme Court held in 2015 that any state body controlled by “active market participants” in a profession regulated is not a sovereign entity for antitrust purposes without “active state supervision.” Yet four years later, attorneys continue to regulate themselves without such supervision, overlooking the threat of criminal felony and civil treble damage liability.