INTRODUCTION
The Professional group to be examined is the lawyers licensed to practice before the courts of the United States, and the many states thereof.
The lawyers of the United States are members of an elite "fraternity" of controlled numbers and limited admissions. This market is not a free-entry market.
The Regulations : The regulations are a series of laws, which limit and clearly control the licensing of lawyers. These laws are passed as rules by the individual state supreme courts, or by the legislative assemblies. They are laws describing liability standards, complexity, simplicity, Bar of Law entry, educational requirements, and American Bar Association accreditation.
The Problem : Lets examine our legal system to take notice of economic inefficiencies caused by laws and regulations. I have experienced a number of deliberate inefficiencies first-hand, which are not yet discussed in published papers.
The Questions :
• Are the numbers of lawyers too high or too low ?
• Does our present regulation of law school enrollment result in a legal system which encourages "rent seeking" and other excess social cost.
• Do we foster inefficiencies with the limited entry to the profession?
• Does the United States differ greatly from other countries ?
• Do the regulations and laws encourage too much litigation ?
• Does the legal community hold the legislative and regulatory community captive. Does legal complexity work toward rent-seeking by limiting competition ?
• Do lawyers themselves encourage too much litigation ?
• Can we quantify the social cost of changes not made due to an absence of the threat of litigation ?
• Can we make efficiency-oriented and production-increasing legal-system improvements ?
• Do we reduce our competitiveness in the world with our
litigatiousness ?
• Do lawyers reduce the GNP or GDP or foster an atmosphere of increased production ?
• Does justice really have some inherent link to economic efficiency ? That is . . do we base fairness on economic outcome? Should we ?
• Are many arguments against the legal profession as it exists today already corrected or debunked ?
Many of these questions have been asked, and several are still unsettled and being debated. Before reaching beyond these to the genuine misuse of law that I question below, we must look at each of the questions above.
The Result of those Regulations :
What do the Regulations really do?
• The legal profession says that regulations protect the public from "shysters, charlatans, and mountebanks", as well as fly-by-night law schools. The ABA wishes to protect the "most unwary guileless members of the public being incompetently represented and advised, if not victimized and defrauded." (Leef 1997).
• The detractors say this ignores the workings of the free market which protects all consumers; injects lost consumer surplus due to monopoly into the market mix; and assumes that only government can protect consumers.
• The detractors say that the regulations act as a monopoly-granting grip which causes noticeable misallocation of resources.
• The Antitrust division of the Justice Department says that changes within the American Bar Association will forestall the need to begin prosecution under the Antitrust laws.
Studies which are cited herein are the carefully-crafted economic modeling studies or the empirical analysis of statistics to prove or disprove hypotheses.
I have found no study which examines the inefficiency created by a very basic problem area of "law". That area is the violation of the rules, statutes, and ethics of law which create unforeseen externalities (positive and negative) and unjustified legal cost, easily interpreted as rent-seeking.
These maneuvers can be described as frivolous, which is a violation of Rule 11 (a federal rule adopted by most all states, as it is described in federal rulings).
These maneuvers may be intentional moves to gain an advantage in business, which is unlawful purpose, and described at the very least as unethical.
• What can be done to reduce the sum-total of lost consumer-surplus which such misuse of law swallows ?
• Can economists overlook this misuse, and expend time only in an effort to evaluate law in it's optimum setting, (fictional and Coase-like) with no externalities, and no transaction costs ?
• Does creating "secret procedures", secret local rules, and/or arbitrary local rules act as a form of rent seeking by requiring the hiring of the locals to interpret for outsiders ?
• Do small community courts practice a form of tax on all local transactions by requiring that pro se litigants or "outsider" lawyers hire a local facilitator ?
• What is the actual cost of : Absence of notice; ex parte hearings; absence of sworn testimony from which facts can be developed; delays due to absentee-judges; frivolous pleadings and cases; clerks of dubious skill and educational level briefing cases for judges ?
• Is there economic value lost in failure to follow stare decisis - that is following "settled points of law" ?
• Does the public lose production which it is entitled to receive when a judge writes a incoherent unpublished opinion ?
• Does the court become a facilitator of monopoly when it allows a constitutional deprivation to occur due to a litigant being a pro se non-member of the bar ?
• Does the court become a facilitator of monopoly when it allows a technical dismissal of a substantive case thus causing the cost of legal redress for the litigant to rise ?
But first, we look at inefficiencies among the normal application of adversarial law to disputes designed to settle entitlements and rights between conflicting parties.