Ending the Lawyer Monopoly

When it comes to getting goods or services you want, nothing is better than a market where producers and providers compete vigorously for business. Competition makes them alert to better ways of delivering what people want at lower cost.

Although everyone alive has benefitted enormously from the economic energy unleashed by competitive markets, some would like to restrict or abolish the market in their own particular occupation. Socialism for me, Capitalism for everyone else, is what this hypocritical philosophy boils down to.

One profession that has been very successful in implementing this strategy is the practice of law. Lawyers have succeeded in stifling the market for legal services by securing passage of Unauthorized Practice of Law (UPL) statutes that make it an offense for anyone who is not a licensed attorney to practice law. While courts have defined many activities as the practice of law, many others remain ambiguous and will only become more so as the information revolution matures.

Defenders of UPL statutes argue that they are necessary to protect the public against incompetent legal help. However, it is rare to find a UPL case in Michigan or elsewhere brought by an aggrieved client. Nearly always, it is a state or local lawyer organization that brings action against an unlicensed practitioner. If the client is satisfied, why should it matter whether the person who assisted him was a licensed attorney or not?

The reason why many (but not all) in the legal profession care is simple:

money. Paralegals or legal assistants can and will do many routine legal matters for much less than lawyers charge. One study found that, on average, paralegals charged $80 for a will, compared to $200 for lawyers; $125 for bankruptcies, compared to $500; and $150 for business incorporations, compared to $650. Obviously, the more people turn to lower-priced service providers, the less business there is for licensed attorneys.

In states where the law is less restrictive, people are turning to paralegals in large numbers. As William Fry, former assistant dean of Columbia Law School has written, Some bar leaders have a strange myopia on this issue. They do not see that, while they are claiming the public needs protection, the public is happily using nonlawyers in ever-greater numbers.

But what about the possibility that a nonlawyer might give a client bad advice? It can happen. However, experience in the states where paralegals have been allowed a significant range of practice shows that incompetence is not a problem. Consumer complaints about paralegals in California, where they have been in business without licensing or regulation for 10 years, have been almost nonexistent.

Arizona has had no UPL statute at all since 1986, and there is no evidence of any problem associated with paralegals trying to do more than they are capable of doing. There, the market is working just fine: people use paralegals when it best suits their needs, and they use lawyers when that best suits their needs.

Low-income people would be big beneficiaries of the repeal of UPL. An American Bar Association study concluded that less than 25 percent of the nation's poor are able to obtain legal help when they need it now. Furthermore, many middle-class people either do without legal help when they need it or pay too much for it. Repeal of our UPL statute would enable poorer people to obtain legal assistance and open up a field of employment for many others. Most paralegals themselves come from lower and lower-middle class backgrounds.

The very premise of UPL statutes-that the lack of a professional license necessarily means that an individual is incapable of understanding the law-is mistaken. Nonlawyers routinely represent individuals before federal administrative agencies, such as the IRS. Tax law is exceedingly (and unnecessarily) complicated, but many tax accountants successfully represent clients in disputes with the IRS. Just because they have received a license from the state to practice law does not give lawyers a unique ability to counsel others. UPL doesn't protect the public; it merely protects what some lawyers regard as their turf.

The law recognizes the right of an individual to represent himself in legal matters, but if he feels the need for some assistance, he has to hire a lawyer. It is as if the law makes us choose between walking or hiring a chauffeured limousine. Basic fairness suggests that people ought to have the freedom to contract with others for whatever kind of service fits their needs and budget.