Market For Lawyers Research Articles

Legal Markets

The existence of an effective legal system is assumed throughout economic analysis, and yet there has been little study of the economics of legal markets themselves. Research to date has focused narrowly on the economics of markets for lawyers. In this review, I distinguish legal markets from the market for lawyers and show how excessive regulation of our legal markets—by lawyers themselves—distorts economic activity and growth. It does so primarily by inhibiting investment in the legal and regulatory technologies needed to respond to the transformation of the economy wrought by globalization, digitization, aspirations for inclusion, and the coming of artificial intelligence. (JEL J44, K00, K40, L84)

What Firms Want: Investigating Globalization's Influence on the Market for Lawyers in Korea

This article addresses one of the central debates regarding globalization: how best to approach liberalizing markets in order to balance the interests of local and non-local actors and institutions. It takes the legal services market as its focus and draws on the South Korean (“Korea”) experience as a case study. Korea recently liberalized its regulatory approach to legal services by changing both its method of producing lawyers (including initiating a graduate level law school system and drastically increasing the proportion of bar exam passers) and allowing foreign competition to directly enter its market through foreign law firms and foreign-licensed lawyers working as foreign legal consultants. Arguments for liberalization suggest that competition from foreign actors will introduce benefits to the local market that are particularly important to global actors. In the legal services context, this suggests that global clients may prefer particular expertise and experiences that would be recognized and promoted by the law firms serving them. In our research, we explore this possibility by analyzing the hiring preferences of law firms serving global clients as reflected in the credentials of their lawyers. We draw on a unique dataset comprised of information published by law firms in the form of professional profiles of their lawyers. The firms we analyze are competitors in the global market and include five elite Korean law firms and U.S.-based law firms with Korean-practices situated in their Hong Kong offices — a short airplane trip from Seoul. Our analysis provides insight into the credentials and expertise preferred by each group of firms. From this, we assess the ways in which the two groups of law firms value foreign legal education and law school reputation, as well as the interplay of globalization and gender.

The Market for Lawyers Revisited

This paper examines the changes in the market for lawyers in the United States over several decades. Reviewing data from 1981 through 2012, we find that the quality of entrants to this market, as measured by the rate of attrition from law schools and mean scores on the Multistate Bar Exam, is highly responsive to the demand for legal services. Analyzing earnings of lawyers, we find that females earn substantially less than males, Blacks earn less than those of other ethnic backgrounds, and the disparity increases over the life cycle. There is also evidence that because of the decline of entrants to the profession, the share of older lawyers has increased, reducing the premium paid for experience. Finally, we examine the trend in inequality in lawyers' earnings, and find that it has increased substantially over the period of our data.

Responding to the Market: The Impact of the Rise of Corporate Law Firms on Elite Legal Education in India

Corporate law firms have emerged in the past twenty years as a small, but economically important and growing part of the Indian legal sector. While these firms have been critical in transforming elite legal education in India, their direct influence has actually been relatively minor. Instead, their far larger impact has been in creating a new corporate employment market for lawyers that students and schools have worked to supply. In this paper we explore three impacts on elite legal education in India caused by this growing demand for corporate lawyers. First, we argue the prospect of high-paying prestigious corporate work has changed who applies to law school, how these prospective students pick the law schools they attend, and how much they are willing to pay for their education. Second, dividing elite law schools in India into three categories (“national law schools,” “legacy schools,” and “private law schools”) we find that these institutions have each changed the educational experience they offer as they have adapted to an increasingly corporate-oriented legal environment. Third, we claim that inside the institutional context of elite law schools, students have emphasized and shaped parts of their legal education they believe will be appealing to corporate firms. We claim that together these three impacts of the rise of law firms in India have fundamentally altered the educational experience at elite law schools in the country.

What does and should influence the number of lawyers?

Before we can ask whether there are too many lawyers we must answer several preliminary questions: whom do we consider lawyers, and what does and should influence their number? The term ‘lawyer’, w...

Does the Lack of a Profit Motive Affect Hiring in Academe? Evidence from the Market for Lawyers

AbstractThe comparative performance of academic and economic markets continues to be debated. One factor potentially distinguishing academic markets is the profit motive. Profit and competition have been shown to curb discrimination in markets, and the absence of profit discipline could result in myriad forms of prejudice in academic hiring. We explore the role of the profit motive in the performance of academic markets by comparing the pedigree of employees of top law schools and top law firms. Top law schools are much more likely to employ graduates of top ranked law schools than elite law firms, and the difference exists at both the junior and senior levels. We find no evidence that the graduates of top 5 law schools outperform grads of less prestigious schools in publications or citations. In the absence of a profit motive, academic hiring appears more likely to indulge a preference for pedigree, and by implication, this may explain other scholarly prejudices in the academy.

Bricks without Straw: The Sorry State of American Legal Education

While many law students and recent grads have come to feel that legal education is an expensive waste of time now that the job market for lawyers has collapsed, some seasoned law practitioners have their own concerns about the worth of a legal education. Their concerns, however, relate to product quality rather than product marketability. Newly-minted lawyers don’t seem to write as well as they used to. Other complaints are more nebulous. In a recent edition of The Economist, Cravath, Swaine & Moore’s presiding partner was quoted to the effect that law schools spend too much time and effort teaching students to think like lawyers and not enough inculcating the practical skills of lawyering. He decried “the difference between what law schools teach and what lawyers do.” He is in good company. Judge Harry T. Edwards’s “The Growing Disjunction Between Legal Education and the Legal Profession” comes to mind. His article sent the legal academic community into a collective hissy fit. For starters, everyone might read or reread And Gladly Teach, the autobiography of Bliss Perry (1860–1954)—editor of The Atlantic Monthly, a prolific author in his own right, and humanities professor at Williams, Princeton, and Harvard—particularly the passage on the marginal utility of Acad. Quest. (2011) 24:172–180 DOI 10.1007/s12129-011-9215-1

What is the objective of professional licensing? Evidence from the US market for lawyers

According to public interest theory, professional licensing solves the lemon problem generated by asymmetric information. In contrast, the capture theory claims that licensing aims at increasing professional salaries by restricting supply. This paper shows that the two theories can be identified using data from one regulated profession and provides an empirical application to the US market for entry level lawyers. The empirical results support capture theory.

The Market for Lawyers and the Quality of Legal Services

Studying the strategic interaction between litigants, lawyers and judges, we analyze the value of the quality of legal representation and how public information over quality affects the outcome of the judicial process. Judges have reputational concerns and the quality of lawyers is reflected in knowledge of legal principles and in proof-taking ability. Deriving the demand for legal representation and the market equilibrium, we show that higher quality of legal representation is welfare increasing but better information over quality may be welfare reducing. We discuss the implications of our results on the desirability of quality ceritfication, such as the Queen's Counselor system.

Licensing Exam Difficulty and Entry Salaries in the US Market for Lawyers

AbstractThis article provides evidence of a correlation between licensing exam difficulty and salaries in a regulated profession. Exam difficulty is positively correlated with salaries across states and over time, both at the aggregate and individual state levels. The magnitude of this correlation is substantial: a 1 per cent increase in exam difficulty implies a 1.7 per cent increase in median entry‐level salaries. Exam difficulty does not significantly affect the inter‐quartile difference in salaries.

The Market for Lawyers: The Value of Information on the Quality of Legal Services

We study the value of information on the quality of legal services by analyzing the incentives of litigants to hire high-quality lawyers and the effect of legal representation on the decision-making behaviour of adjudicators.In a setting where adjudicators have reputational concerns and where the quality of lawyers is reflected in their knowledge of legal principles, we show that better information over the quality of legal representation generates a trade-off. It allows for a better match between the value of a legal dispute and the quality of the legal representation. But it induces a bias in the decisions of adjudicators in favour of the litigant with the highest-quality lawyer. For a given distribution of the quality of lawyers, the social value of public information on the quality of lawyers may then be negative.We discuss the implications of these effects on the desirability of quality certification system (such as the Queen's Counselor system) in the market for the legal professions. Certification also has the effect of increasing the incentives of lawyers to invest in quality-enhancing training. We show that free certification leads to excessive supply of certified lawyers. We also show that the main insights are robust to the accounting for proof-taking activities by lawyers.

The Market for Lawyers and Social Capital: Are Informal Rules a Substitute for Formal Ones?

Japan’s prefecture-level panel data is used to examine how the demand for lawyers is affected by social capital after controlling for economic conditions. The main findings from a fixed effects model are: (1) The demand for lawyer is smaller when people live close and cohesively. (2) Conflicts generated by bankruptcies cause people to seek legal resolutions, thus relying on lawyers. Nevertheless, the elasticity of demand in Japan is small, reflecting a feature of Japan that the norm is to settle a matter informally.

Rule of Law and Lawyers in Latin America

From the nineteenth century onward, lawyers have been the leading members of Latin American political elites. Nevertheless, Latin American countries have been plagued with caudillos and dictators, and lawyers have been these strongmen's collaborators. The article explains the dissonance between the constitutionalism and legalism taught at the universities and the sordid political practices that resulted from the lack of independence of the legal profession: there was not a market for lawyers' services, so lawyers depended on those who controlled the political apparatus. The situation started changing in the late twentieth century. During this recent period, lawyers and judges have shown more independence and have become active political players, using the law as an instrument for opposing arbitrary political practices. The new trend is explained not only by the increased awareness of the rule of law values but also by the existence of a market for legal services.

What is the Objective of Professional Licensing? Evidence from the US Market for Lawyers

What is the Objective of Professional Licensing? Evidence from the US Market for Lawyers

Job Mobility and the Market for Lawyers

This paper studies the life cycle career choices of law school graduates using unique data from the University of Michigan Law School. The model assumes that these graduates act according to the optimal solution of a dynamic optimization problem in which they sequentially choose among five employment sectors. The employment sectors are differentiated by pecuniary and nonpecuniary returns, promotion and dismissal probabilities, and the extent of transferability of human capital. The estimation of the model reveals a self-selection mechanism, based on unobserved heterogeneity in abilities and expected future returns, which plays a critical role in reproducing the sector-specific nonmonotonic separation hazards observed in the data. The underlying self-selection mechanism also has implications for policy interventions in the market for lawyers, such as loan forgiveness programs.

Up-or-Out Rules in the Market for Lawyers

We examine how up-or-out rules operate as a screening device in the market for lawyers. Using data on large New York law firms, we show that firm growth is a slow and uncertain process because performance as an associate is not an especially informative signal about whether a lawyer will make a good partner and because the costs of mistaken promotion are relatively high. A newly hired associate is unlikely to be a suitable partner and the screening process is relatively imprecise. Firm growth therefore contributes between 5%-7% of the present value of profits of a law firm.

Favoritism versus Search for Good Papers: Empirical Evidence Regarding the Behavior of Journal Editors

Journal editors who publish papers authored by colleagues and former graduate students have been charged with practicing favoritism, with the implication that the papers in question are of lower quality than those written by scholars with no ties to the editor. Using citation analysis, the authors find strong evidence that although journal editors occasionally publish subpar papers authored by colleagues and former graduate students, on balance their use of professional connections enables them to identify and 'capture' high-impact papers for publication. This implies that a practice interpreted as favoritism by many scholars in fact serves to enhance efficiency in the market for scientific knowledge. Copyright 1994 by University of Chicago Press.

Law Students, the External Market, and Socialization: Do We Make Them Turn to the City?

The market for lawyers has made a complete about-turn since the early 1980s. 1 With the downturn of the economy in the late 1970s and early 1980s the cry was that too many lawyers were being produced for the places and work available. The situation began to reverse in the mid-1980s and now the legal profession faces a 'crisis' of recruitment and retention of its lawyers. How are the university and polytechnic law schools, which provide the first 'academic' stage of undergraduate legal education, to fit into this changing picture of downswings and upturns in the market? In particular, the enormous demand for new lawyers in the shape of articled clerks comes from the larger 'City' firms which by themselves could swallow annually almost all the law students who wish to go into practice after their university or polytechnic education. Are law students affected mainly by the external market for their hire or by the influences of curriculum, teachers, and colleagues at university? This paper sets out the findings of a cross-sectional, questionnaire-based study carried out at the School of Law, University of Warwick, into the socialization effects of undergraduate legal education at Warwick. One aim of the study has been to explore issues of social origin, law school experience, and career expectations with a view to discovering whether students possess, or develop, a set of values and expectations that emphasize the role of 'big city' practice over other forms of legal work. In doing so, it draws on an extensive body of research on legal socialization, most of which has been undertaken in the United States of America.2 The study is informed by the necessary assumption that students do not develop in isolation. They may be influenced by their experiences prior to entry into law school and by cues they receive from the law school and its curriculum, as well as from the external market for legal services.

How the Market Solves an Assignment Problem: The Matching of Lawyers with Legal Claims

In the market for lawyers, observable data on promotion and turnover can be explained by reference to the idea that there is positive assortative mating of lawyers and legal claims. There is a scale-of-resources effect, under which it is optimal to assign larger claims to lawyers of higher quality. In a law firm the institution of "tenure" performs a sorting function. Lawyers found to be of high quality are given tenured positions, and the rest leave. The value of legal claims handled by a firm determines its sorting problem, which in turn determines its promotion ladder and turnover.

Occupational Choice under Uncertainty

An econometric problem in estimating models of occupational choice is that the agents' forecasts of future wages and occupational tenure are unobservable. This paper solves the problem by assuming that agents have rational expectations and by considering the effects of arbitrage both within and between cohorts. The solution consists of two time series regressions of the demand and supply functions of entrants into an occupation. From these regressions one obtains estimates of the rate of return to education, the direct cost of education, and other parameters that influence the market. The model was estimated with data from the market for lawyers. 1. MANY OCCUPATIONS REQUIRE the agent to acquire some schooling before he can practice. How does the agent choose between two occupations that require different schooling periods? Since Adam Smith [17, Book I: Chapter 10], economists have assumed that the agent decides by comparing the expected present value of incomes between the two occupations (e.g., Friedman and Kuznets [7], Schultz [15], Becker [1], and Mincer [10]; see [13] for a survey of the literature). While the decision rule is well known, the problem of uncertain wages plagues empirical applications of models embodying the decision rule. Most empirical works rely on cross-section data or short panel data sets. Thus the total wages over the lifetime of the agent are not observed. "The question of ex ante expectations cannot of course be known. Short term macroeconomic factors tend to confound estimates of costs and returns to education" (Rosen [13]). Rosen also raised the question of dropouts. That is, agents may leave an occupation in which they practiced. Therefore the question of uncertain wages is complicated by the additional uncertainty of occupational tenure. There was an important attempt to solve the problem of uncertain wages by Richard Freeman [3, 4, 5]. Freeman recognized that demand conditions in the market affected the supply of new students. He argued that new entrants made their decisions to enter by comparing current wages in the relevant occupations. Since future conditions may change, current wages may not be good predictors of future wages. These systematic forecast errors lead to cycles in the supply of new entrants; these cyclical models are known as Cobweb models. This paper also considers the problem of occupational choice under uncertainty. An agent's decision problem based on maximizing expected discounted value of income is explicitly solved. The result is a generalization of Mincer's schooling model [10]. I also close the model by positing a demand curve for the