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December 3, 2004

licensing fattens lawyer income says study

Filed under: pre-06-2006 — David Giacalone @ 5:29 pm

honest A new study of lawyer licensing in the USA concludes that regulation serves the profession’s financial interests rather than the public’s interest in protection from incompetent or unethical lawyers. In “What is the Objective of Professional Licensing? Evidence from the US Market for Lawyers” (Nov 2004), Turin Univ. Prof. Mario Pagliero finds that the objective of such regulation in the USA is explained by capture theory, and “licensing increases annual entry salaries by more than $20,000.”

Pagliero notes “This implies a total transfer from consumers to lawyers of 36% of lawyers’ wages and a total welfare loss of over $6 billion.” The abstract is available from SSRN, and the entire 36-page study can be obtained with a free registration.

  • According to the study, of the 25 states covered, the “transfer” per lawyer from consumers was more than $40,000 per year in Mass., NY and NJ, and under $10,000 only in Iowa. (chart at p. 32)

the thief
is just as he is…
hazy moon

……………………………………. by ISSA, translated by D.G. Lanoue


one-breath pundit

tiny check On a not-unrelated topic: As he does so often, Matt Homann at the [non]billable hour, is once again dreaming up ways for lawyers to extract more money from clients without giving them a better product. (and LegalBlogWatch is encouraging him!)  Once again, I wonder how the fiduciary relationship jibes with manipulating client psyches and price elasticities in order to maximize profits. See our posts on value billing, lawyer marketing, and fees and the lawyer-fiduciary.

wrong way sm

4 Comments

  1. David, speaking of licensing, have you seen this?
    http://www.insurancejournal.com/news/east/2004/12/03/48221.htm (Vermont, Maine and New Hampshire are allowing cross boarder practice of law with only modest restrictions)

    Comment by Martin — December 8, 2004 @ 8:38 pm

  2. David, speaking of licensing, have you seen this?
    http://www.insurancejournal.com/news/east/2004/12/03/48221.htm (Vermont, Maine and New Hampshire are allowing cross boarder practice of law with only modest restrictions)

    Comment by Martin — December 8, 2004 @ 8:38 pm

  3. Hello, Tenured One.  I guess you don’t have to worry about competition intra- or inter-state.  I did hear about the three New England states a few days ago, thanks to a post at MyShingle.   More and more MJP (multi-jurisdictional practice) is good for competition, methinks, and competence issues should not be a problem.
    I’ve covered MJP here in a few prior posts, which I looked up, spurred by your pointer.  As you can see, Connecticut did not decide to join its NE neighbors, instead rejecting lowering MJP restrictions.  For more info, see

    Connecticut’s Lawyer Guild (CBA) Rejects MJP
    MJP Reform: Bumpy Road or Fast Track?
    New NJ Lawyer Rules Allow More Sex, Less Candor and Competence Than the Model Rules

    Comment by David Giacalone — December 8, 2004 @ 10:42 pm

  4. Hello, Tenured One.  I guess you don’t have to worry about competition intra- or inter-state.  I did hear about the three New England states a few days ago, thanks to a post at MyShingle.   More and more MJP (multi-jurisdictional practice) is good for competition, methinks, and competence issues should not be a problem.
    I’ve covered MJP here in a few prior posts, which I looked up, spurred by your pointer.  As you can see, Connecticut did not decide to join its NE neighbors, instead rejecting lowering MJP restrictions.  For more info, see

    Connecticut’s Lawyer Guild (CBA) Rejects MJP
    MJP Reform: Bumpy Road or Fast Track?
    New NJ Lawyer Rules Allow More Sex, Less Candor and Competence Than the Model Rules

    Comment by David Giacalone — December 8, 2004 @ 10:42 pm

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