Regulation of the legal profession and access to law

Publication number: 2008-01
Authors: B. Baarsma, F.A. Felsö, K. S. Janssen
In cooperation with: S. Bremer
Commissioned by: International Association of Legal Expenses Insurance (RIAD)
ISBN: 978-90-6733-422-8

Governments want to safeguard legal security for all those seeking justice. In order to guarantee this public interest most European governments have given certain exclusive privileges to lawyers, among which is the monopoly on the conduct of a case. Much of this regulation or selfregulation is aimed at preserving professional quality, but it may also restrict competition.
Consequently, the prices paid for the legal services provided by lawyers may be too high and this decreases access to law – precisely the opposite of what governments intended.

The International Association of Legal Expenses Insurance (RIAD) commissioned SEO Economic Research to conduct a study into the effect of the regulation of legal services and legal professions on access to law in several European countries.

The central research question is:

'What is the effect of the regulation of the legal profession – predominantly lawyers – on access to law?'

The main results are:

  • This study shows that in terms of increased or better access to law it is not at all clear that more stringent forms of regulations of legal professionals lead to higher benefits to society than costs. No proof can be found in the literature that in strictly regulated countries, lawyers perform better than non-lawyers legal experts. On the other hand, we did find some evidence that the costs of hiring a lawyer are high compared to the costs of hiring a non-lawyer legal expert.
  • The cost of the regulation of lawyers can be estimated by comparative analysis of the costs incurred by legal expenses insurers outsourcing a case to an external lawyer as opposed to insourcing the same case to an internal lawyer or non-lawyer legal expert. On the average case
    basis, a network lawyer costs two to three times more than an insurer’s jurist (paralegal) or salaried lawyer, while an external lawyer costs four to six times as much.
  • From an economic perspective, there seems much to gain by (further) deregulating the national markets. The results show that liberalizing the legal profession by allowing certified non-lawyer jurists to enter the monopoly may have a substantial impact on prices in the legal profession.
  • Freedom of choice for consumers is likely to be the method to reduce the cost of access to law.

Category: 2008