Gatekeeping and the Economic Value of a Law Degree (Part 2)

LincolnIn my last post, I discussed how the commentary on Michael Simkovic and Frank McIntyre’s “The Economic Value of a Law Degree” has illuminated a separate and worthwhile avenue for further research—namely, whether the presence of powerful gatekeepers who oversee the practice of law should make us confident that the value of the law degree will be relatively stable.

Most helpful in this regard has been Deborah Merritt’s post regarding the impact of the typewriter on lawyer education requirements.  At the risk of putting words into her mouth, Merritt observed that the typewriter may have contributed to the decision of the New York bar to make attendance at a three-year law school a prerequisite to bar admission and, therefore, that S&M were too hasty in concluding that people misconceived the typewriter to be a threat to the value of the law degree.

My earlier post explained that we must be careful not to conflate structural changes in the law degree’s value with structural changes in the credentials that one will need to become a lawyer.  By keeping the two separate, we can better understand how the gatekeepers to the industry might be able to insulate the value of the degree from exogenous forces.

In this second post, I’d like to offer some final observations on gatekeeping.  I begin with the acknowledgement that the effects of gatekeeping extend well beyond the population of degree holders, though S&M had perfectly valid reasons for focusing on that population.  Thereafter, I return to the relationship between gatekeeping and nostalgia, highlighting the strange role that the late Abe Lincoln played in the adoption of education requirements.  To finish up, I briefly explain how gatekeeping measures have long been—and will continue to be—a tempting tool for those with the power to wield them.

Focusing on Degree Holders

If the economic value of the law degree has remarkable consistency in the face of shocks (and this notion is still debatable despite receiving empirical support in S&M’s article), then perhaps it is due to protectionist measures undertaken by the gatekeepers of the legal profession.   We can read Merritt’s blog post as a critique of the notion that gatekeeping measures that respond to exogenous shocks will insulate the value of the law degree, thereby increasing the reliability of past performance. For instance, she speculates that educational requirements might have had a negative effect on aspiring lawyers, particularly poorer aspirants who had chosen the potentially cheaper avenue of apprenticeship.

S&M’s concern is the sustained earning power for “law graduates” in the face of technological change.  And while we ought to be quite worried about aspirants as a matter of morality, social welfare, and business, to shine the spotlight only upon them risks arbitrariness.  If we consider the interests of those beyond degree holders, there is little reason not to consider the interests of other stakeholders such as the future clients of those lawyers that were trained in a failing apprenticeship system or unemployed law graduates.  Indeed, both Derek Tokaz and Lauren Shinn made helpful comments regarding the importance of these stakeholders in response to my first blog entry.

Simply put, the analysis of externalities is terrifically complex.  While apprenticeships were surely a primary target of educational reform, as Merritt notes, the apprentices, themselves, made up a relatively small cohort.  At the time that the ABA made the reforms a national mandate, the apprenticeship model was on life support, at best.  The ABA was persuaded to adopt the requirements, in part, by an extensive survey of 1,000 Illinois bar members performed by the President of the University of Illinois.  The results showed that “few offices had any law students,” that “many of the ablest lawyers expressed the opinion that the study in a law office on the part of a student was an absolute waste of time,” that “the only young man they can use at all was said to be one who is willing to work for nothing for a year or two in order to get the experience which comes from life in a large office.”  Only seven respondents out of a thousand favored apprenticeship over law school.   Arguably, the structural shift spared aspiring apprentices from two years of exploitation even if it came with tuition attached.  We can guess that it would have become obvious in the years leading up to the reform that apprenticeships had lost the momentum to law schools. In 1890-92, there were 54 law schools with 5252 students, but by 1917, there were 124, with 22,993 students, and of this number 605 were women.

In light of law school growth, a bigger group of victims from the reform effort might have been those who were attending (or aspired to attend) night law school programs.  At that time, night schools attracted students from the growing immigrant community, many of whom were unable to meet the educational requirements for admission into established daytime law schools. [And many thanks to Merritt for bringing this to my attention via email.]

Still another group of victims might have been consumers of lawyer services.  Educational reforms likely accelerated the increase in lawyers’ rates by limiting lawyer supply, providing an excuse to raise rates, or putting pressure on law school graduates to cover tuition debts.

This is just the tip of the iceberg, of course.  The lesson here is that S&M’s decision to focus only on degree holders is defensible when the alternative would have forced them to take on a greater project than a single article could possibly have addressed.  

Revisiting Nostalgia: Lincoln Love

One surprise to come out of this discussion is the discovery that nostalgia has cut both ways in the history of the legal profession, even with respect to the very structural shift in education that we have been discussing.  In addition to the nostalgic dread that served as an engine for educational requirement change, there was nostalgic sentimentality that almost prevented it.

If there was one meme during the early Twentieth Century law school education debate, it was the notion that Abraham Lincoln wouldn’t have been able to become a lawyer under reformed law school requirements.  The ABA Committee was unsympathetic to this argument:

The mythical Abraham Lincolns who will be excluded from the profession by proper standards is a story we have all listened to.  We have not had a monopoly of that kind of reasoning and the same appeal has been made and made in vain to the other professions.  We do not think it can be successfully made at this late day, and if it is attempted we are convinced it should be unhesitatingly exposed and rejected.

Why should the argument be rejected?  Because Lincoln was too awesome:

[The requirements] would not have excluded Abraham Lincoln from the profession, or any other poor young man whose gifts fitted him to become a great lawyer.  Such men surmount the obstacles which are in their way, and they will meet whatever necessary conditions the courts and examining boards impose.  Such a rule may shut out, and it ought to shut out, the poor young man who is without gifts and was never intended by nature for the profession.

So if you’re poor and gifted, you’ll be fine.  And if you’re rich and ungifted, well, you’ll probably be fine too.

The Pull of Protectionism

In considering the issue of whether gatekeepers have routinely and effectively insulated lawyer pay from structural change, a good starting place is to identify those instances in which the gatekeepers have taken regulatory action in response to perceived threats to the practice of law.  In the remainder of this post, I will briefly mention a few such instances.

When I was in law school, the hot topic was the threat of Multidisciplinary Practices (MDPs), firms consisting of both lawyers and non-lawyers, and offering legal services in tandem with other professional services.  Then, the “Big Five” accounting firms were keen to enter the legal market, potentially pushing aside or absorbing major law firms and making lawyers second-class citizens within their own structures, at least that was the fear.     After much bluster about the threat to the “core values” of the legal profession, the ABA passed resolution 10F in 2000, through which they reaffirmed that fee sharing and firm ownership with non-lawyers was prohibited.  The MDP movement stalled as a result.   Although scholars continue to debate whether the ABA’s basis was pretextual and the decision wise, there is a strong argument that the move spared lawyer earnings from the volatility experienced in the accounting world during the last decade—indeed, the Big Five is now the Big Four after the collapse of Arthur Andersen!

Even today, we see the protectionist machinery springing to life in connection with the rise of online and mobile legal applications.  In a high profile example, the Missouri District Court denied’s summary judgment motion in a lawsuit for violation of the state’s unauthorized practice of law statute.  Legalzoom sold access to blank legal forms as well as “self-help services” related to the completion of those forms.  The court concluded that such services do not, as a matter of law, fall outside of the prohibitions of the statute.  While it is certainly possible that the Legalzoom decision was the result of a sincere appraisal of state law, it nevertheless raised eyebrows; there was widespread recognition that courts and other gatekeepers might soon use similar avenues to limit the expansion of lawyerless or extraterritorial legal services.

If the earning power of lawyers is threatened by technological advances, we should not be surprised when the gatekeepers engage in action designed to stem those threats.   Nor should we be surprised if the gatekeepers are effective—an insight that could serve as a corollary to S&M’s analysis.

One last point: Even if it is true as a descriptive matter that earnings protectionism has been largely effective over the last century, that does not answer the normative question of whether the gatekeepers ought to engage in it.  Consumers of legal services might well benefit from the availability of cheap legal forms online, for example.  And some of the protectionist measures taken by bar associations are morally indefensible, such as preventing women from admission.  This discussion of the issue in the official proceedings of the Georgia State Bar in 1916 is even more disgusting and chauvinistic than you would expect.

Nevertheless, an empirical study of the effects of various protectionist measures would be a worthwhile sequel to S&M’s piece, and we might have the typewriter to thank.

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2 Responses

  1. Mike Zimmer says:

    Re: MDFs. In France, Arthur Anderson acquired an old line international law firm, The Law Offices of S.G. Archibald. After Anderson imploded, the Archibald lawyers scattered to a good number of other firms in Paris.

  2. Barry says:

    “If the economic value of the law degree has remarkable consistency in the face of shocks (and this notion is still debatable despite receiving empirical support in S&M’s article), …”

    Perhaps I missed it, but S&M never dealt with the current situation, except to say that things are cyclic (without giving examples of the past comparable to the present).