Legal barriers to innovation: The growing economic cost of professional control over corporate legal markets

Stanford Law Review

Volumn 60, Issue 6, 2008, Pages 1689-1732

  Hadfield, Gillian K ^a  

^a UNIVERSITY OF SOUTHERN CALIFORNIA   (United States)

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EID: 49149104159     PISSN: 00389765     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (157)

1. William H. Simon, The Ideology of Advocacy: Procedural Justice and Professional Ethics, 1978 WIS. L. REV. 29 (1978);
2. William H. Simon, The Kaye Scholer Affair: The Lawyer's Duty of Candor and the Bar's Temptations of Evasion and Apology, 23 LAW & SOC. INQUIRY 243, 245 (1998) ("Kaye Scholer indicates limitations on the profession's willingness and ability to set and enforce plausible standards of practice.");
3. William H. Simon, After Confidentiality: Rethinking the Professional Responsibilities of the Business Lawyer, 75 FORDHAM L. REV. 1453, 1454 (2006) ("Corporate confidentiality is dead, and the bar's attempt to suggest that things could be otherwise is an exercise in myth making.").
4. See, e.g., Deborah L. Rhode, Policing the Professional Monopoly: A Constitutional and Empirical Analysis of Unauthorized Practice Prohibitions, 34 STAN. L. REV. 1, 61 (1981) (arguing that "parochial perspective is apparent in unauthorized practice enforcement");
5. see also DEBORAH L. RHODE, ACCESS TO JUSTICE 88 (2004) (noting inconsistency between public messages of the American Bar Association (ABA) that efforts to strengthen unauthorized-practice- of-law definitions and enforcement are designed exclusively to protect consumers and candid comments from bar leaders that the ABA's function is to protect the interests of lawyers);
6. Deborah L. Rhode, Professionalism in Perspective: Alternative Approaches to Nonlawyer Practice, 1 J. INST. STUDY LEGAL ETHICS 197, 203, 205 (1996) [hereinafter Rhode, Professionalism in Perspective] (arguing that the "main danger [of opening access to nonlawyers] lurking in the shadows is the bar's own interest in restricting competition" and noting that the bar usually relies on "unsupported or anecdotal assertions" about the quality of nonlawyer practice).
7. Richard L. Abel, Why Does the ABA Promulgate Ethical Rules?, 59 TEX. L. REV. 639 (1981) (characterizing ABA ethical rule-making as a structurally unavoidable symbolic, not instrumental, exercise to legitimate lawyers' self-interested market conduct in the face of public interest and ethical demands);
8. Deborah L. Rhode, Why the ABA Bothers: A Functional Perspective on Professional Codes, 59 TEX. L. REV. 689, 720-21 (1981) ("No matter how well-intentioned and well-informed, lawyers regulating lawyers cannot escape the economic, psychological, and political constraints of their position. . . . To effect significant improvements in the quality, cost and delivery of legal services, the bar must accept fundamental change in its regulatory structure.").
9. Stephen Gillers, What We Talked About When We Talked About Ethics: A Critical View of the Model Rules, 46 OHIO ST. L.J. 243, 245 (1985).
10. DAVID LUBAN, LAWYERS AND JUSTICE: AN ETHICAL STUDY 217-34, 269-73 (1988).
11. Barlow F. Christensen, The Unauthorized Practice of Law: Do Good Fences Really Make Good Neighbors - or Even Good Sense?, 5 AM. B. FOUND. RES. J. 159, 215 (1980) ("Barring actual evidence of serious injury, the profession has no justification, except perhaps for purely selfish reasons, for denying to the public the right to choose from whom it will purchase legal services.").
12. David B. Wilkins, Who Should Regulate Lawyers?, 105 HARV. L. REV. 799 (1992).
13. ANTHONY KRONMAN, THE LOST LAWYER: FAILING IDEALS OF THE LEGAL PROFESSION 378 (1993).
14. Jonathan Macey, Occupation Code 541110: Lawyers, Self-Regulation, and the Idea of a Profession, 74 FORDHAM L. REV. 1079, 1096 (2005) ("Legal self-regulation displays the typical self-interested behavior of a cartel without any of the concomitant benefits . . . .").
15. Benjamin H. Barton, Do Judges Systematically Favor the Interests of the Legal Profession?, 59 ALA. L. REV. 453 (2008) [hereinafter Barton, Do Judges Systematically Favor the Interests of the Legal Profession?]. Barton has elsewhere examined the weakness of traditional defenses for lawyer self-regulation such as consumer protection and professional independence.
16. See Benjamin H. Barton, An Institutional Analysis of Lawyer Regulation: Who Should Control Lawyer Regulation - Courts, Legislatures, or the Market?, 37 GA. L. REV. 1167 (2003);
17. Benjamin Hoorn Barton, Why Do We Regulate Lawyers?: An Economic Analysis of the Justifications for Entry and Conduct Regulation, 33 ARIZ. ST. L.J. 429 (2001).
18. See, e.g., Charles Silver, When Should Government Regulate Lawyer-Client Relationships? The Campaign to Prevent Insurers from Managing Defense Costs, 44 ARIZ. L. REV. 787 (2002);
19. Fred C. Zacharias, The Future Structure and Regulation of Law Practice: Confronting Lies, Fictions, and False Paradigms in Legal Ethics Regulation, 44 ARIZ. L. REV. 829 (2002).
20. ABA CTR. FOR PROF'L RESPONSIBILITY, RESOLUTION OF HOUSE OF DELEGATES ADOPTING REVISED RECOMMENDATION 10F (2000), available at http://www.abanet.org/cpr/mdp/mdprecom10f.html.
21. Interestingly, Utah enacted a statute in 2003 that defined the practice of law (and hence limited the monopoly of lawyers) exclusively in terms of court appearances representing others. UTAH CODE ANN. § 78-9-102 (2003). It was quickly repealed in 2004. H.B. 234, 2004 Gen. Sess. (Utah 2004).
22. ABA CTR. FOR PROF'L RESPONSIBILITY, supra note 12.
23. Letter from the U.S. Dep't of Justice and the Fed. Trade Comm'n to the ABA Task Force on the Model Definition of the Practice of Law (Dec. 20, 2002), available at http://www.abanet.org/cpr/model-def/ftc.pdf [hereinafter Letter from DOJ and FTC].
24. Letter from the ABA Section of Antitrust Law to the Task Force on the Model Definition of the Practice of Law (Apr. 2, 2003) [hereinafter Letter from ABA Antitrust Section], available at http://www.abanet.org/cpr/model-def/ antitrust.pdf. The ABA Section on Delivery of Legal Services also opposed the effort to define the practice of law so as to preclude nonlawyer delivery, urging the profession to rely on the value it provides, and not the protection it receives, to ensure its dominance in the market. Memorandum from Mary K. Ryan, Chair, ABA Standing Comm. on the Delivery of Legal Services, to Lish Whitson, Chair, ABA Task Force on the Model Definition of the Practice of Law (Dec. 19, 2002), available at http://www.abanet.org/cpr/model-def/scdls. pdf ("The greatest threat to the public arises not when lay people, in the performance of their professional or business roles touch on issues concerning legal rights and responsibilities, but when lay people mislead consumers into the belief that they are lawyers or have the qualifications that a lawyer has.").
25. ABA TASK FORCE ON THE MODEL DEFINITION OF THE PRACTICE OF LAW, REPORT TO THE HOUSE OF DELEGATES, RECOMMENDATION (2003) [hereinafter ABA DEFINITION RECOMMENDATION], available at http://www.abanet.org/cpr/model-def/recomm.pdf. The draft definition that was criticized by the FTC, the DOJ, the Antitrust Section, and others went further to explicitly indicate that a person is presumed to be practicing law when giving legal advice, "[s]electing, drafting, or completing legal documents or agreements," "[r]epresenting a person before an adjudicative body, including, but not limited to, preparing . . . documents or conducting discovery," and "[n]egotiating legal rights or responsibilities on behalf of a person" and that the practice of law "shall be performed only by those authorized by the highest court" of a given jurisdiction.
26. ABA TASK FORCE ON THE MODEL DEFINITION OF THE PRACTICE OF LAW, DRAFT DEFINITION OF THE PRACTICE OF LAW (Sept. 18, 2002), [hereinafter ABA DRAFT DEFINITION], available at http://www.abanet.org/ cpr/model-def/model_def_definition.html. In its final report, the Task Force expressed the view that the giving of legal advice is "[i]nherent" in selecting and drafting documents and representation in court.
27. ABA TASK FORCE ON THE MODEL DEFINITION OF THE PRACTICE OF LAW, REPORT 4 (2003) [hereinafter ABA DEFINITION REPORT], available at http://www.abanet.org/cpr/model-def/taskforce_rpt_803.pdf.
28. ABA TASK FORCE ON THE MODEL DEFINITION OF THE PRACTICE OF LAW, CHALLENGE STATEMENT, available at http://www.abanet.org/cpr/model-def/ model_def_challenge.html.
29. Rhode, Professionalism in Perspective, supra note 2.
30. Kevin Quinn and I have calculated, based on data from the American Lawyer Media made available to us through the Law Firms Working Group, for example, that the "high" and "low" rates for partners and associates in the most profitable corporate law firms has increased between 25% and 40% in real (CPI-adjusted) terms over the past eight years.
31. Goldfarb v. Va. State Bar, 421 U.S. 773 (1975).
32. Bates v. State Bar of Ariz., 433 U.S. 350, 377 (1977) ("The ban on advertising serves to increase the difficulty of discovering the lowest cost seller of acceptable ability. As a result, to this extent attorneys are isolated from competition, and the incentive to price competitively is reduced.").
33. Supreme Court of N.H. v. Piper, 470 U.S. 274, 281 (1985) (noting among other considerations in a Privileges and Immunities analysis that "law is important to the national economy").
34. United States v. ABA, 934 F. Supp. 435 (D.D.C. 1996).
35. See, e.g., Gillian K. Hadfield, The Price of Law: How the Market for Lawyers Distorts the Justice System, 98 MICH. L. REV. 953, 962, 984 (2000);
36. Richard H. Sander & E. Douglass Williams, Why Are There So Many Lawyers? Perspectives on a Turbulent Market, 14 LAW & SOC. INQUIRY 431, 449-51 (1989).
37. See Hadfield, supra note 25, at 963-82.
38. Id. at 964-68.
39. Edward J. Phelps, Annual Address (Aug. 20, 1879), in REPORT OF THE SECOND ANNUAL MEETING OF THE AMERICAN BAR ASSOCIATION 188 (1879).
40. For an overview of the economic analysis of self-regulation, see Anthony Ogus, Rethinking Self-Regulation, 15 OXFORD J. LEGAL STUD. 97, 97-108 (1995).
41. Other legal professions also claim an inherent supralegislative authority to regulate themselves. The Canadian Bar Association, for example, has claimed that the General Agreement on Trade in Services (GATS), which requires states to take steps to ensure that regulation in services is necessary to ensure quality and based on objective and transparent criteria, does not apply to lawyers. "Our view is that the legal profession should not have to prove the 'necessity' of rules which it is convinced are required to preserve its integrity and protect the public." See Paul D. Paton, Legal Services and the GATS: Norms as Barriers to Trade, 9 NEW ENGLAND J. INT'L & COMP. L. 361, 399 (2003) (quoting the Canadian Bar Association).
42. See Edward John Phelps, American Lawyer and Diplomat, http://family.phelpsinc.com/bios/edward_j_phelps.html.
43. Phelps, supra note 28, at 188.
44. Robert Gordon has observed: After the revolution it turned out that the new states, the new nation and the new economy required more regular and sustained attention to governance than part-time legislators and juries could provide. America did not have, and did not want, a powerful career civil service. Lawyers stepped forward to fill the vacuum. They had the credentials and legitimacy because they had articulated the grievances of the Revolution in legal terms; they had drafted the new Federal and State Constitutions, and gradually got them accepted as legal texts subject to lawyers' arguments and judges' interpretations. Robert W. Gordon, Portrait of a Profession in Paralysis, 54 STAN. L. REV. 1427, 1440 (2002).
45. For a history of the role of the bar in the days of the early Republic and the loss of status in the period up to the Civil War, see Christensen, supra note 6, at 169-75.
46. Phelps, supra note 28, at 191.
47. Id.
48. ABA, CALL FOR A CONFERENCE; PROCEEDINGS OF CONFERENCE; FIRST MEETING OF THE ASSOCIATION; OFFICERS, MEMBERS, ETC., 38-39 (1878).
49. Report of the Committee on Legal Education and Admissions to the Bar, in REPORT OF THE SECOND ANNUAL MEETING OF THE AMERICAN BAR ASSOCIATION 236 (1879).
50. Blewett Lee, The Constitutional Power of the Courts Over Admission to the Bar, 13 HARV. L. REV. 233 (1899).
51. Edson R. Sunderland, The Grant of Rule-Making Power to the Supreme Court of the United States, 32 MICH. L. REV. 1116 (1934).
52. ABA SECTION OF LEGAL EDUC. & ADMISSIONS TO THE BAR, LEGAL EDUCATION AND PROFESSIONAL DEVELOPMENT - AN EDUCATIONAL CONTINUUM 116 (1992).
53. In most states, the substance of professional regulation is based on the ABA's Model Code of Professional Responsibility as adopted by state bar associations.
54. See, e.g., CAL. BUS. & PROF. CODE § 6125 (Deering 2007); N.Y. JUD. CT. ACTS LAW § 478 (Consol. 2008); TEX. GOV'T CODE ANN. § 81.102 (Vernon 2007).
55. The Texas Supreme Court has employed a common formulation. See Eichelberger v. Eichelberger, 582 S.W.2d 395, 398-99 (Tex. 1979) (holding that "[t]he inherent judicial power of a court is not derived from legislative grant or specific constitutional provision, but from the very fact that the court has been created and charged by the constitution with certain duties and responsibilities," and "from the doctrine of separation of powers between the three governmental branches . . . . to enable our courts to effectively perform their judicial functions and to protect their dignity, independence and integrity.") (emphasis added).
56. In re N.H. Bar Ass'n, 855 A.2d 450, 451, 456 (N.H. 2004) ("The means by which the judicial branch chooses to organize the Bar, which it is charged with supervising, cannot be restricted by the other branches of government. . . . Otherwise, inherent judicial power is compromised.").
57. In re Unified N.H. Bar, 291 A.2d 600, 600 (N.H. 1972).
58. "The Enron-inspired Sarbanes-Oxley Act is the first federal statute in the history of the republic to regulate lawyers directly and broadly. The second came only two years later, when Congress confirmed and extended the power of the Internal Revenue Service . . . to regulate extensively the practice of tax lawyers." William H. Simon, Introduction: The Post-Enron Identity Crisis of the Business Lawyer, 74 FORDHAM L. REV. 947, 950 (2005).
59. Goldfarb v. Va. State Bar, 421 U.S. 773, 785 (1975) (stating that the minimum fee schedules established by state and county bar associations are not exempt from the Sherman Act as "state action" because activity is not compelled by direction of state).
60. In 2002, the Federal Trade Commission issued an opinion that attorneys were not exempted from the Gramm-Leach-Bliley Act, imposing restrictions on the sharing of private consumer information by financial institutions. The New York State Bar Association and ABA sought a declaratory judgment that the FTC lacked authority to extend the regulation to attorneys. ABA v Fed. Trade Comm'n, 430 F.3d 457 (D.C. Cir. 2005). The D.C. Circuit agreed that the Act could not reasonably be interpreted by the FTC to apply to lawyers, noting that the Act made no reference to the profession of law, "a profession never before regulated by 'federal functional regulators'" and that "Congress does not hide elephants in mouseholes." Id. at 467, 469.
61. Bates v. State Bar of Ariz., 433 U.S. 350 (1977). The Court went on to hold that the advertising regulations did, however, violate the First Amendment. In deciding Bates, the Court revisited Parker v. Brown, 317 U.S. 341 (1943), in which the Court first held that the Sherman Act was not intended to limit state action.
62. Adrian Vermeule, The Judicial Power in the State (and Federal) Courts, 2000 SUP. CT. REV. 357, 360.
63. Id. at 399.
64. Id. at 406.
65. Barton, Do Judges Systematically Favor the Interests of the Legal Profession?, supra note 10, at 456.
66. Id.
67. E.J. Phelps, Annual Address by E.J. Phelps, in REPORT OF THE SECOND ANNUAL MEETING OF THE AMERICAN BAR ASSOCIATION 192 (1879).
68. N.Y. STATE BAR ASS'N, LAWYER'S CODE OF PROF'L RESPONSIBILITY pmbl. (2005).
69. See ABA CTR. FOR PROF'L RESPONSIBILITY, supra note 12. Fred Zacharias noted that the opposition to the ABA Commission on Multidisciplinary Practice's recommendations "arose primarily because of the Commission's insistence that the same rules apply to all lawyers." Zacharias, supra note 11, at 842. Zacharias also questions the continuing reliance of the professional regulatory model on the assumption that all clients are the same. Id.
70. WILLIAM G. ROY, SOCIALIZING CAPITAL: THE RISE OF THE LARGE INDUSTRIAL CORPORATION IN AMERICA 4 (1997). Roy reports: As late as 1890, fewer than ten manufacturing securities were traded on the major stock exchanges . . . . Investors considered manufacturing companies too risky and industrialists resisted surrendering control to outsiders. . . . Carnegie Steel Company, an unincorporated limited partnership, was the largest manufacturing operation in the world. Id. (citations omitted). Alfred Chandler adds, "Before the appearance of the multiunit firm, owners managed and managers owned."
71. ALFRED D. CHANDLER, JR., THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS 9 (1977).
72. CHANDLER, supra note 59.
73. Lochner v. New York, 198 U.S. 45 (1905).
74. Interestingly, the recognition of the corporation's standing to assert Fourteenth Amendment rights under the U.S. Constitution was first decided by the U.S. Supreme Court in an opinion that found the point unworthy of discussion. Santa Clara County v. S. Pac. R.R. Co., 118 U.S. 394, 396 (1886). The grounds for according the corporation due process rights were challenged much later in dissents first by Justice Black alone, for example in Connecticut General Life Insurance Co. v. Johnson, 303 U.S. 77, 85 (1938) (Black, J., dissenting), and then Justice Black with Justice Douglas. Wheeling Steel Corp. v. Glander, 337 U.S. 562, 576 (1949) (Douglas, J., dissenting). The majority opinions in those cases declined to even address the arguments, continuing to assume that the corporation was a "person" for the purposes of the Fourteenth Amendment. In Wheeling Steel, Justice Jackson, the majority opinion writer, also wrote separately to emphasize that there was no question that corporations were entitled to the protections of the Fourteenth Amendment, yet still failed to provide substantive reasoning for this argument. Id. at 574-75 (Jackson, J., writing separately).
75. LOUIS D. BRANDEIS, BUSINESS - A PROFESSION 313, 321 (1914).
76. Id. at 323.
77. David Luban, The Noblesse Oblige Tradition in the Practice of Law, 41 VAND. L. REV. 717, 717 (1988).
78. Id. at 722-23.
79. CHANDLER, supra note 59, at 9-10, 455; see ROY, supra note 59, at 6.
80. CHANDLER, supra note 59, at 456-63.
81. Oliver E. Williamson, The Modern Corporation: Origins, Evolution, Attributes, 19 J. ECON. LITERATURE 1537, 1558 (1981).
82. KRONMAN, supra note 8, at 3.
83. Gillian K. Hadfield, The Price of Law: How the Market for Lawyers Distorts the Justice System, 98 MICH. L. REV. 953 (2000).
84. I will refer to corporations in order to converge with the conventional description of the work of "corporate" law firms. Some of what I say, however, will apply more generally to other business entities and organizations.
85. See ABA TASK FORCE ON THE MODEL DEFINITION OF THE PRACTICE OF LAW, STATE DEFINITIONS OF THE PRACTICE OF LAW [hereinafter ABA STATE DEFINITIONS], available at http://www.abanet.org/ cpr/model-def/model_def_statutes.pdf, for a listing of statutory definitions compiled by the ABA.
86. Ark. Bar Ass'n v. Block, 323 S.W.2d 912, 914 (Ark. 1959) (citing R.I. Bar Ass'n v. Auto. Serv. Ass'n, 179 A. 139 (R.I. 1935)) (cited in ABA State Definitions, id.); see also Comm. on Prof'l Ethics & Conduct v. Baker, 492 N.W.2d 695, 701 (Iowa 1992) ("It is neither necessary nor desirable to attempt the formulation of a single, specific definition of what constitutes the practice of law.") (quoting Iowa Code of Professional Responsibility for Lawyers); Mass. Conveyancers Ass'n v. Colonial Title & Escrow, Inc., No. Civ.A. 96-2746-C2001, 2001 WL 669280, at *5 (Mass. Super. 2001) (finding that "a comprehensive definition would be impossible to frame" but formulating a general definition); Cardinal v. Merrill Lynch Realty/Burnet, Inc., 433 N.W.2d 864, 867 (Minn. 1988) ("The line between what is and what is not the practice of law cannot be drawn with precision.") (quoting Cowern v. Nelson, 290 N.W. 795, 797 (Minn. 1940)); Nebraska ex rel. Johnson v. Childe, 23 N.W.2d 720, 723 (Neb. 1946) ("An all inclusive definition of what constitutes the practice of law is too difficult for simple statement."); Gmerek v. State Ethics Comm'n, 751 A.2d 1241, 1255 (Pa. Commw. Ct. 2000) ("There is no need for present purposes to venture upon a comprehensive survey of the boundaries - necessarily somewhat obscure - which limit the practice of law.").
87. Fink v. Peden, 17 N.E.2d 95, 96 (Ind. 1938), quoted in Cincinnati Ins. Co. v Wills, 717 N.E.2d 151 (Ind. 1999).
88. See ABA STATE DEFINITIONS, supra note 73.
89. ABA DRAFT DEFINITION, supra note 17.
90. Id.
91. See Letter from DOJ and FTC, supra note 15, and Letter from ABA Antitrust Section, supra note 16.
92. ABA DEFINITION RECOMMENDATION, supra note 17.
93. See Vermeule, supra note 51.
94. I model this process and discuss the institutions involved in mediating the inputs of legal effort into legal rule production in Gillian K. Hadfield, The Levers of Legal Design: Institutional Determinants of the Quality of Law, 36 J. COMP. ECON 43 (2008);
95. Gillian K. Hadfield, The Quality of Law: Judicial Incentives, Legal Human Capital and the Evolution of Law (Feb. 21, 2007) (unpublished manuscript, on file with author), available at http://works.bepress.com/ghadfield;
96. see also Gillian K. Hadfield, Don't Forget the Lawyers: The Role of Lawyers in Promoting the Rule of Law in Emerging Market Democracies, 56 DEPAUL L. REV. 401 (2007);
97. Gillian K. Hadfield, The Role of International Law Firms and Multijural Human Capital in the Harmonization of Legal Regimes, in MULTIJURALISM: MANIFESTATIONS, CAUSES AND CONSEQUENCES (Albert Breton, Katharina Pistor and Pierre Salmon eds., forthcoming 2008), available at http://works.bepress.com/ghadfield.
98. Roberta Romano has focused in particular on the idea of law as a product in the area of corporate law, where there is a significant literature on "competition" among states to obtain or retain market share in the market for incorporations. Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. ECON. & ORG. 225, 225-26 (1985).
99. For a discussion of the regulatory competition literature in corporate law and a critique of the analogy between legislatures and profit-maximizing firms in competition, see Gillian Hadfield & Eric Talley, On Public Versus Private Provision of Corporate Law, 22 J.L. ECON. & ORG. 414 (2006).
100. The ABA Task Force on the Definition of Law, for example, proposed in its draft definition that "whether or not they constitute the practice of law," nonlawyers could represent themselves or serve as a mediator or arbitrator. ABA DRAFT DEFINITION, supra note 17. The proposed restriction of the definition to legal services provided to serve the objectives of a particular client also was understood to exclude the publication of legal self-help books and other legal information; this latter issue has been a significant battle in the profession. Id. As recently as 1997, the Texas Bar, for example, opened proceedings in its Unauthorized Practice of Law Committee into the question of whether Nolo Press, a publisher of legal self-help books and software, was engaged in the unauthorized practice of law. See In re Nolo Press/Folk Law, Inc., 991 S.W.2d 768 (1999). The Texas Legislature amended its statutory definition of the practice of law in 1999 to explicitly exclude such publications. TEX. GOV'T CODE ANN. § 81.101 (Vernon 1999).
101. "The practice of law shall be performed only by those authorized by the highest court of this jurisdiction." ABA DRAFT DEFINITION, supra note 17.
102. Most states and the federal system require that a person be a member of the bar in order to be eligible for appointment or election to the bench.
103. Most states have what is called a "unified" bar, meaning that all lawyers must belong to the state bar association. In states without a unified bar, lawyers who have been admitted to practice are not required to belong to the association. In California, membership in the state bar association is a constitutional requirement. CA. CONST. art. VI, § 9. Some states require judges to be members of the bar; others prohibit this.
104. There are no systematic data on firm size in the early parts of the twentieth century but it is clear that the vast majority of lawyers worked in solo practice or at most two-person partnerships. In 1905 in Philadelphia, for example, a clear majority of the 1900 lawyers at the time were solo practitioners. LAWRENCE FRIEDMAN, AMERICAN LAW IN THE 20TH CENTURY 30 (2002). "In 1900, a firm with twenty lawyers was a giant."
105. LAWRENCE FRIEDMAN, A HISTORY OF AMERICAN LAW 539 (3d ed. 2005). Even as late as the 1960s, the average size of the largest law firms was forty.
106. MARC GALANTER & THOMAS PALAY, TOURNAMENT OF LAWYERS: THE TRANSFORMATION OF THE BIG LAW FIRM 22 (1993) (based on a study of the 35 largest firms). Today the average size of the largest law firms is well over 1000 (calculation by author). In addition, approximately 35% of the profession works in solo practice.
107. CLARA N. CARSON, THE LAWYER STATISTICAL REPORT: THE U.S. LEGAL PROFESSION IN 2000, at 28-29 (2004) (calculation based on data showing that 74% of lawyers are in private practice and 48% of private practitioners are in solo practice).
108. See John P. Heinz et al., The Changing Character of Lawyers ' Work: Chicago in 1975 and 1995, 32 LAW & SOC'Y REV 751, 760-62 (1998).
109. See ABA, supra note 37.
110. ABA SECTION OF LEGAL EDUC. & ADMISSIONS TO THE BAR, 2007-2008 STANDARDS AND RULES OF PROCEDURE FOR APPROVAL OF LAW SCHOOLS 19-20, 22, 25-29, 32, 37-38, 42 (2007).
111. Robert W. Gordon, The Geologic Strata of the Law School Curriculum, 60 VAND. L. REV. 339, 340 (2007).
112. The current nineteen-member Accreditation Committee consists of seventeen people who have completed the JD degree; the remaining two hold PhDs in subjects other than law. See American Bar Association, Accreditation Committee Members, http://www.abanet.org/legaled/committees/comaccredit.html.
113. A court can grant a lawyer's motion to appear pro hac vice and bestow temporary authority to appear or participate in a particular case.
114. ABA CTR. FOR PROF'L RESPONSIBILITY, CLIENT REPRESENTATION IN THE 21ST CENTURY: REPORT OF THE COMMISSION ON MULTIJURISDICTIONAL PRACTICE 4-5, 21 (2002), available at http://www.abanet.org/cpr/ mjp/home.html.
115. See Grace M. Giesel, Corporations Practicing Law Through Lawyers: Why the Unauthorized Practice of Law Doctrine Should Not Apply, 65 MO. L. REV. 151, 173-74 (2000).
116. See ABA COMM'N ON MULTIDISCIPLINARY PRACTICE, REPORT TO THE HOUSE OF DELEGATES (2000), available at http://www.abanet.org/cpr/mdp/mdpfinalrep2000.html.
117. A lawyer may reveal information regarding client representation for the following reasons: [T]o establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client. MODEL RULES OF PROF'L CONDUCT R. 1.6(b)(5) (1983).
118. In order to engage in a business transaction or security arrangement with a client, the terms must be transmitted in writing, the lawyer must be confident that the transaction is fair and reasonable for the client, the client must be advised to seek independent legal advice, and the client must give informed consent in writing.
119. For a discussion and compilation of regulatory activity in this area, see Silver, supra note 11.
120. See, e.g., Lawrence J. Fox, Accountants, the Hawks of the Professional World: They Foul Our Nest and Theirs Too, Plus Other Ruminations on the Issue of MDPs, 84 MINN. L. REV. 1097, 1103-04 (2000) ("We are not just another set of service providers. We are not just another cohort of business consultants. . . . [W]e are a priesthood.").
121. Luban, supra note 65, at 719.
122. RICHARD SUSSKIND, THE FUTURE OF LAW: FACING THE CHALLENGES OF INFORMATION TECHNOLOGY 1 (1996). Mark Chandler, general counsel at Cisco Systems, uses Susskind's anecdote to convey the same point in his pleas to the profession to do a better job of helping him to contribute to his company's bottom line.
123. See Mark Chandler, Gen. Counsel, Cisco Systems, Inc., Luncheon Address at the Northwestern School of Law's 34th Annual Securities Regulation Institute: State of Technology in the Law (Jan. 25, 2007), available at http://blogs.cisco.com/news/2007/01/cisco_general_counsel_on_state.html.
124. Google Groups, About Google Groups, http://www.google.com/googlegroups/ about.html.
125. In 2000, estimates are that 32%, NALP FOUND. FOR LAW CAREER RESEARCH & EDUC. & THE AM. BAR FOUND., AFTER THE JD: FIRST RESULTS OF A NATIONAL STUDY OF LEGAL CAREERS 27 (2004), to 48%,
126. AM. BAR FOUND., THE LAWYER STATISTICAL REPORT (2004), of the approximately one million lawyers practicing in the United States were solo practitioners. Only 5% of new lawyers in their first ten years of practice, however, are solo practitioners.
127. NALP FOUND. FOR LAW CAREER RESEARCH EDUC. & THE AM. BAR FOUND., supra, at 13, 27 (2004). The share of new lawyers in large firm practice diminishes substantially as one moves down the U.S. News and World Report rankings of law schools from which they graduated. Whereas 50% of graduates from the top ten law schools and 33% from the top eleven to twenty law schools are in firms of more than 100 lawyers, only 15% of those from schools ranked 21 to 100 and 9% of those from "Tier 3" are in this practice environment. Id. at 44.
128. See YOCHAI BENKLER, THE WEALTH OF NETWORKS: HOW SOCIAL PRODUCTION TRANSFORMS MARKETS AND FREEDOM (2006);
129. SCOTT E. PAGE, THE DIFFERENCE: HOW THE POWER OF DIVERSITY CREATES BETTER GROUPS, FIRMS, SCHOOLS, AND SOCIETIES (2007);
130. CASS R. SUNSTEIN, INFOTOPIA: HOW MANY MINDS PRODUCE KNOWLEDGE (2006).
131. JAMES SUROWIECKI, THE WISDOM OF CROWDS: WHY THE MANY ARE SMARTER THAN THE FEW AND HOW COLLECTIVE WISDOM SHAPES BUSINESS, ECONOMIES, SOCIETIES AND NATIONS (2004);
132. DON TAPSCOTT & ANTHONY D. WILLIAMS, WIKINOMICS: HOW MASS COLLABORATION CHANGES EVERYTHING (2006).
133. Many a law professor bemoans the misguided belief among law students that they must concentrate their legal education on the doctrine tested on the bar exam.
134. The ABA itself bemoaned the lack of practical education in law schools in the 1992 "MacCrate Report." ABA SECTION OF LEGAL EDUC. & ADMISSIONS TO THE BAR, LEGAL EDUCATION AND PROFESSIONAL DEVELOPMENT - AN EDUCATIONAL CONTINUUM 4-5 (1992). A study conducted by the Carnegie Foundation for the Advancement of Teaching concluded in 2007 that legal education continues to emphasize almost exclusively the teaching of legal analysis.
135. WILLIAM M. SULLIVAN ET AL., EDUCATING LAWYERS: PREPARATION FOR THE PRACTICE OF LAW 87 (2007).
136. TECHNOLOGY AND EMPLOYMENT: INNOVATION AND GROWTH IN THE U.S. ECONOMY 25-26 (Richard M. Cyert & David C. Mowery eds., 1987).
137. For a discussion, see GALANTER & PALAY, supra note 88, and Ronald J. Gilson & Robert H. Mnookin, Sharing Among the Human Capitalists: An Economic Inquiry into the Corporate Law Firm and How Partners Split Profits, 37 STAN. L. REV. 313 (1985).
138. ABA DRAFT DEFINITION, supra note 17.
139. See, e.g., Ass'n of the Bar of the City of N.Y., Comm. on Prof'l & Judicial Ethics, Formal Op. 2006-3 (2006), available at http://www.abcny.org/Ethics/eth2006.htm.
140. JOHN BATTELLE, THE SEARCH: HOW GOOGLE AND ITS RIVALS REWROTE THE RULES OF BUSINESS AND TRANSFORMED OUR CULTURE (2005). Wal-Mart achieved enormous gains from collecting the massive quantities of data generated in individual stores from barcode scanning and sharing this information with suppliers who could use it to redesign products and logistics. Numerous companies now employ these techniques.
141. PAUL WESTERMAN, DATA WAREHOUSING: USING THE WAL-MART MODEL (2001);
142. Evan Schuman, At Wal-Mart, Worlds [sic] Largest Retail Data Warehouse Gets Even Larger, EWEEK, Oct. 13, 2004, hrtp://www.eweek.com/c/a/Retail/At-WalMart-Worlds-Largest-Retail-Data-Warehouse- Gets-Even-Larger.
143. See, e.g., L.A. County Bar Ass'n, Prof'l Responsibility & Ethics Comm., Op. No. 488 (1996), available at http://www.lacba.org/ showpage.cfm?pageid=5041.
144. See CHANDLER, supra note 59; ROY, supra note 59.
145. See, e.g., MODEL RULES OF PROF'L CONDUCT R. 5.4(a)(3) (1983); D.C. Bar Ass'n, Op. 322 (2007), available at http://www.dcbar.org/for_lawyers/ethics/legal_ethics/ opinions/opinion322.cfm; Fla. Bar, Prof'l Ethics Comm., Op. 02-1 (2002), available at http://www.floridabar.org/tfb/TFBETOpin.nsf/.
146. See Gillian K. Hadfield, Delivering Legality on the Internet: Developing Principles for the Private Provision of Commercial Law, 6 AM. L. & ECON. REV. 154 (2004);
147. Gillian K. Hadfield, Privatizing Commercial Law, 24
148. See JOHN P. HEINZ & EDWARD O. LAUMANN, CHICAGO LAWYERS: THE SOCIAL STRUCTURE OF THE BAR (1982);
149. JOHN P. HEINZ ET AL., URBAN LAWYERS: THE NEW SOCIAL STRUCTURE OF THE BAR (2005).
150. Legal Services Act 2007, c. 29 (Eng.), available at http://www.opsi.gov.uk/acts/acts2007/ukpga_20070029_en_1.
151. OECD DIRECTORATE FOR FIN. & ENTER. AFFAIRS, COMM. ON COMPETITION LAW & POLICY, COMPETITION IN PROFESSIONAL SERVICES (2000), available at http://www.oecd.Org/dataoecd/35/4/1920231.pdf.
152. JOHN VICKERS, U.K. OFFICE OF FAIR TRADING, COMPETITION IN PROFESSIONS (2001), available at http://www.oft.gov.uk/shared_oft/reports/ professional_bodies/oft328.pdf.
153. LORD CHANCELLOR'S DEP'T, IN THE PUBLIC INTEREST? A CONSULTATION FOLLOWING THE OFFICE OF FAIR TRADING'S REPORT ON COMPETITION IN THE PROFESSIONS (2002), available at http://www.dca.gov.uk/consult/general/oftrept.htm.
154. SIR DAVID CLEMENTI, REVIEW OF THE REGULATORY FRAMEWORK FOR LEGAL SERVICES IN ENGLAND AND WALES: FINAL REPORT (2004), available at http://www.legal-services-review.org.uk/content/report/ report-chap.pdf.
155. Legal Services Act, 2007, c. 29, §§ 57-61 (Eng.), available at http://www.opsi.gov.uk/acts/acts2007/ukpga_20070029_en_1.
156. COMM'N OF THE EUROPEAN COMMUNITIES, PROFESSIONAL SERVICES - SCOPE FOR MORE REFORM (2005), available at http://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=COM:2005:0405:FIN:EN:PDF;
157. COMM'N OF THE EUROPEAN COMMUNITIES, REPORT ON COMPETITION IN PROFESSIONAL SERVICES (2004), available at http://www.eadp.org/main7/position/ Regulated%20professionsfinal_ communication_10feb04_en.pdf.