The Self-Sustaining Guild: American Lawyers Will Still Own the Future

For decades it seemed as if the demand for legal services would keep growing indefinitely, and the prosperity of the American legal profession would keep mounting year by year. Then in 2008 came the smash-up, and boom gave way to sudden bust. Does this sequence of events relate to the loosening of the legal profession’s traditional status as a guild? And, in fact, is that status loosening? James Chen’s essay invites us to consider these questions.

One can imagine ways in which weakening of guild control might be eroding the profession’s prosperity. In theory, some combination of online technology and relaxed (de-“guilded”) rules of law firm organization (allowing more document prep to be outsourced to Mumbai) might hollow out the supply of entry-level law firm jobs. I have trouble imagining that as the ultimate cause of the new-law-grad depression, however; both automation and outsourcing had been in full swing during the profession’s years of flushed prosperity, and news reports suggest that law firms may actually have cooled on offshoring lately

An alternative account might run as follows. Guild organization allowed the legal profession for centuries to control entry to its ranks, but it eventually lost this control as law schools kept expanding the number of seats for entering students, with the result that a calamitous flood of newcomers ended up in the profession.  Plausible, again, and yet the number of new lawyers had been rising steadily for decades. Why would that trend suddenly capsize the whole ship, as opposed to depressing lawyers’ pay more gradually over a period of years.

But take a step back. Is it even true that the legal profession is losing its guild-like manner of organization? I’m not so sure.

One online dictionary defines guild in the following two senses:

  1. A medieval association of craftsmen or merchants, often having considerable power.
  2. An association of people for mutual aid or the pursuit of a common goal.

It is a truism that the legal profession operates as a guild, and one whose historical continuity with the legal guild of medieval times is readily traced, even in jurisdictions that have dispensed with Law French. Rather than react with nostalgia or irritation to its antique qualities, I would like to confront the question: why has the guild format, which has died out for most other occupations, proved so persistent in the legal profession?

It’s not as if guilds have been a popular thing with polite opinion over the past century.  (In general, contemporary America is not enamored of institutions that evoke the word “medieval.”)  Like Dean Chen – indeed, like almost everyone who remembers Economics 101 – I look with suspicion on guilds. We moderns are trained to expect self-regulating professions to engage in behavior harmful to the interests of consumers, innovative producers, and other outsiders.

All too often this image is accurate: many of the legal profession’s self-regulating practices do appear to give short shrift to the interest of clients. As Lester Brickman has demonstrated, bar association handling of fee complaints often puts the interests of the profession ahead of that of clients. Application of unauthorized-practice rules to legal assistants and do-it-yourself document kits fits only too neatly into the economists’ critique of anti-competitive licensing.

Even so, if the legal guild were a mere conspiracy against the interests of those who are not its members, I very much doubt it would have endured as well as it has through the centuries.

The problem to be explained is as follows: In the transition from medieval to modern Europe, nation after nation overthrew the power of the guilds. Some of the methods of regulating commerce once exercised by guilds re-surfaced in the hands of public authorities, trade associations, or workers’ societies and eventually labor unions.  In many other cases the guilds were replaced with nothing at all, and “atomistic” market conditions held sway.

Law, however, retained its guild status (as did a few other professions such as medicine, which I won’t consider here).  The profession itself continues to set rules for admission into its ranks, and to steer client grievances into a system of lawyer discipline and disbarment thoroughly dominated by bar interests. Legal education is cartelized to the nth degree, as I argued in my 2011 book Schools for Misrule, with bar associations and American Association of Law Schools accreditation both playing a major role.  Sometimes the guild leaders, like any body of fallible humans, miscalculate their interests; it’s possible that something of that sort may have happened in the past couple of decades, during which law schools went on an unprecedented (and as we now know unsustainable) jag, charging ever-rising tuitions to ever-growing ranks of students. But guilds can correct their mistakes without losing their status as guilds.

If we still allow lawyers, exceptionally, to make the rules for other lawyers, I suspect it is because the main alternatives look even worse.  Those main alternatives would be for lawyers: 1) not to be regulated at all; or 2) to be regulated by non-lawyers.

The problem with the no-regulation, free-entry option is that lawyers wield enormously destructive coercive powers delegated to them by the state: in particular, powers to do things like file suits and take compulsory discovery. It is perfectly common, especially in this country where we lack loser-pays, for a freelance lawyer to launch a case that inflicts $500,000 in costs on an opponent who has no realistic prospect of recovering those costs even if fully vindicated. That, as much as any other factor, explains why we can’t just do away with gatekeepers and let anyone who pleases set up as a lawyer.

The second possibility, of having non-lawyers regulate the doings of the bar, poses different sort of dangers. Among those dangers are that civilian-dominated boards of discipline would act based on ignorance about how lawyers actually practice. A more systematic worry is that such a board would open the way for interested segments of society to go after lawyers for unpopular clients and causes. A civilian board of lawyer discipline might be captured by management interests and begin trumping up charges against the most committed labor-side lawyers, or vice versa. Instead, across a very wide range of countries from the medieval to the modern era, lawyers have coalesced behind systems of self-regulation that keep outsiders at bay.

Don’t bet against proven success, I say. If I had to guess, I’d predict that five years from now America’s lawyers will be back to a decent state of prosperity, and that a hundred and five years from now they will still constitute a self-regulating guild, envied by civilian outsiders.