Cartels and Controls in Legal Training

• DOI: 10.1177/0003603X0004500206
• Published date: 01 June 2000
• Date: 01 June 2000
• Author: George B. Shepherd
• Subject Matter: Domestic Antitrust

The Antitrust Bulletin/Summer 2000

Cartels and controls in

legal training

BY GEORGE B. SHEPHERD*

I. Introduction

437

For

more than half acentury, and especially during the past 20

years, the American

Bar

Association (ABA) has administered the

accreditation system for law schools as, in economic effect, a car-

tel of law school faculty, enforced by a boycott. Many

of

the par-

ticipants

in

the

accreditation

system

are

public-spirited

and

selfless. However, economic analysis indicates that the system has

imposed substantial harms. Existing law faculty have gained, on

balance, at the expense

of

their students, of their universities, and

of

other potential faculty members whom the system denies teach-

* Associate Professor of Law, Emory University School

of

Law.

AUTHOR'S

NOTE: /thank Thomas C. Arthur, Michael Broyde, William J.

Carney, Howard

0.

Hunter, Andrew Kull, Fred S. McChesney, Robin K.

Mills, Charles A. Shanor, William G. Shepherd, and seminar participants

at Emory and the

/997

annual meetings

of

the American Law and Eco-

nomics

Association

for

helpful

comments. Shon E.

Glusky

provided

research

assistance. The

article

builds on George B.

Shepherd

and

William G. Shepherd, Scholarly Restraints-ABA Accreditation and Legal

Education, 19 CARDOZO L. R.

209/

(1998).

©2000 by Federal Legal Publications. Inc.

438

The antitrust bulletin

ing jobs. By suppressing potential new schools that would offer

efficient legal education at lower prices, the system has excluded

many from the legal profession, particularly the poor and minori-

ties. It has raised the cost

of

legal services. And it has, in effect,

denied legal services to segments

of

our society.

Idemonstrate that the ABA has exerted monopoly power not

only over the market for legal training, but also over three related

markets: the market for the hiring

of

law faculty, the market for

legal services, and each university's internal market for funding.

Possible cures include abolishing the accreditation controls and

changing the role

of

the bar exam.

Part II describes the markets that the ABA accreditation sys-

tem influences and the relation among the markets. In its exami-

nation

of

law schools' incentives,

part

III notes that many law

schools are organized, in effect, as partnerships

of

faculty. Part IV

reviews the history

of

the ABA's law school accreditation system.

Part V describes the details

of

both the accreditation process and

the ABA's substantive requirements. Part VI discusses the sys-

tem's economic structure, while part VII describes the

system's

impacts in the four markets. After part VIII considers the system's

possible offsetting benefits, part IX draws conclusions and recom-

mends changes in the system.

II.

The

markets

To understand the ABA accreditation system, one must first

define

the markets where

the

system

functions.

A

market,

as

economists define it,Iis the array

of

products or services that, if

there were no legal constraints, consumers might substitute for

each other

if

relative prices changed. For example, ginger ale, but

not wine, is probably in the

same

market as cola; higher

cola

prices might cause people to drink ginger ale instead, but would

not change consumption of Chablis much.

See

WILLIAM

G. SHEPHERD,

THE

ECONOMICS OF INDUSTRIAL

ORGANI-

ZATION ch. 3 (4th ed. 1997);

F.M.

SCHERER

&

DAVID

N. Ross, INDUSTRIAL

MARKET

STRUCTURE AND ECONOMIC PERFORMANCE

73-79

(3d ed. 1991).