Regulating lawyers in a liberalized legal services market: the role of education and training.

Author:Webb, Julian
Position::Symposium on Legal Education


The recent reforms to the legal services market in England and Wales have attracted considerable international interest and commentary. (1) The implications of those changes for the U.S. legal services market have also been much debated, particularly as regards external ownership and investment in law firms. (2) Despite the recent rejection of alternative business structures by the American Bar Association (ABA), the reforms in Britain, Australia, Ireland, and (increasingly) continental Europe still represent a challenge to thinking in the United States. These reforms, it is suggested, point to a reshaping of the regulatory landscape on quite a fundamental scale. They seek to replace a system of regulation that, at best, has struggled to live up to its rhetoric of defending the public interest through the independence of lawyers, and, at worst, has provided a "client hostile foundation on which to regulate lawyers." (3) The alternative is a system that assumes that a liberalized market, driven by competition, assisted where necessary by regulation, is the best protector of public and consumer interests, in Britain and Australia, in particular, reforms have thus sought to insulate regulatory agencies from professional capture, largely by creating new co-regulatory spaces between independent regulatory and quasi-disciplinary agencies and law firms that are better placed to reflect consumer interests and, over time, could increasingly sideline the professional representative bodies.

Despite the amount of ink spilled on the issue of regulatory reform, the implications of such reform for legal education have been barely considered in the literature. This Article begins to fill that gap. It does so from the perspective of the ongoing English reforms. In England and Wales the implementation of the Legal Services Act 2007 (LSA 2007) has been followed by the announcement of a fundamental review of legal education, to be conducted jointly by the "big three" legal regulators--the Solicitors Regulation Authority (SRA), Bar Standards Board (BSB), and ILEX Professional Standards (IPS). It is being represented as the largest review conducted since 1971. (4) In January 2011, the regulators published a tender for a first research phase of the review. The tender was awarded in April 2011 to an academic consortium led by the present author. (5) The consortium's work is continuing, so it is not possible at this stage to report on the outcomes; however, this paper serves to introduce the context of the review, and to speculate on its implications for legal education and training policy and practice in England and Wales. The lessons for the United States arising from such reforms are obviously less clear-cut, given quite profound differences in the respective training systems in each country. Nevertheless, there are also some common features/problems shared by both systems: pressures from a significant over-supply of graduates, debate about variability of standards, graduates' lack of preparedness for practice, and, possibly, the over-regulation of law schools. These may permit us to offer some relevant and useful analogies.


    In most jurisdictions the provision of legal services is, to a greater or lesser extent, regulated. The scope and reach of regulation varies quite widely, though it tends to focus on one or more of the following functions:

    * Representation of a party to court proceedings;

    * The protection of specific legal professional titles (such as attorney, notary, or solicitor);

    * The provision of specific categories of legal advice for financial reward.

    Traditionally, though some responsibility may be shared with the state, the judiciary, or some other--usually state-sponsored---entity, regulation has commonly been promulgated and enforced by the profession itself, as a form of self-regulation. The argument of this Part is, essentially, a well-known one: that the traditional self-regulatory bargain between profession and state has broken down, or at least, has been substantially renegotiated by the state. The cause of this renegotiation has been the recognition of significant imperfections in the market for legal services, which demand a proper role for the balanced regulation of legal services, and, arguably, legal services education and training. Sitting behind this, however, there is also a fundamental reconceptualization of the role of the market, and of the state in relation to the market, which will be framed here in terms of the rise of a "post-regulatory competition state."

    The traditional ideal of professional self-regulation is deeply embedded in the common law legal profession. Lawyers in England and the United States have long enjoyed the privileges of such self-regulation. Although the U.S. states were among the first jurisdictions to recognize competition as a positive value in regulation (by opening up lawyer advertising and striking down mandatory minimum fee schedules), U.S. lawyers today enjoy a degree of regulatory autonomy that is perhaps now unprecedented in the developed common law world, despite increasing legislative and international intervention. (6) U.S. state bars today still enjoy considerable authority in setting admission standards and conduct rules, overseen by state courts, which have jealously guarded the autonomy of the bar and their own oversight of lawyer discipline, (7) largely insulated from antitrust laws under the state action doctrine. (8) Nonetheless, although disciplinary functions have been widely delegated by the courts to quasi-autonomous agencies, the U.S. system, like others, is criticized for being insufficiently independent, lacking in transparency, geared towards reactively disciplining malfeasance rather than proactively assuring competence, insufficiently attentive to quality of service issues, and for putting the professional before the public interest. (9) Indeed there seems to be a strong perception, at least among governments and supra-national entities, that traditional systems of lawyer regulation suffer from flaws that are "significant, systemic and structural." (10)

    These pressures on the system of lawyer regulation reflect a range of influences, most of which are by no means unique to, or necessarily most evident in, the United States. Changes in the structure of the legal profession itself, particularly growing divisions, not just between the corporate and private client hemispheres, but between local, national, and global law practice, have placed strains on the homogeneity and collegiality of the profession, and at least some cracks in the edifice of professional self-governance. (11) Competition has also increased considerably: from within the profession, as numbers have grown, and restrictions over marketing and advertising have been reduced; from in-house, as corporations have sought to reduce expenditure on external legal advice; from overseas lawyers (primarily for transnational work and outsourcing); and from other professions and unregulated providers as divisions between regulated and unregulated legal activities have been exploited. (12)

    Since the 1980s, the rise of consumerism and powerful consumer lobbies (at least in some jurisdictions (13), the growing dominance of neo-liberal political theory, and with it, the resurgence in neo-classical economic thinking, both reflected in the Washington consensus, have also placed the profession under a more intense ideological and economic spotlight. As a consequence, the modes of regulation and enforcement activity have also begun to evolve in some quite profoundly different ways, with pressure for change most apparent, initially, in a number of increasingly marketized common law jurisdictions--Australia, England, New Zealand, and Ireland. (14) In recent years, the attack on traditional self-regulation has become increasingly framed in terms of both national (15) and international (16) antitrust or competition policies. These have led to new forms of external regulation of legal practice, (17) to the dismantling of some of the demarcations between legal and non-legal services, and, at a more ideological level, to the treatment of lawyers as just another category of "service provider," (18) rather than an ethically and constitutionally distinct profession. International trade agreements have also raised the specter of increased harmonization and possibly standardization of professional obligations across borders.

    To understand these changes, I suggest it is helpful to locate them in the context of a set of deeper transformations that are reshaping the relationship between state and market in an increasingly globalized political economy, and, in the process, redefining the scope and functions of regulation. These transformations, I suggest, can be ascribed to the emergence since the early 1990s of what we might call the post-regulatory competition state.

    By this term I am combining insights from two complementary ways of thinking about the state. The first, following Philip Cerny, (19) argues that the late-modern, developed state has itself emerged out of a process by which political actors have switched their attention from the traditional foci of state intervention, to activities intended to ensure the competitiveness of national firms and economic policies in global markets. This shift has itself been a response to globalization's lowering of economic borders and the reduction of national political autonomy which that implies. It has also become a largely self-perpetuating process, as the pursuit of competitiveness fosters the further elimination of national barriers to global economic activity.

    The second...

To continue reading