Siena 2005 REGULATION OF THE LEGAL PROFESSION Nuno GAROUPA Universidade Nova de Lisboa CEPR,...
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Transcript of Siena 2005 REGULATION OF THE LEGAL PROFESSION Nuno GAROUPA Universidade Nova de Lisboa CEPR,...
NG 3
INTRODUCTION
• Comparative analysis of regulation of professions: lawyers.
• They satisfy the following requirements in all jurisdictions:– Specialized skills;
– Investment in human capital;
– Credence goods;
– Self-regulated.
NG 4
THEORY
• WHY SHOULD LAWYERS BE REGULATED?– Market Failure (Asymmetry of information
concerning quality);– Other Public Interest Objectives (Patronizing views);– Private Interest (Rent-Seeking).
NG 5
THEORY
• HOW SHOULD LAWYERS BE REGULATED?– Regulation by the Government (Licensing);– Self-regulation;– Regulation by Third Parties
• Regulation through Litigation
• Self-regulation is not a signal in itself of rent-seeking.
NG 6
THEORY
• WHAT SHOULD BE REGULATED?– Entry Restrictions with Consequent Professional
Monopoly Rights; – Restrictions on Advertising and Other Means of
Promoting Competition within the Profession; – Restrictions on Fees and on Fee Contracts;– Restrictions on Organizational Forms; – Restrictions on Conduct and Procedures.
NG 14
THEORY
• Regulation by Professional Litigation– Fundamental Divergence between the Private and the
Social Motive to Litigate– Alignment of Interests between Professionals and
Organizations (should Law Firms be liable?)
NG 15
SUMMARY OF THEORY
TABLE 4 – SELF-REGULATION OF PROFESSIONS
ENTRY RESTRICTIONS
FEE RESTRICTIONS
ADVERTISING RESTRICTIONS
ORGANIZATION RESTRICTIONS
CONDUCT RESTRICTIONS
PUBLIC INTEREST
MINOR MINOR PRICE NO MORE ON SUBSTANCE
PRIVATE INTEREST
SEVERE SEVERE PRICE QUALITY
YES MORE FORMAL
NG 16
QUICK STATISTICSTABLE 1 – NUMBER OF LAWYERS PER 100,000
COUNTRY 1983 1990 2000 % 1983-2000 US 250 261 338 35%
GREECE - - 296 - UK 100 - 283 183%
SPAIN 135 - 241 79% PORTUGAL 54 (1980) 116 188 248% (1980)
ITALY 80 - 160 100% BELGIUM 122 137 155 27%
GERMANY 70 - 142 103% NORWAY - - 116 -
DENMARK - - 81 - NETHERLANDS 30 57 77 157%
FRANCE 51 - 68 33% AUSTRIA - - 51 -
JAPAN - - 18 - Source: Faure et. al. (1993), World Bank Legal and Judicial Reform Practice Group, Council of the Bars and Law
Societies of the European Union, own calculations.
NG 17
QUICK STATISTICSFIGURE 1
C R O SS C O M PA R IS O N O F L A W Y E R S A N D P H Y S IC IA N S p e r 1 00 ,0 00
NE T HE R LA N DSD E NM A RK
F R AN C EA U ST R IA
GE R MA N Y
B E LG IU M
P O RT U G AL
JAP A N
N O RW A Y
UK
U S A
G RE E CE
S PA IN
IT A LY
0
50
100
150
200
250
300
350
400
150 200 250 300 350 400 450 500 550 600 650
P HY S IC IANS
LA
WY
ER
S
NG 18
COMPARATIVE ANALYSISTABLE 7 – COMPARATIVE INSTITUTIONAL ANALYSIS: LAWYERS
NETH US BEL E&W GER SPAIN POR FRA AUS NOR SAMPLE
Faure a) 3.08 (1)
2.60 (2)
2.33 (3)
2.30 (4)
1.50 (5)
- - - - - 5
Faure b) 2.55 (2)
3.10 (1)
2.07 (5)
2.30 (3)
2.22 (4)
- - - - - 5
Faure c) 3.28 (1)
3.00 (2)
2.53 (3)
2.30 (4)
1.90 (5)
- - - - - 5
Garoupa Weighted
7.12 (3)
8.17 (1)
7.30 (2)
5.95 (7)
5.38 (8)
6.54 (5)
4.79 (9)
5.96 (6)
4.80 (10)
6.83 (4)
10
IAS Entry
2.1 (3)
- 2.5 (6)
2.9 (8)
3.7 (12)
3.4 (9)
3.5 (10)
3.9 (14)
4.1 (15)
- 15
Garoupa Entry
3.75 (4)
4.5 (1)
4.25 (2)
3.25 (6)
2.75 (9)
4 (3)
2.75 (9)
3.75 (4)
3 (8)
3.25 (6)
10
IAS Conduct
1.8 (5)
- 2.1 (6)
1.2 (4)
2.8 (10)
3.1 (12)
2.2 (8)
2.7 (9)
3.3 (13)
- 15
Garoupa Others
11.08 (2)
12.5 (1)
10.59 (4)
8.91 (6)
7.92 (8)
9.25 (5)
6.91 (9)
8.75 (7)
6.59 (10)
11 (3)
10
Notes: In brackets, the ranking position. IAS also includes Finland (1 and 1), Sweden (2 and 2), Denmark (3 and 3), Ireland (5 and 6),
Italy (7 and 14), Luxemburg (13 and 10), and Greece (10 and 15).
NG 19
COMPARATIVE ANALYSISFIGURE 2
REGULATION OF PROFESS IONS
WEIGHTED AVERAGE
AUSTRIA
NORWAY
USA
SPAIN
BELGIUM
NETHERLANDS
FRANCE
GERMANY
PORTUGAL
3,5
4
4,5
5
5,5
6
6,5
7
7,5
8
8,5
3,5 4 4,5 5 5,5 6 6,5 7 7,5 8 8,5
PHYSICIANS
ENGLAND AND WALES
NG 20
LEGAL PROFESSION IN EUROPE
• Code of Conduct for Lawyers in the European Union:(a) Personal advertising and publicity is forbidden unless explicitly allowed by the
local bar; (b) Contingent fees (pactum de quota litis) are banned; (c) Multidisciplinary partnerships are restricted since lawyers cannot share
honorariums and fees with other professionals unless explicitly allowed by the local bar; (d) Lawyers should not conflict with other lawyers, but if they do, the local bar
should be asked to intervene before the case goes for litigation; (e) A lawyer should not accept instructions to represent a client in substitution for
another lawyer in relation to a certain matter if the client has not fully paid and reimbursed the first lawyer.
• The Code also refers to the “corporate spirit of the profession" by which a relationship of trust and cooperation should be developed (a principle regulated under the name of duty of solidarity among lawyers).
NG 21
LEGAL PROFESSION IN EUROPE• CCBE Response to the European Commission Competition Questionnaire on Regulation in Liberal
Professions and its Effects, May 2003:
• (a) Contingent fees (i.e., an agreement between a lawyers and his client by virtue of which the client undertakes to pay the lawyer a share of the result regardless of whether in the form of money or any other benefit) being forbidden is a necessary rule of the profession;
• (b) Fee sharing with non-lawyers is a consequence of the duty of confidentiality and avoidance of conflicts, thus multidisciplinary partnerships should not be permitted since they offend the core values of the profession;
• (c) These restrictions cannot be considered a restriction of competition under EU competition law since they are applied in the specific context of a profession;
• (d) Comparative conclusions with respect to different regulations across Europe should be avoided because they follow from legal and cultural intrinsic differences, and are respected by the jurisprudence
of the ECJ.