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No. 322

October 9, 1998

THE CASE FOR A FREE MARKET IN LEGAL SERVICES

by George C. Leef

Executive Summary

Every state except Arizona prohibits the unauthorized

practice of law (UPL); a person must possess an attorney's

license to hold himself out as a lawyer.  UPL prohibitions

restrict the right to pursue a legitimate occupation and

the right to contract with others.  By imposing a costly

barrier to entry, they distort the market for legal

services.  Consequently, consumers face higher prices and

fewer choices.

UPL prohibitions are part of a wider phenomenon:

governmental limitations on freedom to engage in voluntary

economic transactions.  Before the New Deal, the Supreme

Court regarded economic liberty as worthy of

constitutional protection.  Since 1937, however, the Court

has drawn a distinction between "fundamental" and

"nonfundamental" liberties, with economic liberties

consigned to the latter category.

Governmental interference with fundamental liberties

faces "strict scrutiny" from the courts and is frequently

invalidated, whereas interference with economic liberties

receives only minimal scrutiny, implying that legislatures

may do virtually anything in the field of economic regula-

tion.  That distinction is without any constitutional

basis.

UPL prohibitions are neither necessary nor sufficient

to protect consumers from incompetence.  A competitive

market, reinforced by remedies for fraud, breach of

contract, and negligence, offers the optimal combination

of price and quality.

Because they infringe upon individual freedom and

serve no legitimate public purpose, UPL prohibitions

should be repealed or struck down by the courts as

unconstitutional.

George C. Leef is president of Patrick Henry Associates in

East Lansing, Michigan, and adjunct professor of law and

economics at Northwood University.