Making It Easier to Practice Law

For an attorney, admission to a state bar typically depends on passing an exam focused on the laws of that state. Although many states still abide by this traditional system, some have adopted interstate compacts and even allow non-lawyers to do work traditionally reserved for attorneys.

The longstanding bar admissions system illuminates some of the reasons economists have called for reform to professional licensing practices. The White House Council of Economic Advisers, whose three members provide the President independent advice on economic affairs, acknowledges in a 2015 report that licensing can help consumers identify well-qualified professionals. Still, the Economic Council concludes that the education and fees required for professional certification reduce the number of workers in a given field.

In addition, although fewer workers means higher salaries for licensed professionals, the Economic Council also highlights the downsides of licensing requirements, including lower wages for non-licensed professions, increased prices for customers, and less interstate mobility among licensed workers. Jason Furman, former Chair of the Economic Council, identifies licensing as a form of rent-seeking: an action that benefits private individuals without increasing overall wealth.

To address these problems, some states’ legal licensing authorities have lowered certain barriers erected by license requirements. For example, twenty-four states and the District of Columbia now use the Uniform Bar Examination. The Uniform Bar allows students to qualify for bar admission in multiple states without sitting for multiple state bar exams. For example, an applicant seeking bar admission in both Washington and Oregon previously had to complete each state’s exam, typically on different test dates and in different locations. Now, an applicant can take the Uniform Bar for admission in both states. Nevertheless, states still retain the option of separately assessing state law knowledge before admitting applicants. New York, for instance, requires applicants to take an online course and online exam covering New York law.

In addition, lawyers can now transfer their practices to other states in particular cases. For example, Kansas recently became the nineteenth state to grant temporary licenses to military spouses licensed to practice law in other states.

Standing out among its peers, Washington State has undertaken an ambitious effort to reduce the role of legal licensing. It now licenses “Legal Technicians” to perform some tasks for clients that were previously conducted by attorneys. A Legal Technician license requires only an associate’s degree, as well as training and experience as a paralegal. Although current rules prohibit Legal Technicians from representing clients in court, the Washington State Bar Association states that they may “consult and advise, complete and file necessary court documents, help with court scheduling, and support a client in navigating the often confusing maze of the legal system.” At the moment, Washington State only licenses Legal Technicians to practice family law.

Despite recent changes to licensing schemes, licensing can benefit the economy by ensuring that professionals are qualified. For over four decades, the American Nurses Association has advocated for a higher education requirement as a prerequisite to earning a nursing license. Research linking better-educated nurses with improved patient outcomes supports the Association’s contention. Indeed, Furman notes that some level of licensing helps improve service quality.

On the other hand, the Economic Council links professional licensing with both higher costs and lower interstate mobility. For example, an out-of-state landscape architect can only practice in Pennsylvania for 30 days per year and must apply to the State Board of Landscape Architects to do so.

For lawyers and their clients, the bar admission system has comparable benefits and costs. The American Bar Association’s Model Code of Professional Responsibility states that “the public should be protected from those who are not qualified to be lawyers” due to insufficient education. Therefore, the bar admission system helps assure clients that lawyers meet a baseline educational standard. But legal services remain expensive, as one million low-income people try to obtain legal representation but are unable to do so each year. And as Luz E. Herrera, Associate Dean at the Texas A&M University School of Law, documents, even middle class Americans might find themselves priced out of legal representation.

Thus, reforms to the bar admission system—including the streamlined Uniform Bar Examination—could help reduce the cost of legal services and improve interstate mobility. The Economic Council recommends interstate compacts as the best way to simplify licensing requirements. The report specifically cites reciprocity agreements in which a lawyer certified to practice in one state may practice in another. Not every state uses such agreements, but expanding reciprocity could increase mobility for attorneys, as demonstrated by Kansas’ permitting temporary legal practice by military spouses.

These recent developments could represent the beginning of a major shift in licensing lawyers. If these reforms continue, the trends of high costs and reduced mobility that the Economic Council claims result from excessive licensing schemes may begin to reverse course.