Legal Market Decartelization

Authors

Milan Markovic, Texas A&M University School of LawFollow
Nuno Garoupa, George Mason University Antonin Scalia School of LawFollow

Document Type

Article

Publication Date

4-2025

Journal Title

UC Davis Law Review

ISSN

0197-4564

Abstract

American lawyers’ grip on the legal market is receding. Scholars and policymakers increasingly agree that the public has little to lose and potentially much to gain from legal market decartelization - the weakening of the lawyers’ monopoly over the legal services market. Harkening to deregulatory initiatives abroad and in Arizona and Utah, reformers contend that removing restrictions on the corporate delivery of legal services and unauthorized practice of law will slash costs and expand access to justice.

Drawing on economic theory and recent market developments, this Article offers a cautionary rejoinder. Understandable concerns about cartelization and lawyer rent-seeking have led critics to understate the risks of legal market deregulation in the American context. The American legal market is highly localized, with significant variations within and across states. Nevertheless, in all states, consumers are at a disadvantage vis à vis lawyers and other legal services providers because of asymmetric information. Legal market decartelization does not address asymmetric information and may exacerbate it, enabling well-capitalized entities such as private equity firms to gain dominance without offering better or lower-cost legal services. Increasing the number of providers and separating labor from capital is also likely to produce more moral hazard and negative externalities, especially in litigation where contingent fees arrangements are common, but fee shifting is not. Lastly, lawyers play an integral, yet underappreciated, role in the development of law both ex-ante and ex-post that would diminish in a deregulated market and worsen regulatory and legislative capture. Cartelization is not without its advantages, and policymakers must look beyond decartelization to address the maldistribution of legal services.

First Page

2233

Last Page

2286

Num Pages

54

Volume Number

58

Issue Number

4

Publisher

UC Davis School of Law

Recommended Citation

Milan Markovic & Nuno Garoupa, Legal Market Decartelization, 58 U.C. Davis L. Rev. 2233 (2025).
Available at: https://scholarship.law.tamu.edu/facscholar/2204

File Type

PDF