Self-regulation of the legal profession and quality in the market for legal services: an economic analysis of lawyers’ reputation
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Our article intends to show that self-regulation of the legal profession helps to regulate the quality of legal services in a market characterized by strong information asymmetries. Our model highlights the role of the collective reputation of the profession jointly with the individual reputation of lawyers to sustain high quality. It shows that a high-quality steady state exists in a market for legal services and that the likelihood of high quality increases when the market is self-regulated by the legal profession as compared with the situation where there is no self-regulation. Moreover, the profession has an incentive to maintain a good collective reputation as this increases the clients’ willingness to pay for legal services and, therefore, the rent that accrues to lawyers as a whole.
KeywordsSelf-regulation Collective reputation Individual reputation Legal services
JEL ClassificationsK2 L14 L15 L44 L51 L84
The authors gratefully acknowledge comments from the participants to the conferences of the European Association of Law and Economics (Paris, 2010), the Canadian Law and Economics Association (Toronto, 2010), the Journées de l’Association Française de Sciences Economiques (Besançon, 2011), the 23rd SASE Annual Conference (Madrid, 2011), the Conference of the International Society for New Institutional Economics (Firenze, 2013), and the workshop “The professions between regulation and competition: interdisciplinary approaches” held at the University Paris Ouest Nanterre La Défense (Paris, 2013). We are also grateful to the Mission de recherche Droit et Justice, French Ministry of Justice, for financial support. We also thank Fabienne Llense and anonymous referees of the Journal for their helpful comments. All remaining errors are ours.
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