Legal Barriers to Innovation: The Growing Economic Cost of Professional Control Over Corporate Legal Markets

Gillian K. Hadfield, University of Southern California Law

Abstract

Markets for legal goods and services are among the most heavily regulated in the U.S. Between the profession and the judiciary, lawyers control not only who may sell legal products but who may invent them, through restrictions on licensing, organizational form and the sharing of revenues with non-lawyers. In this paper I argue that professional control over corporate legal markets in particular--with an imposed high degree of homogeneity on the pool of people who can respond creatively to the diverse and changing economic needs--poses a significant obstacle to innovation in markets more generally and control over spiraling legal costs.