Innovation: first the lawyers and then the law

Gillian Hadfield, a lawyer economist from the States has written a brilliant essay on deregulation of legal services and law which should be high up the reading list of anyone interested in the importance of innovation in legal services. You can read it here (hat tip to Jordan Furlong for his excellent post which alerted me to it). Her basic argument is that:

  • Law and legal services dominated by the professions inhibit the evolution and efficiency of law and legal services. In the commercial world, there is a “great “DNA gap” between lawyers and business thinkers….[and in the wider world there is a ] “mismatch between what we need from our legal system and what we get. How do you regulate global emissions or build an improved health care system or govern a 21st-century financial sector without drowning in ideological politics, 2,000-page statutes and endless litigation?”
  • The kind of deregulation attempted under our Legal Services Act gives the UK a key strategic advantage which the US should follow, “loosening the near total grip that lawyers have on creating the law and supplying legal services in the U.S. “
  • This leads her to question not only the quality and efficiency of our legal services systems but the quality and efficiency of our legal processes and our substantive rules.
  • She sees the diversity of knowledge sets beyond law is essential to innovation and the development:

    “The real problem is that we don’t seem to be producing either people or organizations that provide legal inputs appropriate for the rapid changes of the new economy. And this failure has come about precisely because we have treated legal inputs as the province of lawyers alone.

    “It’s not that lawyers aren’t smart or committed enough to produce good quality legal services. The problem with the way in which U.S. markets for legal inputs are structured is that they are entirely closed off to the potential quality-improving and cost-reducing innovations that might be produced by people who are not already heavily invested in our existing ways of handling legal problems. Those existing approaches are the problem: too costly, too poorly informed about rapidly changing business and regulatory realities in a global economy, too risk averse, too slow and cumbersome.”

There are some incisive passages illustrating how lawyer-led law may be designing in its own irrelevance. I have argued elsewhere, complexity may be counterproductive, Hadfield appears to be arguing it may be self-destructive. If she is right, and we are seeing some signs of it already, innovation can privatise adjudication and even – she suggests quite plausibly – the supply of law.

Finally, if anyone involved the legal education review is reading, it is worth dwelling on this point:

“One consequence of the lock lawyers have exercised over the markets for legal expertise is a tremendous lack of diversity in the training and experience lawyers acquire. …But diversity in problem-solving approaches is an essential feature of any robust system of innovation. So one reason lawyers don’t invent better systems is that they all think more or less alike. “

I believe the problem with legal rules she identifies is profoundly important: She puts it like this, “Even if the cost and quality of legal expertise were significantly improved, poorly designed, excessively complex rules could still drive legal bills up and the achievement of legal objectives down.” She proposes market solutions, but if she is right, we also need intellectual and political solutions. We need to think about new forms of law. We need to research them. We need to test them and then we need to evolve them.

2 thoughts on “Innovation: first the lawyers and then the law

  1. I don’t buy it. When you take out the lawyers, you get innovations such as we saw at News International. When you take out the lawyers, the sort of rule-making you get is what emanates from Parliament – knee-jerk, populist, ill-considered, counter-productive and often completely unintelligible in the real world.

    The main inhibitor at least at the legal aid end of the market has been the Legal Services Commission, spelling out in minute detail exactly what the lawyers must do and how they must do it, and visiting any innovation with massive penalties at audit.

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