American Bar Association's Proposed Rule is Bad for Consumers
April 15, 2003
The American Bar Association spent its midyear meeting debating a new rule that would prohibit anyone but lawyers from giving legal advice or working on legal documents. The ABA said this was necessary to shield consumers from fraud and to give nonlawyers the security of knowing what services are legal for them to perform. Really.
The ABA is unhappy that a growing number of real estate agents, income-tax preparers, paralegals, credit counselors, self-help books, Internet sites and charity groups provide legal services at far lower prices. So rather than compete, the guild wanted states to adopt its "model" rule and outlaw the competition.
Fortunately, this power grab immediately ran into trouble, not to say laughter:
- In addition to complaints from some of its own members (the ABA's Antitrust Law Section), both the Federal Trade Commission and Justice Department said the proposed rule was anticompetitive and bad for consumers.
- Last month the ABA backed down, but its task force still recommends that each state adopt a definition of who gets to practice law, though the guild graciously leaves it up to states to decide on the definition.
The real ABA game here is to tighten its cartel so lawyers can raise prices:
- Recent data from New Jersey show that in areas where competition exists in real estate closings, lawyers charge $350 to $400 less than in other areas.
- Thousands of Americans use on-line mortgage lenders or inexpensive software that lets them build their own wills; under the "model" ABA rule, a lawyer could command a fee simply for witnessing these activities.
There are times when retaining an attorney is desirable, and when that happens consumers need to know what they are getting. But so long as clients are clear on their rights, they deserve a variety of legal service choices.
Source: Editorial, "How Many Lawyers Does It Take..." Wall Street Journal, April 15, 2003.
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