Questioning the Sole-Trader Rule in the Barrister Profession
Alan J. Devlin
Latham & Watkins
September 1, 2010
The Irish Jurist, Vol. 45, p. 123, 2010
In Ireland, no barrister may enter into a partnership with another. A controversial report by the Competition Authority in 2006 concluded that this sole-trader edict is antithetical to Irish society, by virtue of its foreclosing the emergence of an efficient market structure in the industry. The Authority’s recommendation that barristers be permitted to form partnerships encountered stiff resistance from the Bar Council and a number of leading Irish lawyers. These commentators questioned the efficiencies that would supposedly be facilitated by partnerships, warned that anticompetitive concentration within the profession would ensue, challenged the assertion that entry barriers into the profession are currently significant, argued that the emergence of a two-track system of sole practice and partnerships would degrade the prestige of the former route and ultimately lead to its demise, and contended that the abolition of the sole-trader rule would frustrate the attainment of efficiencies embodied in the Law Library. The most central overarching theme, however, was that the efficiency model underlying economics renders that mode of analytic inquiry ill-suited to the intricate social question of justice. In short – proponents of the status quo submit – competition economics is in tension with the larger values at play in the legal industry.
In this, the first of two papers addressing the role of law and economics in Irish legal matters, the author contends that the sole-trader rule should be abolished. With respect to the normative quality of this rule, economic analysis is indeed fully commensurate with notions of justice. Bringing that analysis to bear on the arguments promoted by defenders of the status quo reveals their case to be of merely superficial appeal. Permitting barristers to form partnerships would significantly curtail the difficulties faced by promising law graduates who aspire to join the bar. It would also facilitate greater levels of competition at the top of the profession. The formal pooling of income and diversification of practice – two features inherent in a partnership – would reduce the otherwise systemic financial risk facing barristers. Cross-subsidization would yield considerable benefits by enhancing the provision of pro bono services. The formal combination of lawyers possessing expertise in complementary areas of law would induce axiomatic efficiency benefits in complex cases. As explored below, the objection that sole practice may become second tier is without significance, as is the worry that efficiencies found in the Law Library would be diluted. Finally, the fear that large-scale consolidation would foster tacit collusion and undesirably reduce the choices open to solicitors ought not to be countenanced. In this last regard, it must not be forgotten that the barrister profession will continue to be subject to the competition laws, which will foreclose combinations that yield monopoly or excessive concentration in certain fields of practice. Since the sole-trader rule stands on so insecure a foundation, it ought to be jettisoned.
Number of Pages in PDF File: 26
Date posted: September 3, 2010 ; Last revised: November 20, 2010
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