The Market for Lawyers: The Value of Information on the Quality of Legal Services

46 Pages Posted: 20 Sep 2008

See all articles by Elisabetta Iossa

Elisabetta Iossa

University of Rome Tor Vergata; IEFE Bocconi University

Bruno Jullien

University of Toulouse 1 - Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 19, 2007

Abstract

We study the value of information on the quality of legal services by analyzing the incentives of litigants to hire high-quality lawyers and the effect of legal representation on the decision-making behaviour of adjudicators.

In a setting where adjudicators have reputational concerns and where the quality of lawyers is reflected in their knowledge of legal principles, we show that better information over the quality of legal representation generates a trade-off. It allows for a better match between the value of a legal dispute and the quality of the legal representation. But it induces a bias in the decisions of adjudicators in favour of the litigant with the highest-quality lawyer. For a given distribution of the quality of lawyers, the social value of public information on the quality of lawyers may then be negative.

We discuss the implications of these effects on the desirability of quality certification system (such as the Queen's Counselor system) in the market for the legal professions. Certification also has the effect of increasing the incentives of lawyers to invest in quality-enhancing training. We show that free certification leads to excessive supply of certified lawyers. We also show that the main insights are robust to the accounting for proof-taking activities by lawyers.

Keywords: Career Concerns, Decision Bias, Market for Lawyers

JEL Classification: D82, K40

Suggested Citation

Iossa, Elisabetta and Jullien, Bruno, The Market for Lawyers: The Value of Information on the Quality of Legal Services (January 19, 2007). Available at SSRN: https://ssrn.com/abstract=1271102 or http://dx.doi.org/10.2139/ssrn.1271102

Elisabetta Iossa (Contact Author)

University of Rome Tor Vergata ( email )

Via Columbia n.2
Rome, 00133
Italy

IEFE Bocconi University ( email )

Via Roentgen 1
Milan, Milan 20136
Italy

Bruno Jullien

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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