Legal Barriers to Innovation

Regulation, Vol. 31, No. 3, Fall 2008

USC Legal Studies Research Paper Series No. 09-5

USC CLEO Research Paper No. C09-5

9 Pages Posted: 27 Oct 2008 Last revised: 12 Nov 2013

See all articles by Gillian K. Hadfield

Gillian K. Hadfield

University of Toronto; Vector Institute for Artificial Intelligence; OpenAI; Center for Human-Compatible AI

Date Written: October 24, 2008


The American Bar Association and its state-level brethren control and regulate the legal profession, determining who can provide legal services, how those providers are trained, and what business forms those providers can use. This professional regulation limits what may be offered as a legal product or service, homogenizes the pool of potential innovators in terms of training and risk-orientation, prohibits the corporate practice of law, severely restricts the available financing for large-scale legal ventures, and constrains the capacity to exploit economies of scope and scale in developing better methods of producing what business clients ultimately need. This article examines this problem and encourages states to adopt a different regulatory structure that encourages innovation that benefits legal clients.

Keywords: innovation, corporate legal markets, law, legal barriers, bar association, regulation, monopoly, self-regulation, legal market, barriers to entry

JEL Classification: D42, J2, J4, J44, J71, J78, K2, K23, K31, L51, L89, O1, O11

Suggested Citation

Hadfield, Gillian K., Legal Barriers to Innovation (October 24, 2008). Regulation, Vol. 31, No. 3, Fall 2008, USC Legal Studies Research Paper Series No. 09-5, USC CLEO Research Paper No. C09-5, Available at SSRN:

Gillian K. Hadfield (Contact Author)

University of Toronto ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
4169784214 (Phone)

Vector Institute for Artificial Intelligence ( email )

OpenAI ( email )

Center for Human-Compatible AI ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

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