Professional Discipline and the Labor Market: Evidence from Lawyers

Abstract

I investigate the labor market outcomes of American lawyers after they are professionally disciplined. To do so, I match employment data for 672k lawyers in 2012 and 2020 to novel data on public disciplinary measures imposed by state licensing bodies since 1990. I use this data to study discipline and employment in three ways. First, I document the prevalence and distribution of discipline. I find that 4.4 percent of lawyers are professionally disciplined and that half of disciplined lawyers who are not disbarred go on to reoffend. I also find that disciplined lawyers are not representative of the legal profession in terms of the type of law firms they work for and their practice areas. Second, I document the labor market outcomes of disciplined lawyers after they are disciplined and compare them to the labor market outcomes of similar non-disciplined lawyers. I find that disciplined lawyers are more likely to subsequently end up in law firms with limited oversight and in practice areas with unsophisticated clients. Finally, I investigate causal channels that could explain the labor market outcomes of disciplined lawyers and find suggestive evidence that they likely operate through law firms' concerns over reputation and by serving as a signal of lawyer type.

Keywords: Legal Profession, Professional Discipline, Labor Market

JEL Classification: J44, K23, M51, L22, D18