The Pursuit of Justice and Private Interests in the Law

This is the third in a series of posts on my new book, The Pursuit of Justice: Law and Economics of Legal Institutions. In this post I will discuss how the law evolves instrumentally — that is, to serve private interests rather than the public interest.

Law is often assumed to be a public good that can only be (or is best) provided by governments. Yet despite traditional beliefs and wishes, government-produced law is frequently driven to serve particular narrow interests. Three of the chapters in The Pursuit of Justice analyze legal history to exemplify this point.

Chapter 2 by economists Nicholas A. Curott and Edward P. Stringham is titled, “The Rise of Government Law Enforcement in England.” In this fresh look at the origins of Anglo-American law, we see a new argument to explain the gradual shift from non-centralized Anglo-Saxon law that was largely enforced by social norms, to post-Norman, state-centralized law that was enforced by the crown’s own system of fines and punishments.

In their extensive literature review, Curott and Stringham document how most scholars have framed this episode in Hobbesian, public good terms. The authors write:

Theorists argue that only government can create the rules that reduce conflict, facilitate exchange, and bring order to society. Without government law enforcement, … society would degenerate into the Hobbesian ‘nasty, brutish ans short’ outcome.

Yet applying the principles of public choice to the law poses a paradox to the Hobbesian view: if a model of self-interest explains how people interact within the legal system, then this same model should explain how people interact when establishing the rules that make up the legal system.

Curott and Stringham unearth a good deal of historical evidence to argue: a) before state-monopolized law, the non-centralized system of norm-enforced laws was effective at sustaining order; and b) the centralization of law into a state monopoly was not evidently conducted on public interest grounds but, rather, was driven significantly by the crown’s thirst for more revenues. Violations of the “king’s peace” gradually became good business for kings, and this prompted the state-centralization of law.

Chapters 9 and 12 show that modern U.S. law has also evolved to serve the instrumental interests of lawyers and judges. In “The Lawyer-Judge Hypothesis,” law professor Benjamin H. Barton examines a series of twentieth-century court rulings across several areas of law, through which case law came to embody the economic interests of the legal profession. Quoting the chapter:

Here is the lawyer-judge hypothesis in a nutshell: if there is a clear advantage or disadvantage to the legal profession in any given question of law, judges will choose the route that benefits the profession as a whole.

The courts allow legal professions to self-regulate more than other professions such as medicine or financial services. Attorney-client privilege is far more protected than doctor-patient or clergy-penitent confidentiality, even though the arguments for strong attorney-client privilege apply equally well to other professions. Yet such disparities do increase demand for lawyer services.

Similarly in his chapter, “Licensing Lawyers: Failure in the Provision of Legal Services,” policy analyst Adam B. Summers shows how the regulation of legal services insulates lawyers from competition. Summers documents the arguments that occupational licensing and advertising restrictions are supposed to protect consumers who have limited information and expertise about legal services. Yet the actual effects of regulation are far from these noble intentions: higher fees for legal services, lower quality, limits on consumer access to legal services, and disproportionate harm on poor consumers and non-licensed providers. The chapter shows how a market-driven system of voluntary certification and reputational enforcement would spawn a variety of cost-reducing and access-increasing innovations, while not compromising consumer protection.

In conclusion, the encroachment of special interests into the law itself is only a surprise if we view the law with romance, as though it will naturally and through the good intentions of its practitioners wind up serving the general public interest. These three chapters in The Pursuit of Justice remind us that legal institutions evolve instrumentally. That is, the regulatory and common law processes by which legal rules emerge are sensitive to the interests of decision makers in these processes. Whether by insulating the legal profession from competition in our contemporary world, or by the Norman era monopolization in the service of fiscal expedience to kings, the chapters in The Pursuit of Justice advance scholarship demonstrates this as a realistic character of government-produced law.