Supreme Court wants to Regulate the Legal Profession

Last Tuesday the supreme court of India expressing concern over growing commercialization of the legal profession with lawyers demanding “astronomical” fees from litigants, which made it difficult for the poor to access justice, the Supreme Court asked the Centre on Tuesday to bring a law to regulate the field and to prescribe “floor and ceiling of advocates’ fees”.

Let us examine supreme court’s demand of regulating the legal profession in India using sound laws of economics.

First, the concern of supreme court re commercialization of the legal profession where lawyers are demanding ‘astronomical’ fees from the litigants is quite legitimate. But after this correct diagnosis of the symptom the treatment offered by the court isn’t sound at all. In fact it is antithetical to the concerns shown by the court as we will see in a while.

To understand the issue reflected in court’s concern one needs to simply ask the question, why the lawyer’s fees are astronomical (astronomical from whose perspective is also an important question, but I will not delve into that issue here)?  The reason of astronomical fees is simple demand and supply condition prevailing in the legal market right now. The legal market (profession) of India is monopolized by the legal professionals (lawyers, judges etc.) using the method of government licensing. Anyone who wants to become a lawyer will have to acquire a law degree (LLB or LLM) and then get a license to practice law from the monopolist Bar Association. Without this license no outsider is allowed to become a lawyer and practice law. This monopoly condition means the supply of lawyers in India is highly restricted. When this low supply of lawyers meets with the high demand of law services, arising because of myriad of governmental regulations and legislation, it results into higher prices (fees) of lawyer’s services. As with any monopoly, this law monopoly also results into high legal prices (fees) and low quality of services provided by the legal profession.

Now, because the root cause of higher lawyer fees is the monopoly practice of that profession, which is legally backed by the government and supreme court itself, the only sound solution is to dismantle this monopoly by dismantling the bar association and allowing free market competition in legal profession. Market competition will ensure lower prices and higher quality (including speedy resolution of all cases with justice being done to victims) of legal services. The moment legal market will be opened for competition more lawyers will start to enter this profession because of its present higher prices (fees) and profit. This entry of lawyers will increase the supply of legal services lowering its price (fees). Market competition will ensure that only top quality honest and just lawyers remain in the market whereas all inefficient unjust lawyers will be weeded out. Gradual lowering of legal fees will make sure that the poorest of the poor Indians can also avail top quality legal services.

But, alas, instead of offering this economically and ethically sound solution of the problems of the legal profession, the supreme court is offering the exact opposite and economically and ethically unsound solution in the form of ‘price controls’. As I said above, the measure of price control will prove to be antithetical to the goals envisaged by the supreme court. When the government will put ceiling and floor on the prices (fees) of legal services it will result into scarcity of lawyers and other legal professionals in the country. Lawyers are also humans and entrepreneurs who need profit to survive and run their live. Selfishness is what drives every life on this earth. Everyone is selfish and there is nothing wrong in being selfish. If people think people like lawyers or teachers are in a noble profession and they don’t require profit then they are making a big mistake. The matter is not whether lawyers and teachers should earn profit; the matter is how much profit they should earn. The answer is: as much as their services are valued by their customers in the free market. When the government will put limit on the maximum fees that lawyers can charge from their customers, as according to the law of supply, it will result into drastic reduction in the supply of lawyers in India. This will increase the prices of legal services even higher than at what astronomical levels it is today! This will make sure that no poor person will ever be able to access legal services! Not only this, it is quite possible that this increased scarcity will start a whole new underground market for legal services in the form of local mafias who will produce their own mafia justice! When people will not be able to get justice from the official legal system, they will resort to other alternatives. Many will take law in their hands. And all these results are exactly opposite to what the supreme court is eying for.

Murray Rothbard once said, “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”  The supreme court of India is in this state of economic ignorance, and in that state of ignorance it is better that it refrains from advising the government or anyone else on economic matters. In the zeal of doing good the busybody judges will harm (poor) people of India.