For helpful comments we wish to thank Julian Greenhill, Paul Grout, Ian Jewitt, William Kovacic, Gilat Levy, Neil Rickman, Giancarlo Spagnolo, Kathryn Spier, and seminar participants at Brunel University, Birkbeck College, Einaudi Institute for Economics and Finance, European University Institute, Paris School of Economics, University of Bristol, University of Essex, University of Rome Tor Vergata, University of Warwick, and the 2007 CMPO Workshop on the Economics of Legal Services and Justice in Bristol. Special thanks go to editor Jennifer Reinganum and two anonymous referees for their very helpful comments.
The market for lawyers and quality layers in legal services
Article first published online: 24 JAN 2013
Copyright © 2013, RAND.
The RAND Journal of Economics
Volume 43, Issue 4, pages 677–704, Winter 2012
How to Cite
Iossa, E. and Jullien, B. (2012), The market for lawyers and quality layers in legal services. The RAND Journal of Economics, 43: 677–704. doi: 10.1111/1756-2171.12004
- Issue published online: 24 JAN 2013
- Article first published online: 24 JAN 2013
We study the functioning of the market for lawyers, considering the strategic interaction among litigants, lawyers, and judges. We investigate the value of legal representation and of systems of quality certification, such as the Queen’s Counsel system. In our setting, higher quality lawyers obtain better-quality evidence and are better able to interpret it. Judges receive information from the lawyers and have reputational concerns. We show that reputational concerns generate a decision bias in favor of certified lawyers and that this causes misallocation of lawyers at the market equilibrium. As a result, whereas a higher quality of lawyers increases welfare, public information over quality may be welfare reducing.