A Comparison between the American Markets for Medical and Legal Services
36 Pages Posted: 7 Jun 2018 Last revised: 26 Jul 2018
Date Written: June 1, 2018
America’s access to justice woes are paradoxical in a number of ways. We have more lawyers than every country, except for India, and more lawyers per capita than every country, except for Israel. We spend more on law as an absolute amount or as a percentage of GDP than any other country. At the high end, our so-called “Big Law,” we provide the best and most lucrative services in the world. Yet, we barely provide any legal services to the very poor, and American lawyers cost too much for the working poor or even the middle class. We graduate so many juris doctors that as many as a third fail to find work as a lawyer, despite clear signs of demand within the middle class. Why the mismatch between supply and demand?
It turns out there is another American market for professional services that shares some of the same puzzling features: medicine. We spend more than any other country on law and medicine and yet we have relatively poor outcomes in both.
The solution to this puzzle is similar for both medicine and law. The American market for these professional services is actually best understood as divided into three portions. At the top end, where large law firms serve corporate clients and fancy hospitals serve wealthy Americans and foreigners, America does have an argument to the world’s best medical and legal services. At the bottom end, America is hardly the best in the world. But in medicine (through Medicaid and the CHIP program), and in law (through public defenders, legal aid, and pro bono work) the poorest Americans have at least some access to services. The real problem area is in the middle.
Nor are these poor results solely a consequence of market forces. While America often trumpets free market solutions to its problems, neither of these markets are particularly free. In law and medicine, occupational licensing (its length and cost and the nature of the training) is part of the reason why services are too costly for the working poor and the middle class. This is not to say that the licensing schemes are bad, just that efforts to increase access to either medical or legal services must either involve massive infusions of funds or changes to current regulation and professional education, or both.
In this regard, medicine is again a helpful model to study, since we have recently seen a massive change in the market for medical services. There are several lessons to be taken from the passage and implementation of the ACA for would-be reformers of the market for legal services, including the power of entrenched interests and the unusual political economy of lawyer regulation.
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