Lawyers, Legislation and Social Welfare

Efficiency considerations have played an increasing role in the development of legal doctrine over the last decades. Our paper investigates the consequences of the efficiency doctrine for the long run allocation of human resources between the legal profession and other professional activities. It is argued that a short run pursuit of the efficient scope of legislation may create an inefficient oversupply of lawyers under free entry into the legal profession. Self-regulation of entry into the legal profession by the bar association may provide higher aggregate welfare. Liberalization of professional entry can explain both the expansion of legislative activity and the unprecedented growth rate of the legal profession in many countries.