In my profession, I hear lots of complaints that there are too many lawyers. Sometimes, such complaints are even heard from lawyers. When that happens, there is good reason for skepticism.
In an op-ed published in the January 8th edition of the Los Angeles Times, attorney Mark Greenbaum argues that the market for lawyers is "saturated," but the American Bar Association is not doing anything to control the "flow" of new lawyers. So, he argues, the government should step in to regulate the number of new lawyers to "save" the legal profession from itself.
Greenbaum is certainly right about three things: (1) the number of law school graduates has been increasing; (2) so has the amount of debt law students have taken on; and (3) recent law school graduates have had a hard time finding work in the recent economic climate. But where's the market failure that might warrant the unusual step of government regulation of a labor market? (Actually, Greenbaum is promoting additional government regulation of a labor market, as state governments already limit entry into law practice via the bar exam.)
When Greenbaum writes about "saving the legal profession from itself," what is he talking about? According to price theory, if the supply of lawyers increases, the average earnings of lawyers should drop, and the cost of legal services to consumers should drop with it. Is that necessarily a bad thing for society? Even if it were a bad thing, wouldn't it self-correct over time? After all, rational people are not going to enter law school, incurring tens of thousands of dollars of debt, if they do not expect to have jobs when they graduate.
One thing would certainly be accomplished by (further) government regulation of entry into legal practice: incumbent attorneys would have less competitive pressure, and so (all else being equal) would be able to charge higher rates for legal services. But I'd never accuse Mr. Greenbaum of self-interest; after all, he's just trying to "save the legal profession from itself."