Sunday, January 8, 2012

What would happen if we outlawed lawyers?

A couple of professors of mine from Montana State (Rob Fleck and Andy Hanssen, now both Clemson economists) have a research agenda that uses Ancient Greece as a case study to understand the capabilities and pitfalls of democratic institutions. On the second day of the annual ASSA conference, I was reminded of this research agenda and I saw Andy present their latest paper in their series in an excellent session on Endogenous Changes in Legal Institutions.

Rob and Andy's latest paper examines the case of Athens, the Greek city state that was known as the pinnacle of democracy and commerce. Rob and Andy focus their analysis on a peculiar feature of Athenian democracy: the fact that Athenians banned professional lawyers and they did so deliberately. In other words, defendants defended themselves, plaintiffs brought their own cases and public-interest cases were brought because of civic duty (and when that didn't work out, small monetary rewards were offered). Here is the abstract (paper pdf):
Legal expertise permits detailed laws to be written and enforced, but individuals with expertise may employ their special knowledge to skew decisions in privately beneficial directions. We illustrate this tradeoff in a simple model, which we use to guide our analysis of the legal system in ancient Athens. Rather than accepting the costs of expertise in return for the benefits, as do most modern societies, the Athenians designed a legal system that banned professional legal experts. And this was not because Athenian society was simple: The Athenians employed sophisticated contingent contracts and litigated frequently (to the point that the law courts featured prominently in several famous comedies). Furthermore, the Athenians recognized that forgoing expertise was costly, and where the cost was particularly high, designed institutions that made use of expertise already existing in society, employed knowledgeable individuals who were unable to engage in significant rent seeking, or increased the private returns to collecting publicly beneficial information. Although the Athenian legal system differs in many ways from modern legal systems, it nonetheless functioned very effectively. Investigation of the Athenian system serves to illustrate how important it is for institutional designers to consider legal institutions as a bundle, whose pieces must complement one another.
This is just the latest in a series of fascinating studies. For an overview of their joint research agenda, here is their own description.

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