In Occupational Licensing and Labor Market Mobility: Evidence from the Legal Profession, Adam Chilton, Jacob Goldin, Kyle Rozema, and Sarath Sanga investigate the tradeoffs of state bar licensing requirements through the lens of bar exam waiver policies. These policies permit lawyers with a threshold level of experience to obtain a state bar license without having to sit for the bar examination, effectively “waiving in.” The authors use variation in state waiver policies as a natural experiment permitting empirical analysis of whether states allowing entry through waiver experience a decline in lawyer quality, measured in relation to metrics of lawyer discipline and law school status. The variation in policies arises because some states, like California, categorically do not permit waiver, while waiver states include those that are more restrictive (with “Reciprocity” policies requiring reciprocal waiver from the originating state) and less restrictive (with “Admission on Motion” policies permitting waiver without reciprocity).
The authors conceptualize waiver policies as creating “corridors” between states that are either closed or open and codes corridors based on waiver policies from 1983 to 2019. They examine lawyer bar admissions through these corridors based on Martindale-Hubbell directory information on the state and year in which each listed lawyer obtained license(s) (1.7 million observations through 2019). They then fold in data on lawyer quality, derived from a dataset of all lawyers for whom public discipline records are available during the relevant time frame (from a total of 37 states), added to which is information on law school attended (available for roughly 90 percent of lawyers in the dataset). The authors put in an impressive amount of work assembling these datasets and demonstrates ingenuity in using waiver policy variation to conduct the experiment.
The big empirical takeaways are interesting, important, and nuanced. As one might expect, when states implement bar waiver policies, they increase experienced lawyers’ “labor market mobility” (measured as obtaining a second license) to those states (by 38 percent), with bigger effects for more popular states with harder bar examinations. With this increase comes declining quality, shown in a larger percentage of experienced lawyers entering bar waiver states subject to discipline during their careers versus similar lawyers entering states without waivers. Additionally, lawyers who enter with a waiver are slightly more likely (by 12 percent) to graduate from law schools outside the top 100. (There are minor findings that are also interesting, such as the fact that state bars have become more liberal over time, with increasing proportions of states using waivers of both types.)
The main findings on lawyer quality are important and speak directly to significant policy debates within the field. Bar admissions policies are justified as ensuring quality control (as opposed to being simply economically protectionist) and the authors’ data appear to buttress this justification. The paper does not delve deeply into the policy dimensions of quality tradeoffs insofar as the observed decline in quality, such as it is, could be outweighed by an increase in other public goods, including access to lawyers.
One limitation of the study, which the authors acknowledge, is that the number of lawyers who move in any one year is quite small: 58 percent of corridors have flows of no more than 1 lawyer per year and overall the estimated effect of a state’s bar waiver policy is to induce less than one lawyer per year to enter. Although there are substantial numbers of experienced lawyers who obtain second licenses each year, only a fraction of these move to waiver states.
This matters in how we assess the importance of the findings for lawyer quality. An important finding of the paper is that lawyers who enter waiver states are more likely to be disciplined (2.1 percent) than those who enter nonwaiver states (1.6 percent). However, based on the average number of second licenses per year (5383), this would amount to a difference in roughly 30 sanctioned lawyers nationwide. Given this limited impact, it isn’t entirely clear how to substantively assess the quality concern. In addition, if the question is what impact the bar has on quality, it is notable that the discipline rate for lawyers who do not obtain a second license is roughly one percentage point higher than those who do so by waiver (3.0 percent versus 2.1 percent). While it is fair to say that entry by waiver decreases quality relative to entry by nonwaiver, it seems to increase quality relative to the existing pool of lawyers.
There are other questions that the data raise. From the analysis of disciplined lawyers, it is not clear when the discipline occurred, whether before or after the second license. This is relevant because if bars are admitting lawyers who have already been disciplined, then they seem to be making a policy choice in favor of access and/or may have assessed the disciplinary violation to be not significant enough to deny entry. On the other hand, if the discipline is after entry, then the argument for quality control has more force. Moreover, it is not clear there is a consistent definition of public sanction across states. This could be an issue because some states may publicize different forms of discipline (e.g., some may report reprimands and sanctions while others only suspensions and disbarments). This could skew outcomes depending on which states the lawyers are entering.
Overall, this paper should give ample food for thought to anyone who was ever curious about bar waiver policies and their tradeoffs. It is important to know that waiver policies can potentially reduce the quality of lawyers in a jurisdiction, though how much to make of this reduction is something that requires more study. Partly, how we assess this issue will depend on what the lawyers who enter by waiver are doing and whether it makes a dent in access to justice. Perhaps, in this regard, it would be useful for states with waiver policies to impose higher pro bono requirements on lawyers who waive in to ensure that the policy has a public benefit and does not simply permit lawyers to monetized more liberal entry rules.
