Update: ABA Journal, Do CLE Requirements Affect Bar Size? New Working Paper Explores
Kyle Rozema (Northwestern; Google Scholar), How Do Continuing Education Requirements Affect a Workforce? Evidence from the Legal Profession:
I study how requiring lawyers to complete continuing education impacts the American legal profession. I find that continuing education requirements decrease the number of licensed lawyers in a state by 5 percent—a decline that appears to be driven largely by lawyers who do not practice full-time in the state. Next, I find suggestive evidence that the requirements alter the composition of the legal profession, resulting in relatively fewer lawyers available to serve individuals with limited options for legal assistance. Finally, I find some weak evidence that the requirements may modestly improve the quality of services in the state.
Conclusion
Occupational licensing regimes are typically premised on the idea that at least some clients have difficulty assessing the quality of services, causing the market to fail to adequately discipline low-quality services, which in turn creates suboptimal competency gaps in professional workforces. Entry barriers target these gaps at the beginning of workers’ careers, and professional oversight bodies that discipline workers for incompetence target gaps that may arise after entry. Although most professions had these mechanisms in place by the 1960s, mandatory continuing education requirements have since been adopted in most licensed professions, presumably to help address underinvestment in human capital after workers enter the profession. However, the net effect of these requirements depends on how much they crowd out other forms of training and whether that alternative training is better suited to worker needs.
This article studied how continuing education requirements affect the size, composition, and quality of the American legal profession. I found that continuing education requirements decrease the number of licensed lawyers in a state by 5 percent. Next, I found suggestive evidence that continuing education requirements alter the composition of the legal profession, resulting in relatively fewer lawyers available for individuals with limited options for legal services. Finally, I found no evidence that the adoption of continuing education requirements reduced the number of consumer complaints in a state, but I found that compliance deadlines have modest short-term behavioral effects on misconduct and push higher-risk lawyers out of the profession at higher rates.
The welfare implications depend not only on how CLE requirements affect the legal workforce but also on how they affect legal services. However, apart from the analysis of consumer complaints and professional discipline, my analysis focused on how CLE requirements impact the size and composition of the workforce rather than on legal services. Importantly, even if CLE requirements shrink the legal workforce, they may not necessarily shrink the capacity of the legal profession to provide legal services to the same extent, as lawyers who are induced out of the profession may be more likely to be those who took a career path outside of the practice of law or are not currently practicing law full-time. Indeed, I found suggestive evidence that CLE requirements primarily affect lawyers’ decisions in ways that likely have minimal effects on labor market participation, implying that the effect on the number of licensed lawyers is likely to overstate the effect on the amount of legal services. Future research should explore how containing legal education requirements affects the provision of legal services. It should also explore other potential benefits to having a larger legal workforce independent of the provision of legal services, such as how much it increases the flexibility of the labor market to address changes in the demand for legal services or whether licensing deters unethical behavior beyond that in legal practice.
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