Abstract
We study the value of information on the quality of legal services by analyzing the incentives of litigants to hire high-quality lawyers and the effect of legal representation on the decision-making behaviour of adjudicators.In a setting where adjudicators have reputational concerns and where the quality of lawyers is reflected in their knowledge of legal principles, we show that better information over the quality of legal representation generates a trade-off. It allows for a better match between the value of a legal dispute and the quality of the legal representation. But it induces a bias in the decisions of adjudicators in favour of the litigant with the highest-quality lawyer. For a given distribution of the quality of lawyers, the social value of public information on the quality of lawyers may then be negative.We discuss the implications of these effects on the desirability of quality certification system (such as the Queen's Counselor system) in the market for the legal professions. Certification also has the effect of increasing the incentives of lawyers to invest in quality-enhancing training. We show that free certification leads to excessive supply of certified lawyers. We also show that the main insights are robust to the accounting for proof-taking activities by lawyers.
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