A piece in the Economist, Oct. 9, 2010 at 24, links lack of productivity growth in European countries partly to their restrictions on professional services. It notes that “many European countries are rife with anti-competitive rules. Architects and lawyers’ fees in Italy and Germany are subject to price floors and ceilings.” No revolution in legal services awaits if the law bars competition on price.
Governmental regulation of what lawyers can and cannot charge their clients will certainly stifle market-based competition among law firms and muzzle legal departments that want to see innovation in pricing. As the Economist puts it well, “Such restrictions limit the ability of efficient newcomers to compete for market share, cosseting incumbents and raising costs across the economy.” Europe is not the only area to lag in this domain (See my post of May 2, 2008: restrictions in India on law firms and advertising.). Over time, barriers to open competition among law firms will weaken and fall.