Between 1970 and 1990, America's legal industry experienced explosive growth, with lawyer wages relative to other private-sector workers and the share of all private employment hours in legal services both skyrocketing during those two decades. A new working paper from economists Ariell Reshef and Cailin Slattery uses decades of data to examine what the authors call the "lawyerization of America." The study offers a detailed look at how a wave of federal and state legislation fundamentally transformed the country's legal landscape.
The demand for legal services rose substantially during this period, and lawyers became increasingly specialized. Lawyer wages relative to other private-sector employees surged, while the legal-services industry's portion of total private employment hours exploded upward. The supply of lawyers remained tightly controlled and didn't expand enough to meet the new demand. Changes in the country's industry composition can explain only a small fraction of the legal industry's growth, and lawyers' LSAT scores didn't rise, suggesting they weren't being paid more simply because they were smarter. The authors estimate that legislative uncertainty—the reality that many laws are vague, given that they cover more conduct than they previously did—cost the country more than $20 billion in 2024.
The report identifies three major drivers behind these trends: an expansion in scope, as a wave of legislation brought new areas of conduct within the law's reach; an increase in uncertainty, as much of this legislation was written in broad language that left contested questions to be settled in court; and a change in lawyers' incentives, as Congress enacted statutes to encourage enforcement by the private sector rather than expand public enforcement capacity, including "fee shifting" under which a losing defendant might have to pay the plaintiff's legal fees. The authors document these patterns empirically by charting the rise of fee-shifting provisions in legislation and the growing page count of federal regulations, showing that they statistically predict the rise of lawyers.
The driving force was a wave of major legislation that passed starting in the 1960s. Big-ticket federal examples included the civil-rights and voting acts of the 1960s, as well as environmental, consumer-protection, and workplace-safety laws that soon followed. Even deregulatory measures of the 1970s and 1980s often had the effect of shifting disputes into court as a substitute for direct regulation. The authors connect specific pieces of legislation to rising numbers of cases—such as a 1975 fee-shifting law and the 1991 expansion of liability for employment discrimination—and show that new legislation often led to higher lawyer employment exactly where you'd expect it: the 1964 Civil Rights Act corresponded to rising legal employment disproportionately in states with more Black workers, while the Clean Air Act may have had a similar effect in states with worse air quality. For state laws, the authors compare states that enacted new rules against those that didn't, finding that laws heightening product liability seem to push lawyers into negligence and insurance law, while unilateral divorce pushes them into domestic law. The transition has been complete for a third of a century, but the country continues to live with the consequences.