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Collegial Reputation and Peer Rankings: An Invisible Hand?

Suppose you have practiced law for many years in the same community. You are shown a list of other lawyers who do the same sort of work as you, in the same area. You probably have an opinion about most of the names on the list. Favourable or unfavourable impressions will have accumulated from your interactions with them on files, your observations of their work, and other colleagues’ comments to you about them.

Of course, they also have opinions about you. Your collegial reputation is the sum of the opinions about you held by others in your community of practice.

Collegial reputations are not necessarily fair or well- deserved. They may reflect prejudice or irrelevant factors, rather than the real qualities of someone’s work. Nevertheless, within professions like law, colleagues are relatively well placed to evaluate the many aspects of value that are invisible to clients.

An Invisible Hand?

Collegial reputation can be an invisible hand aligning professionals’ self-interest with the interests of their clients. Adam Smith famously wrote that, in a competitive market, an invisible hand causes purely profit-seeking behaviour by market participants to advance the interests of consumers. Even someone who is merely trying to make money must offer goods and services that others value in order to do so — assuming that the market is working well.

Unfortunately, competition’s invisible hand is clumsy when it comes to markets for professional services provided to inexperienced consumers. If clients cannot perceive the quality attributes of the different services offered, they will not reward high-quality service-providers with their business. If they cannot ascertain and compare the real prices offered (for example, due to hourly and contingency billing), then they cannot reward the more cost-effective professionals with their business.

The Rewards of Collegial Reputation

Collegial reputation can do invisible hand work when traditional market competition fails. Even if the value of a professional’s work (or lack thereof) is not obvious to her clients, it may be obvious to her colleagues. Doing great work for reasonable prices can be rewarded by one’s professional peers, in the long run. Doing lousy work at exploitative prices should hopefully produce the opposite effect.

Referrals are the primary currency in which collegial reputation pays dividends. If a referrer truly cares about the interests of referral-seekers, they will refer them to the professional(s) whom they expect to provide the best value. At its best, the referral system rewards professional excellence even as it directs clients toward the firms that will do the best work for them.

Access to Reputational Information

Reputational information can help clients access justice, because it helps them identify good value in a legal service marketplace which is otherwise mysterious. Unfortunately, access to reputational information is distributed unequally. People with legal experience or social connections in the legal profession are more likely to have it than those who do not.

Peer rankings (e.g. by Lexpert and Best Lawyers) gather reputational information and make it available to everyone. Lawyers practicing in an area are asked how likely they would be to refer cases to other practitioners on a list. Their responses are aggregated, and the ranking company awards the top vote-getters titles such as “Lexpert Ranked” or “Lawyer of the Year.”

Peer rankings do offer clients a window into the otherwise secret world of collegial reputation. Although their revenue comes from selling advertisements to lawyers, Lexpert claims “strict separation between editorial (which includes the Surveys and Rankings), and advertising.” Assuming that rankings really can’t be bought by lawyers, they offer genuine collegial reputation data to the world.

Unfortunately, existing peer rankings also have significant limitations:

  • They provide no information about most lawyers and firms. For example, of the dozens of family lawyers in the Windsor-Essex (Ontario) area, only two are listed in Lexpert and one in Best Lawyers.
  • Those who are listed tend to be the most experienced (and therefore, often the most expensive) lawyers. Top-notch early-career practitioners, who deliver excellent value-for-money to their clients, are typically absent because they don’t yet have sufficient name recognition to succeed in the surveys.
  • Bad reputations are not captured. Knowing who to avoid would be just as helpful to most clients as knowing who the superstars are.
  • It is unclear whether lawyers vote for the colleagues whom they really feel are most referral-worthy for sound reasons, as opposed to just their friends or the names they recognize.

Lexpert-For-the-Rest-of-Us?

If collegial reputation’s invisible hand becomes more adept, lawyers’ financial incentives will become better aligned with their professional duties. Peer rankings are a straightforward way to help the hand do its work, but there’s room for improvement in the existing rankings. Law societies and bar associations might have a role in gathering comprehensive, unbiased, and methodologically robust information about collegial reputations.

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