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Every American Should Celebrate These Federal Election Results November 9, 2016

Posted by David Bookstaber in Federalism, Government, Judiciary, Regulation.
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I haven’t made as much time for current events in recent years as I used to. My news on the campaign concluded with yesterday’s election was mostly limited to whatever people would mention during conversation.

I learned this morning that the used car salesman was elected President, and that vociferous supporters of his leading opponent, a politician who should have gone to jail long ago, are in mourning.

When our federal government was smaller, and when it hewed more closely to its Constitutionally proscribed role, the person who held the office of President didn’t matter as much. Good leadership and good ideas can bubble up from anywhere, and the guy behind the desk in the oval office doesn’t want to go down in history as a monster. Recent years have shown us that as government has grown the President has acquired the power to inflict extensive damage through often subtle administrative actions that are quite difficult to check. On that score, the losing candidate, with her long history and proven expertise in abusing such power, seemed to me far more dangerous than the blustery winner. Trump seems more inclined to work in broad strokes in the light of day than in dark rooms through a thousand cuts.

This election was, however, absolutely critical in one regard: The future composition of the U.S. Supreme Court (SCOTUS). SCOTUS is presently evenly split between (liberal) activists and (conservative) constructionists. If a liberal had won control of the presidency the current SCOTUS vacancy would have been filled by a liberal, and that least-accountable branch of the federal government would have resumed its activist practice of “legislating from the bench:” establishing laws by judicial fiat that are nearly impossible to reverse.

Instead, we have a conservative majority in the executive and legislative branches that will allow SCOTUS to be repopulated with judges who respect the role proscribed by the Constitution.1 America may not appreciate how close it came to a long reign of judicial tyranny. But for that everyone should today breathe a sigh of relief.

1Trump has said his nominee will come from the list compiled with the help of the Heritage Foundation, a conservative think tank, and the legal group, the Federalist Society.

Law Education Update July 17, 2011

Posted by David Bookstaber in Education, Judiciary.
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Medical students learn from real doctors in a real hospital during their education. In law, we’re learning from a bunch of academics who have deliberately elected not to pursue law as a profession.

From a WSJ article about how some law schools are finally deciding that they had better teach law students how to practice law.

Legal Cartel Update May 20, 2011

Posted by David Bookstaber in Judiciary.
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I have complained before about the legal cartel’s barriers to practicing law. I did not realize that the cartel extends to financial participation in legal practice:

The ban on law firms accepting nonlawyer investors is nationwide, with the exception of Washington, D.C., under ethics rules established largely by state supreme courts. Violations of the rules can lead to disbarment.

The restriction on investors is decades old and stems from even older strictures against lawyers sharing fees with nonlawyers, for fear that might compromise their professional independence.

The present system of ownership restrictions “perpetuates economic inequity,” Jacoby & Meyers said in Wednesday’s court filings. “The small [legal] practice does not have access to the capital markets that the Wall Street [law] firms have,” it added.

QOTD: Lazy Law Update April 13, 2011

Posted by David Bookstaber in Judiciary.
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Richard Epstein provides the latest installment of this recurring feature:

Law is not just an idealized system of rules: It also involves the public administration of those rules by a wide range of elected and appointed officials in an endless array of particular circumstances. For those who would defend a just legal order, the basic challenge is to strike a proper balance—between limiting the discretion of these officials so that they do not undermine the rule of law, while also allowing them enough leeway to perform their essential roles.

Lately in America, we have done a poor job of preserving this balance. In practice—and, increasingly, in legal theory—government officials have been given unprecedented ability to make exceptions to the law, both in enforcing it and in respecting the rights granted under it. Indeed, the past year has seen two of the most enormous pieces of legislation in U.S. history—the Patient Protection and Affordable Care Act and the Wall Street Reform and Consumer Protection Act—make the imbalance far worse. Both laws seek to dramatically transform vast swaths of the American economy; both give enormous power to the government to bring about these transformations. And yet both laws are stunningly silent on exactly how these overhauls are to take place. The vague language of these statutes delegates much blanket authority to government officials who will, effectively, make the rules up as they go along.

Lazy Law Update: IRS Edition December 3, 2010

Posted by David Bookstaber in Judiciary, Taxation.
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I have previously described the problem of selective enforcement of a byzantine legal code. Today the Libertarian Party alerts us to the federal government’s intention to imprison Wesley Snipes for three years for conviction on misdemeanor charges of ‘willful failure to file an income tax return.’

Why is a failure to file a tax return a criminal non-act? Should people ever be sent to prison for not doing something? If the IRS wants to come after Snipes and take his money, they have power to do that. Who does it help to send the man to prison?

The federal tax code also allows for “selective enforcement,” to put it mildly. Why is it that Wesley Snipes gets a prison sentence, but known tax cheat Tim Geithner gets promoted to Secretary of the Treasury? Maybe Tim should be Wesley’s cellmate. Throw tax cheat politician Charlie Rangel in the slammer too for good measure.

Judicial Activist Smackdown July 1, 2010

Posted by David Bookstaber in Judiciary.
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Justice Scalia added a concurrence in McDonald v. Chicago (starting p.52) to slam Justice Stevens for his judicial activism. My favorite excerpts, edited for clarity:

JUSTICE STEVENS [claims] that it is the courts’ prerogative—indeed their duty—to update the Due Process Clause so that it encompasses new freedoms the Framers were too narrow-minded to imagine. … (Why the people are not up to the task of deciding what new rights to protect, even though it is they who are authorized to make changes, see U. S. Const., Art. V, is never explained.) … It is only we judges, exercising our “own reasoned judgment,” who can be entrusted with deciding the Due Process Clause’s scope … which basically means picking the rights we want to protect and discarding those we do not.

JUSTICE STEVENS insists that he would not make courts the sole interpreters of the “liberty clause”; he graciously invites “[a]ll Americans” to ponder what the Clause means to them today. The problem is that in his approach the people’s ponderings do not matter, since whatever the people decide, courts have the last word.

JUSTICE STEVENS abhors a system in which “majorities or powerful interest groups always get their way,” but replaces it with a system in which unelected and life-tenured judges always get their way. That such usurpation is effected unabashedly—with “the judge’s cards . . . laid on the table”—makes it even worse. In a vibrant democracy, usurpation should have to be accomplished in the dark.

Put Unions in the Chain of Liability March 12, 2010

Posted by David Bookstaber in Judiciary, Open Questions, Unions.
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Unions negotiate the conditions of employment and work performance for their members, typically in an adversarial relationship with an employer. If unions truly represent their members, then why don’t they accrue any liability for their members’ work behavior?

After all, if an employee causes some injury or damage in the course of employment, tort law generally puts the employer right near the head of the chain of liability. But when a union has negotiated the circumstances and rules of employment and work, why aren’t they more liable than the employer? (Assuming, of course, that the employer is in compliance with the labor contract.)

I raised the question in response to a strange and unfortunate case mentioned in the Independent blog.

But I am truly confused: For union shops in general why isn’t the chain of accountability — and hence, liability — Employee -> Union -> Managers -> Corporation -> Shareholders?

Lazy Law: The Backlash November 24, 2009

Posted by David Bookstaber in Judiciary.
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Looks like activists across the political spectrum are uniting against a problem I previously termed “Lazy Law.” As Harvey Silverglate illustrates in his book Three Felonies a Day federal criminal law is so comprehensive and vague that almost anyone can be construed as having broken some law. Which means that prosecutors can indict practically anyone they wish.

NYTimes offers an interesting survey of the movement.

Edwin Meese III, who was known as a fervent supporter of law and order as attorney general in the Reagan administration, now spends much of his time criticizing what he calls the astounding number and vagueness of federal criminal laws.

“It’s a violation of federal law to give a false weather report,” Mr. Meese said. “People get put in jail for importing lobsters.”

What About Universal Legal Care? September 5, 2009

Posted by David Bookstaber in Healthcare, Judiciary.
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Since government already has its sleeves rolled up to reform the healthcare industry, Richard Rafal offers “A Doctor’s Plan for Legal Industry Reform” along the same lines.  Which only seems fair — after all, if the U.S. Constitution provides for any universal right to healthcare it has hidden that right in its “penumbras.”  But it explicitly enumerates universal rights to legal care (legal counsel, due process, speedy trials, the right to petition the government, etc.).  The judicial system is our last governmental defense against infringement of our inalienable rights, but these days it is practically inaccessible except through the legal cartel.

Rafal’s Legal Industry Reform is worth reading in full, but here are some highlights to get you started:

Each potential legal situation will be assigned a relative value, and charges limited to this amount. Program participation and acceptance of this amount is mandatory, regardless of the number of hours spent on the matter. Government schedules of flat fees for each service, analogous to medicine’s Diagnosis Related Groups (DRGs), will be issued. For example, any divorce will have a set fee of, say, $1,000, regardless of its simplicity or complexity….

Legal “death panels.” Over 75? You will not be entitled to legal care for any matter. Why waste money on those who are only going to die soon? We can decrease utilization, save money and unclog the courts simultaneously. Grandma, you’re on your own.

Ration legal care. One may need to wait months to consult an attorney. Despite a perceived legal need, physician review panels or government bureaucrats may deem advice unnecessary. Possibly one may not get representation before court dates or deadlines. But that’ s tough: What do you want for “free”?

Why Government Must Be Small: The Unseen May 30, 2009

Posted by David Bookstaber in Government, Judiciary.
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John Hasnas illuminates Frederic Bastiat’s 1850 essay, “That Which is Seen, and That What is Not Seen.”  An essential point of these essays is that when government acts to pass or enforce a law it (hopefully) does so to achieve some positive result.  However, it is difficult if not impossible to foresee all of the secondary and collateral consequences of an action, which may be detrimental to others.  These “unseen” victims of action or inaction deserve as much consideration as the proximate beneficiaries of an action.

Big government and its advocates tend to tout the positive primary effects of acts.  They downplay negative side effects, and they tend not to temper their enthusiasm for action to effect positive change with the unpredictable and unknowable secondary effects.  This Knightian uncertainty is a fundamental argument for minimalist government.

Hasnas gives some excellent examples that should give the current government pause:

One can have compassion for workers who lose their jobs when a plant closes. They can be seen. One cannot have compassion for unknown persons in other industries who do not receive job offers when a compassionate government subsidizes an unprofitable plant. The potential employees not hired are unseen.

One can empathize with innocent children born with birth defects. Such children and the adversity they face can be seen. One cannot empathize with as-yet-unborn children in rural communities who may not have access to pediatricians if a judicial decision based on compassion raises the cost of medical malpractice insurance. These children are unseen.

One can feel for unfortunate homeowners about to lose their homes through foreclosure. One cannot feel for unknown individuals who may not be able to afford a home in the future if the compassionate and empathetic protection of current homeowners increases the cost of a mortgage.

In general, one can feel compassion for and empathize with individual plaintiffs in a lawsuit who are facing hardship. They are visible. One cannot feel compassion for or empathize with impersonal corporate defendants, who, should they incur liability, will pass the costs on to consumers, reduce their output, or cut employment. Those who must pay more for products, or are unable to obtain needed goods or services, or cannot find a job are invisible.

Better that 99 go unaided than 1 be improperly treated March 5, 2009

Posted by David Bookstaber in Healthcare, Judiciary, Markets, Regulation.

Wyeth v. Levine struck me as a horrendous decision.  As the WSJ summarized from the dissent:

Justice Alito’s larger point is that “drug labeling by jury verdict” undermines the workability of the federal drug-labeling regime. Juries are presented with tragic plaintiffs who were injured, not the unknown patients who are helped, by a product. Hence, they tend to focus on risks more than overall benefits. By contrast, federal regulators are tasked to take the long view and factor in the interests of all potential users of a drug. 

The existing regulatory tax (i.e., the FDA approval process) on development and sale of drugs is already so high that consumers are certainly being harmed, being deprived of life-saving products that would otherwise be available to them.  This decision now allows individual states to unilaterally impose additional tort taxes, which harm the ability of interstate corporations and consumers to engage in mutually agreeable commerce.

I searched the blogosphere trying to understand how six of this Supreme Court’s judges could have backed this decision (best summary is here).  The only supportive analysis I could find suggested that this decision was really about federalism: preserving the rights of the states to not be preempted by the federal regulation.  But Overlawyered has a concise rebuttal to that notion:

Federalism is a two-way street, and permitting states to impair interstate commerce through a litigation tax upsets the federalist structure of the Constitution.

Stevens’ majority opinion notes, “Congress has repeatedly declined to preempt state law….”   So hopefully Congress can promptly close the floodgates of harmful litigation this decision just opened.

Rethinking Prison February 11, 2009

Posted by David Bookstaber in Human Markets, Judiciary, Open Questions.

I previously lamented our society’s increasing dependence on imprisonment as a means of providing “justice.”

Anthony Gregory has an excellent discussion of this issue in the context of the current California prison system.

It seems clear that American-style imprisonment is an ineffective form of justice: It does provide deterrence to most criminals, but in general it is a poorly tailored punishment (except, perhaps, with respect to crimes of kidnapping).  It does not effectively reform criminals — in fact, it often seems to harden them.  It does not protect society from the criminally disposed, except when they are given life sentences.  And it certainly does not serve any interests of restitution, as Gregory notes:

Each prisoner costs taxpayers thirty-five thousand a year. Victims are not made whole, but forced to foot the bill to house their perpetrators. The state used to have some restitution centers through which white-collar convicts could work and pay back their victims as well as some of their detention costs—but these were closed down last month. State officials said the program was too expensive. Only government could lose more money making people work than just locking them up, feeding and clothing them.

Reform is a difficult problem, and tailored punishment may be easy (and fun) in principle but we can leave that for another discussion.  If society feels justified in taking away the freedom of convicts, why can’t it profitably employ them?

Evidently government cannot profit from slave labor, but surely for-profit enterprises can.  There has been a lot of criticism of “for-profit prisons,” but those are not what I have in mind.  For-profit prisons simply try to do in a more cost-effective manner what government prisons do, which is to confine and care for large populations of criminals. They are not permitted to exploit prisoners as slave labor.

Unfortunately, twentieth-century Russian Communists gave penal labor a bad name (“Gulag”).  But that doesn’t mean that a more open and capitalist society like ours can’t profit from prisoners within reasonable bounds of justice.


QOTD: Make Consumers Buy Their Own Insurance February 21, 2008

Posted by David Bookstaber in Judiciary, Markets, Real Estate.
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You can buy insurance against various misfortunes that might befall you.  You can also play our “jackpot justice” system and try to cash in on someone else’s insurance.  The problem with the latter option is that it is fraught with moral hazards.

Corey Cohen offers an excellent solution that extends a proven concept:

Title insurance is little more then a mandated malpractice policy for lawyers that is purchased, in most cases in its entirety, by the homeowner. If a “title defect” occurs, the title insurance completely indemnifies the lawyer who performed the contracted service. In those states that don’t require title insurance, a form must be completed that releases the lawyer from responsibility for forged or poorly performed searches. Either way, the potential injured party, the borrower, is responsible for the cost.

I don’t understand why other providers of goods and services aren’t allowed to mandate upfront indemnification. I’m sure that if given the chance, large retailers like Wal-Mart, which face expensive lawsuits related to in-store injuries, would love a chance for “pay-as-you-go” legal coverage. They could collect a dollar at the door from customers to cover any injury that might occur in the store, or have them sign a waiver releasing the corporation from any injuries that occur from things other then falling prices.

As an emergency physician I would welcome the ability to request payment for individual indemnification on a patient-to-patient basis like the government-mandated, consumer-purchased “malpractice” policy that protects my brethren in the legal profession.

I.e., at least make customers pay for their lottery ticket if they want the right to sue.  And give people like me who don’t want to pay these jackpots a chance to opt out.

Justice For Sale November 16, 2007

Posted by David Bookstaber in Judiciary.
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Retired Justice O’Connor laments the fact that politicized judicial elections in many states have decreased public confidence in the impartiality of the courts. She shills for her profession by suggesting that civic education and merit-based judicial appointments can solve this problem.

The reality is that judges themselves bear most of the blame for the politicization of the judiciary. An impartial judiciary is an essential part of American government, but judges in recent generations have increasingly taken on activist roles. Since they increasingly usurp functions of the legislative and executive branches it is no longer enough to ask whether they are “qualified.”

Justice O’Connor tries to whitewash the actions of judges in my home state of Pennsylvania for accepting “a legislatively enacted pay raise.” The real story on the 2005 pay raise scandal is that it was an unconstitutional act. Even though it was quickly repealed for everybody in government, the judges (amusingly, citing a different clause in the constitution) ruled that the unconstitutional pay raise could not be repealed for them.

Perhaps some blame could be apportioned to constitutions that offer The People little recourse for reigning in activist judges. In Pennsylvania judges only face retention votes every ten years, and there is no constitutional mechanism for recalling them.

Of course, constitutional reforms wouldn’t be necessary if judges took down the “For Sale” signs and returned to their traditional calling as impartial adjudicators of the law.

Judicial Monopoly November 8, 2007

Posted by David Bookstaber in Judiciary, Regulation.

I see no reason why a government should impose a judicial monopoly on civil affairs. If two parties are competent to enter into a contract, then they should also be competent to agree on how that contract should be adjudicated.

Indeed, when given a choice it seems that many American entities would rather have their first appeal through manifestly more cheap and efficient private arbitration. However, the WSJ yesterday noted that the Trial Bar Lobby is tired of losing its monopoly on civil litigation. Which brings us the Arbitration Fairness Act, which “would outlaw pre-dispute arbitration agreements in the future for all private contracts involving consumers, employment and franchising.”

An earlier post here noted the beauty of competition in regulation in principle. The WSJ points out that competition in civil litigation (through arbitration agreements) has proven itself an effective alternative to government monopoly in practice:

Even lawyers concede its virtues. In 2003, an American Bar Association survey found that 78% of lawyers “believe that arbitration is generally timelier than litigation, and 56% feel it is more cost effective.”

One could imagine that without any government oversight a particular industry could form an arbitration cartel at the expense of its customers, but the government already guards against that:

Under existing law, judges can throw out arbitration agreements tilted too far in favor of one party, so most arbitration clauses tend to give the consumer a reasonably fair shake. University of Kansas law professor Stephen J. Ware says that even in cases where arbitration contract terms are more favorable to sellers, the result is generally lower prices for consumers, because the cost of lawyering has been stripped out. “Recognition of this has been standard in the law-and-economics literature for at least a quarter of a century,” he notes.

Lazy Law October 30, 2007

Posted by David Bookstaber in Government, Judiciary.

Tim Wu delves into fascinating examples of what I would call lazy law: The legislature passes all sorts of laws, but the executive only enforces the ones that are generally palatable, or in which the public has particular interest at a particular point in time. There are adherents to the philosophy of prosecutorial discretion but to me this system seems upside down.

The problem is that this system leaves our legal landscape littered with laws that lie in wait like landmines. Anyone who steps on them is at the mercy of the prosecutorial authority. If the authority is looking to score political points (e.g., Spitzer, Nifong) or is being pressured by a special interest, or is simply in a bad mood, then a hapless citizen following a well traveled path gets blown up.

Our system of government is not designed to impose an appropriate level of accountability on prosecutors who enjoy such discretion.

If we had a strong culture of jury nullification perhaps this could work. (This would in effect reduce to a system of Common Law, like the one advocated by John Hasnas.)

QOTD on Judicial Activism August 10, 2007

Posted by David Bookstaber in Government, Judiciary.
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Roger Pilon:

James Madison stood for limited government, not wide-ranging democracy. His first principle was that in wide areas individuals are entitled to be free simply because they are born free. His second principle was that in some areas majorities are entitled to rule because we have authorized them to.

Yet we repeatedly see conservative jurists, as [in Abigail Alliance for Better Access to Developmental Drugs v. Eschenbach], ignoring the true Madison — deferring to the legislature when their duty, as Madison put it, is to stand as “an impenetrable bulwark against every assumption of power in the legislative or executive.”

Federalism and Tort Law May 2, 2007

Posted by David Bookstaber in Judiciary, Markets, Regulation.
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Michael Krauss’s summary essay in the WSJ today led me to his wealth of scholarship on issues of liability that cross govermental jurisdictions, including his analysis with Robert Levy, “Can Tort Reform and Federalism Co-Exist?

At present our nation’s tort laws add a liability premium to all commercial transactions. When you buy something you pay the fair market value of that good or service, plus something extra to cover the seller’s liability insurance. Krauss writes, “Outlays, including the costs of litigation, consume upwards of 2.8% of GDP, and the share of that going to plaintiffs’ lawyers is roughly $50 billion.”

2.8% may not seem like a very high fee to keep our goods and services safe. But it is not levied evenly: We know of plenty of legitimate industries that have been destroyed in the past (asbestos, private aviation) or that even now are in mortal danger (healthcare, firearms, chemicals) from tort law.

Besides, the nature of tort law in this country — what with forum-shopping and interstate commerce — is such that the most costly state regimes are imposed on everyone.

Suppose, however, a federal law declared that the laws and rules governing product liability applicable to a given product are the rules of the state where that product was first sold at retail.

Thus, if a West Virginian bought his lawn mower in Maryland, it would be Maryland law that determined product liability, even if an accident involving an alleged defect happened later in West Virginia. (Labeling is generally easy and would provide reliable identification of the state of first sale.) Manufacturers could now price goods in each state to reflect that state’s liability rules — allowing consumers to pay for the liability protection they wanted. Competition would provide consumers with knowledge of what this all means. West Virginia retailers would have a keen incentive to explain to consumers how they receive greater protection — in return for a higher purchase price — much as current retailers of name-brand products have an incentive to stress the reasons why the brand they sell carries a premium price as compared to generics.

The Insular U.S. Legal Profession January 27, 2007

Posted by David Bookstaber in Education, Judiciary.

Woe unto you, lawyers! for ye have taken away the key of knowledge: ye entered not in yourselves, and them that were entering in ye hindered. – Luke 11:52

The U.S. legal profession is a snooty club, where the price of admission is three unproductive years in law school and $120k. You cannot practice law in this country without undergoing this initiation. There are pretenses of this bar protecting consumers and the legal system. But the legal bar associations — like most lawyers (and, it seems, better business bureaus generally) — are more concerned with protecting their own reputations than with ensuring the quality of legal services available to consumers or the integrity of justice. (As Jesus would tell them, “[ye] make clean the outside of the cup and the platter; but your inward part is full of ravening and wickedness” Ibid:39.)

Cameron Stracher turns toward this elephant in the court in his essay, “Meet the Clients.”

There appears to be an emerging consensus that although law schools may teach students how to “think like a lawyer,” they don’t really teach them how to be a lawyer. It is hard not to agree. One of the biggest problems with the current state of legal education is its emphasis on books rather than people. By reading about the law rather than engaging in it, students end up with the misperception that lawyers spend most of their time debating the niceties of the Rule Against Perpetuities rather than sorting out the messy, somewhat anarchic version of the truth that judges and courts care about. When they graduate, young lawyers rarely know how to interview clients, advocate for their positions, negotiate a settlement or perform any number of other tasks that lawyers do every day. In short, they are woefully unprepared to be lawyers, despite the outrageous hourly fees charged for their services.

In addition to misleading students, the current system harms clients who often assume that their lawyers have more experience than they do.

The state bars profess interest in protecting the public, but none seem to care whether new lawyers can actually do the tasks with which they will soon be confronted.

The legal profession is a trade, for which we need masters and apprenticeships — not degrees and bars. This is not to say we shouldn’t have legal academics. Let them roam the halls of private universities and think tanks along with ethicists, artists, and historians. Just don’t make them part of the initiation requirements for every legal craftsman.

Law is not brain surgery. It is a skill that can be acquired through practice and repetition.