The Advocate

Summer 2012

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How to Strengthen Your Legal Skills:
Study Economics

By Nicholas C. Stewart, Esq.

Law and economics.  These two words have appeared so often together that their pairing has lost its importance.  This article seeks to address that problem.  Many of today’s budding lawyers graduate from their institutions of higher learning with little more than an introduction to the considerable field of economics.  Yet lawyers of all ages have much to gain from economics, especially in these economically challenging times.

Let’s pause to define our terms.  Many limit the scope of “economics” to commercial market relationships, financial dealings, and quantitative analyses.  This article takes a broader approach, one that recognizes the import of economic principles to everyday life.  Rational actors respond to the creation and elimination of incentives; competition stirs innovation and progress; information is the lifeblood of success; and success (at least outside the courtroom) is not zero-sum – these principles animate many of the choices that we make on a daily basis.  “[F]or instruction in the grounds and foundations of all rational decisions,” Supreme Court Justice Oliver Wendell Holmes once aptly stated, we ought to turn to economists and sociologists. 

Greater Respect for the Rule of Law

As an initial matter, a greater appreciation for economic principles and forces can help us better understand our primary motivator as lawyers – the rule of law.  No doubt our country and communities prosper when we equally and predictably protect rights and enforce responsibilities and, thereby, create an environment of stability and certainty.  However, the practice of law has the ability to focus our attention on the law as it stands, rather than on the original purpose of the law and its practical effects.  As lawyers, we have much to offer on the latter question, given that we are on the front lines of the implementation of the law. 

If we looked closer at the state of the law, we may discover that it is the product of well-reasoned normative value judgments.  However, we may also find that certain laws are the result of noble and wrongheaded conceits, hasty calls for action in times of crisis, and the manipulations of small but powerful constituencies.  Appreciating these subtle forces allows us to see behind the proverbial veil, to identify areas of betterment, and to speak up.  It does not matter where we voice these experiences; what counts most is the exchange of ideas.  As lawyers, our charge is not only to defend the rule of law, but also to make it better.  And, as economics teaches us, information begets improvement.

Better Lawyers Inside the Conference Room and Courtroom

Economics also has the power to make us more able advocates as we come to better understand our clients.  With due regard for the exceptions, many young lawyers enter complex fields in which they have little legal experience and even less business experience.  Time will enable these lawyers to become competent in the legal niceties of their practice area.  However, our job is to do more than act as river guides who simply ferry clients across the confusing and consequential waterways of the legal system.  We are expected to be advisors, offering plain, straightforward advice – whether our clients are thinking about suing on a contract or contemplating a potential merger.  Economics can help us better understand the subject matter, structure, and financial situation of the client’s business – something that not only builds trust but that also produces more thoughtful, farsighted, and ultimately helpful legal advice.

This is true in fields like antitrust, bankruptcy, and mergers and acquisitions.  But it is also true in less obvious fields which are not always associated with the field of economics.  Take torts for example – appreciating a client’s operating procedure leads to prescriptive advice that not only minimizes the possibility of injury, but also retains competitive efficiency.  The same can be said for criminal justice – uncovering a criminal defendant’s latent motivations may lead to arguments for treatment in lieu of jail time.  These are important subtleties, and a basic training in economics is one of the better ways to be able to recognize them.

 Better Organizational Management

A practical background in economics can also make lawyers more capable participants in the business life of their firms or public organizations.  Lawyers receive plenty of schooling as to legal theories and principles, but they receive very little in the way of the actual practice of law.  Stated differently, most lawyers are not equipped to hang out a shingle even a few years after graduation.  That is not just because they face the myriad regulations governing the practice of law; it is also because they do not have the business acumen to make a successful go of it.  This includes public organizations like a local prosecutor’s office or legal services non-profit. 

Without a fair grounding in the principles of economics, we should not necessarily expect these lawyer-led entities to exhibit a keen awareness of what it takes to manage successfully.  We should not assume that they will automatically appreciate and effectively apply such “economic” principles as incentives create competition as well as discipline; information tends to get trapped in organizational silos; and a clearly communicated management structure promotes a stable work environment.

Of course, a number of larger law firms have relinquished control of their administration and management to non-lawyers who specialize in such areas – notwithstanding some limitations in various rules of professional conduct.  However, many law firms and public organizations are unable to afford such luxuries; and even those that are run the risk of losing control over culture, development, and direction. 

A Parade of “Shoulds”

So what’s the bottom line?  We become better lawyers with the help of economics.  For legal educators, this means that they should be unafraid of providing an introductory course on economics and how it relates to the law.  The book Law and Economics: A Comparative Approach to Theory and Practice by Robin Paul Malloy is a good centerpiece on which to base such a course.  It also means that legal educators would be wise to take the discussion of a case or theory one step further and consider the “economic” implications.  In other words, they should welcome the opportunity to ask questions about the intended and unintended consequences produced by a statute, regulation, or decision.  This is an invaluable way to encourage critical thinking generally as well as a greater depth of understanding about any particular issue. 

As for students, they should take it upon themselves to actively seek out instruction in economic and managerial fundamentals.  Law schools can play an important role here by partnering with business and economic departments or, at the very least, by limiting the amount of procedural hoops through which students have to jump to diversify their legal education.  As an example, The George Washington University Law School has begun to single out for students courses that incorporate economics.  It has also created a law, economics, and finance think tank and related L.L.M. program.

Finally, there are also opportunities for those of us already engaged in the practice of law.  From seminars and discussion panels to blogs and podcasts (this author recommends EconTalk as a great starting place), there are a wealth of resources that can help supplement our legal educations and experiences. 

Undoubtedly, there are many other strategies to achieve the desired result of a greater appreciation and understanding of economic principles.  This author is confident that many ideas will be more sage and applicable than his own.  The important thing is that we promote this integration of the study of economics and law, and reassert our leadership in the study of rational decisions – not just for our own edification, but for the betterment of our profession and the citizens it serves.

Nicholas C. Stewart practices employment and maritime law at Saul Ewing LLP in Washington, D.C. and can be reached at (202) 295-6629 or

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