FTC Backs Texas Bid to End ABA Control Over Law School Rules

The Federal Trade Commission dubbed the American Bar Association a monopoly for its hold on determining which law school’s graduates qualify for the state’s bar exam, endorsing a Texas Supreme Court proposal to strip its authority.

In a stern 9-page annotated letter to Texas justices, FTC officials argued that the ABA’s control over law school accreditation creates anti-competitive conditions that harm consumers by limiting the supply of lawyers while driving up legal costs. The current Texas rule requires applicants to graduate from an ABA-approved school, effectively giving the association veto authority over who can practice law in the second-largest state.

“The ABA should no longer have the final say on whether a law school’s graduates are eligible to sit for the Texas bar exam,” wrote Clarke Edwards and Daniel Guarnera, directors of the FTC’s policy planning office and competition bureau. They noted in the Dec. 1 letter that the ABA is “dominated” by practicing attorneys with strong incentives to limit competition, while its accreditation council is controlled by law school administrators interested in maintaining expensive academic programs.

Edwards was hired by the FTC as an attorney in the final month of the Obama administration and was promoted to acting director of policy planning in January. Guarnera was appointed director of the competition bureau in February.

The FTC’s intervention comes as the ABA faces mounting criticism over costly accreditation requirements and overzealous standards, including in Florida and Ohio. The Texas Supreme Court in September decided that it would have power to approve law schools under amendments to state bar rules.

The ABA’s faced this scrutiny before. The association agreed to a Justice Department consent decree in 1996 after facing antitrust claims over its law school accreditation process. A decade later, a DC federal judge held the ABA in civil contempt for violating the agreement, and ordered a $185,000 fine.

The proposed Texas amendment would make the state’s Supreme Court, rather than the ABA, the final arbiter of which law schools adequately prepare graduates for practice.

The FTC estimates that the ABA’s “onerous mandates” discourage new law schools from opening, and prevent existing schools from offering lower-cost programs. By limiting the pipeline of lawyers, these restrictions contribute to the limited access to legal aid among Americans with limited financial means.

The commission urged other states to follow Texas’ lead, calling the proposed change “a laudable first step” in disrupting an anticompetitive status quo that’s persisted for decades.