Existing explanation of lawyer licensing focusing on the need to ensure lawyer quality are unconvincing. A license to a practice is a dubious signal of quality, the licensing requirement restricts the availability of legal services, and state licensing is subject to political capture by lawyers. There criticisms of lawyer licensing laws are increasingly important as the current system is threatened by changes in the legal services market and increased federal regulation of the legal profession. It is, therefore, time to reexamine the theory underlying the state licensing system. This Article provides an alternative rational for state licensing requirements. Lawyer licensing encourages lawyers to participate in lawmaking by capitalizing the benefits of their law-improvement effort in the value of the law license. In other words, the license gives lawyers a kind of property right in state law. State competition gives lawyers an incentive to favor welfare-maximizing state laws that make the state attractive as a location for businesses and a forum for litigation. This theory has important implication for both federalism and the scope and nature of lawyer licensing requirements.

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