The Law and Economics of Lawyers: Evidence from the Revolving Door in China’s Judicial System

Zhuang Liu, Wenwei Peng, Shaoda Wang and Daniel Yi Xu

No 20145, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines how power lawyers shape judicial and economic outcomes by studying the “revolving door†between judges and lawyers in China’s judicial system — namely, former judges who quit the bench to practice law. In otherwise identical lawsuits, revolving-door lawyers deliver 8 − 23% higher win rate for their clients. Their performance in home versus away courts suggests these gains stem from both “know how†and “know who.†We extend the theoretical framework of Dewatripont and Tirole (1999) to show that revolving-door lawyers create countervailing forces in society: they enhance judicial decision-making through evidence and reasoning, but also exploit strategic arguments and connections to bias outcomes in favor of their clients. We estimate a structural model of the judicial process to quantify these trade-offs and find that increasing the supply of power lawyers can have a non-monotonic effect on equilibrium judicial quality.

JEL-codes: K0 (search for similar items in EconPapers)
Date: 2025-04
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