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

Author

Listed:
  • John Zhuang Liu
  • Wenwei Peng
  • Shaoda Wang
  • Daniel Xu

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.

Suggested Citation

  • John Zhuang Liu & Wenwei Peng & Shaoda Wang & Daniel Xu, 2025. "The Law and Economics of Lawyers: Evidence from the Revolving Door in China’s Judicial System," NBER Working Papers 33708, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33708
    Note: DEV LE POL
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    More about this item

    JEL classification:

    • K0 - Law and Economics - - General
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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