Here's a nice article from the National Law Journal, which describes the battle in some states between the legislature and the judiciary regarding who should regulate lawyers. These state skirmishes mirror recent struggles between the ABA and the federal government (Congress and administrative agencies, such as the SEC) over a variety of issues, including waivers of the attorney-client privilege and the duty to report a corporate client's misconduct.
Although the article highlights some recent developments on the state level over regulation, the battle over who regulates the bar is longstanding and is unlikely to result in a truce on either the state or federal level in the near future. If anything, I think the tension between self-regulation and external regulation will become even more pronounced in the face of a number of trends, including globalization. Any predictions about which direction professional regulation is heading in the long term?
Here's a classic article by Professor David Wilkins that addresses these questions. (Indeed, I borrowed the title of this post from his article.)