Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers? • Hacker News Board

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#51

Post by circa » Tue, Mar 06, 2012, 10:05 PM UTC

bane wrote: post #11

jerrya wrote: post #6

This may not apply to the world of corporate lawyers the answer seems to be about, but at a smaller level, there are enormous switching costs involved in moving away from, and training a new lawyer. And it's not a free market. In a free market, the consumer can walk away from a purchase. Most times individuals or small businesses need a lawyer, they are in no position from walking away. They need a lawyer. And they n…

"They need a lawyer. And they need to stop spending time searching, and get on with resolving. So a lot of claims from lawyers that they operate in a free market are really not true. They mistake what are basically extortion/price gouging rates for free market pricing." It's interesting because the same fundamental problem is true of health care in the U.S. It's essentially, "they need a doctor. And they need to stop…

I hope your username is for the band and not the batman character. :)

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#52

Post by Anechoic » Tue, Mar 06, 2012, 10:06 PM UTC

wtvanhest wrote: post #14

The unobvious but major thing missed is that hiring the wrong lawyer is far more expensive than an additional $300 per hour. Since the only way to know if you are hiring the right lawyer is to base it on brand, top firms have a lot of pricing power and middle firms dissapear.

The unobvious but major thing missed is that hiring the wrong lawyer is far more expensive than an additional $300 per hour

You could say the same for any number of industries - hire the wrong structural engineer and that bridge or building will collapse, hire the wrong nuclear engineer and attack sub might run out of power while engaging the enemy, hire the wrong electrical engineer and the airliner's control system may fail, etc - and yet only very few people in those industries can ask for over $250/hr.

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#53

Post by ktizo » Tue, Mar 06, 2012, 10:07 PM UTC

javert wrote: post #31

jerrya wrote: post #6

This may not apply to the world of corporate lawyers the answer seems to be about, but at a smaller level, there are enormous switching costs involved in moving away from, and training a new lawyer. And it's not a free market. In a free market, the consumer can walk away from a purchase. Most times individuals or small businesses need a lawyer, they are in no position from walking away. They need a lawyer. And they n…

So a lot of claims from lawyers that they operate in a free market are really not true. A free market isn't defined by whatever arbitrary criteria you make up. You can't claim it's not a free market because it's a hassle to switch lawyers, or because it's expensive to do so, or because searching for lawyers takes time.

Here's a nice definition from the OECD website's glossary of statistical terms;

"A free market economy is one where scarcities are resolved through changes in relative prices rather than through regulation. If a commodity is in short supply relative to the number of people who want to buy it, its price will rise, producers and sellers will make higher profits and production will tend to rise to meet the excess demand. If the available supply of a commodity is in a glut situation, the price will tend to fall, thereby attracting additional buyers and discouraging producers and sellers from entering the market. In a free market, buyers and sellers come together voluntarily to decide on what products to produce and sell and buy, and how resources such as labour and capital should be used."

Given this definition, it is hard to see how there could ever exist a free market in professional legal services and surely only a fool (or possibly a lawyer), would seek to argue that there is one in existence already given the overwhelming evidence to the contrary.

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#54

Post by nickik » Tue, Mar 06, 2012, 10:10 PM UTC

learc83 wrote: post #48

thinkcomp wrote: post #41

There are all sorts of reasons, but first and foremost is the lack of transparency in all things legal. This is why I'm working on PlainSite ( http://www.plainsite.org ). The opacity creates the illusion of difficulty, the need for (arbitary) specialized knowledge, and uncertainty as to the real price because so many factors are hidden from view. For example: you're expected to follow the law even without knowing wha…

>More lawyers could afford to charge reasonable market rates, and not work for large firms, if it weren't for the ABA mandating that you have to attend a law school (that results in huge piles of debt) or clerk for years (four in California) in order to join the bar. That's exactly the problem, regulatory capture of government protected guilds. It's exactly the same with Doctors and the AMA, or electricians, hell in…

Absolutly agree with this. There is a nice episode of the Econtalk podcast that talks about the "guilds"-Problem.

Here is the Abstract: "Clifford Winston of the Brookings Institution talks with EconTalk host Russ Roberts about the market for lawyers and the role of lawyers in the political process. Drawing on a new co-authored book, First Thing We Do, Let's Deregulate All the Lawyers, Winston argues that restrictions on the supply of lawyers and increases in demand via government regulation artificially boost lawyers' salaries. Deregulation of the supply (by eliminating licensing) would lower price and encourage innovation. " --> http://www.econtalk.org/archives/2011/09/winston_on_lawy.htm...

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#55

Post by jriley » Tue, Mar 06, 2012, 10:14 PM UTC

I would add:

1) Pay can be high with win/lose stakes

2) Different pay models (contingency)

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#56

Post by isocpprar » Tue, Mar 06, 2012, 10:15 PM UTC

puppop wrote: post #26

bane wrote: post #18

Earlier quoted context omitted.

There's a service that used to be called "Prepaid legal" with essentially a small retainer, and a minimum guarantee of services, with favorable rates when the service was used beyond that. It operated basically as a kind of legal insurance. http://en.wikipedia.org/wiki/LegalShield

Yes, some company offer that. Cheap, but you lose the case with cheap lawyers. Penny wise, pound foolish.

Why do you think you automatically lose a case with cheap lawyers? If you are bringing a weak case against someone, then perhaps using high priced lawyers will be able to bully them into submission, but if the facts are with you, then a competent lawyer should be fine. If some are so bad that you will trivially lose, then perhaps the ABA/Bar has misrepresented their qualifications?

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#57

Post by rodyancy » Tue, Mar 06, 2012, 10:16 PM UTC

learc83 wrote: post #48

thinkcomp wrote: post #41

There are all sorts of reasons, but first and foremost is the lack of transparency in all things legal. This is why I'm working on PlainSite ( http://www.plainsite.org ). The opacity creates the illusion of difficulty, the need for (arbitary) specialized knowledge, and uncertainty as to the real price because so many factors are hidden from view. For example: you're expected to follow the law even without knowing wha…

>More lawyers could afford to charge reasonable market rates, and not work for large firms, if it weren't for the ABA mandating that you have to attend a law school (that results in huge piles of debt) or clerk for years (four in California) in order to join the bar. That's exactly the problem, regulatory capture of government protected guilds. It's exactly the same with Doctors and the AMA, or electricians, hell in…

Without a regulatory body it would be too easy for an unqualified person to pose as an electrician, doctor, dentist or lawyer. Do you really want someone with no experience or training wiring your house, pulling your teeth, operating on your knee, or defending you at trial?

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#58

Post by monochromatic » Tue, Mar 06, 2012, 10:17 PM UTC

shawnee_ wrote: post #42

Traditional supply-demand economics just doesn't explain the behavior of "middleman" industries, such as lawyering, real estate agenting, etc. Traditional supply-demand economics assumes a 1:1 ratio where there is one buyer and one seller and there is some amount of economic surplus that the two parties play tug-of-war with. Traditional supply-demand economics works great when buyer and seller negotiate directly. But…

In what way are lawyers middlemen?

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#59

Post by thinkcomp » Tue, Mar 06, 2012, 10:19 PM UTC

rodyancy wrote: post #57

learc83 wrote: post #48

Earlier quoted context omitted.

>More lawyers could afford to charge reasonable market rates, and not work for large firms, if it weren't for the ABA mandating that you have to attend a law school (that results in huge piles of debt) or clerk for years (four in California) in order to join the bar. That's exactly the problem, regulatory capture of government protected guilds. It's exactly the same with Doctors and the AMA, or electricians, hell in…

Without a regulatory body it would be too easy for an unqualified person to pose as an electrician, doctor, dentist or lawyer. Do you really want someone with no experience or training wiring your house, pulling your teeth, operating on your knee, or defending you at trial?

If I want to represent myself or my company at trial, I should have that right.

Re: Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?

#60

Post by newman314 » Tue, Mar 06, 2012, 10:19 PM UTC

Anechoic wrote: post #52

wtvanhest wrote: post #14

The unobvious but major thing missed is that hiring the wrong lawyer is far more expensive than an additional $300 per hour. Since the only way to know if you are hiring the right lawyer is to base it on brand, top firms have a lot of pricing power and middle firms dissapear.

The unobvious but major thing missed is that hiring the wrong lawyer is far more expensive than an additional $300 per hour You could say the same for any number of industries - hire the wrong structural engineer and that bridge or building will collapse, hire the wrong nuclear engineer and attack sub might run out of power while engaging the enemy, hire the wrong electrical engineer and the airliner's control system…

Well, if you think about it, when you deal with a lawyer, it invariably has to deal with the law whereas the other professions only deal legalities as a result and not primary purpose. So the relative consequence is not the same.

Similarly, with the police, because they are charged with law enforcement and being equipped with guns is very different than dealing the local surly person at the market.

That's why I'm of the opinion that certain professions need a lot more oversight and avenues of recourse than others. One would be foolish to think otherwise.