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

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

#61

Post by anamax »

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…

> The market dynamics and model are entirely different with these sorts of emergency industries.

Would you call auto-repair an emergency industry? After all, if you break down on the side of the road, you need assistance immediately?

The vast majority of medical care is NOT given in an emergency situation. The same is true of legal services. And yes, auto repair as well.

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

#62

Post by javert »

dantheman wrote: post #40
javert wrote: post #31

Earlier quoted context omitted.

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.

The fact that there is a bar and licensing means that it's not a free market.

Bingo.

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

#63

Post by wavephorm »

nextparadigms wrote: post #8

Any way this market can be disrupted? Maybe through some more efficient/decentralized/AI-based services that would do much of the lawyer's jobs, forcing them to reduce their billing rates?

Docracy was posted to HN recently:

http://news.ycombinator.com/item?id=3666478

It's really limited or just starting out, no EULA's or anything that I can personally actually use.

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

#64

Post by Symmetry »

jerrya wrote: post #34
baddox wrote: post #27

Earlier quoted context omitted.

I don't think that becoming dependent on a particular product, service, or supplier makes it "not a free market."

http://en.wikipedia.org/wiki/Free_market#Overview Adam Smith believed that an economy should be free of monopoly rents If I can keep you from switching lawyers, if I can keep you from interviewing other lawyers, if I know your choice is not "lawyer or no lawyer", but "which lawyer", then I can keep my prices artificially (not a free market) high.

Erm, how is that different than food? You can't choose not to buy food, so would you also consider that not to be a free market?

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

#65

Post by javert »

jerrya wrote: post #36
javert wrote: post #31

Earlier quoted context omitted.

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.

That's not the claim I made, and you didn't address the claim I made. I said: the consumer cannot just walk away. If I am buying a stereo, my choice is between a) do I need a stereo or not, and b) where do I buy it. The purchaser of law services usually does not have the option of walking away from the deal entirely. His/her choice is limited to: which of these expensive lawyers do I go with?

You also can't claim it's not a free market because you actually need the thing you're in the market for.

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

#66

Post by mfaustman »

This whole argument that this is "not a free market" is silly. None of the factors pointed to here would actually limit choice or restrain price movement. It is a free market, but that does not mean that the market lacks information asymmetries that would artificially morph prices.

As Antone points out, there is a strong quality perception issue. Ironically, it is the Bottom Line Law Group that is fighting this perception of quality on a daily basis (vs a Wilson or Fenwick). Thus it does not matter if the supply increases if the consumer perceives the bottom-end as an inferior good.

This skewed perception is rooted in a total lack of transparency in the legal industry. This lack of transparency limits the consumer’s ability to find lawyers like Antone, and keeps the cost of standard information and a simple opinion high.

I agree with Antone that the industry is on the brink of change, but it is a BIG messed up industry. Change will come in many forms within the industry's mirco verticals. It will come from networks of smaller more specialized law firms such as the Bottom Line Law Group, and from innovations which create more transparency in the industry to find qualified attorneys and access quality information.

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

#67

Post by ShabbyDoo »

thinkcomp wrote: post #59
rodyancy wrote: post #57

Earlier quoted context omitted.

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.

You do already, I think (speaking of The US).

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

#68

Post by andylei »

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…

> regulatory capture of government protected guilds

this just doesn't align with evidence. if it were true, there would be too few lawyers, not too many lawyers.

i'm not saying the effect you describe never happens, but when it does, there is not enough supply, driving prices up (this is probably the case in medicine, where there are not enough doctors, driving prices up)

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

#69

Post by javert »

ktizo wrote: post #53
javert wrote: post #31

Earlier quoted context omitted.

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…

That's a description of a free market, but not a definition.

(The OECD saying it's a definition don't make it so.)

A proper definition is: A market wherein all exchanges are voluntary, i.e., no force is involved.

But yeah, it's far from a free market. I'm with you there. That doesn't mean we can sunder the term "free market" and say it's not a free market for a bunch of made-up reasons, which is what I was countering.

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

#70

Post by Symmetry »

kwekly wrote: post #17

"Back to Econ 101. What happens when you double the price of something? Demand for it decreases." Pretty sure what he's describing is sliding the supply curve straight up, which has exactly the opposite effect.

A doubling in the price can either be due to an increase in demand or a decrease in supply. In this context, though, its pretty clear that the author is talking purely about shape of the demand curve, not about the supply curve at all.
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