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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?

#161

Post by rayiner »

randomdata wrote: post #78
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?

I would like to have the choice, yes. I still can choose to pay more for someone with a demonstrable history, but if I want to take the risk on an unknown and save some money in the process, why shouldn't I be able to?

You can. The ABA's licensing requirement does very little to constrain supply. There are way more lawyers graduating each year than there are jobs at big firms. So you can easily go on craigslist and find a lawyer who will work for $30 an hour to get some experience.

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

#162

Post by rprasad »

rayiner wrote: post #155

The legal field isn't really amenable to simplistic economic analysis. With all due respect to thinkcomp, the idea that licensing requirements are what is driving the cost of legal services is totally wrong. First, legal services generally aren't that expensive. If you need someone to help you draft a deed to some property, you can probably get that work done for cheaper than you would pay an engineer to design you a…

Re: 1) Because it is difficult to tell whether your lawyer did a bad job or whether you just had a bad case, branding and signaling becomes tremendously important. It is that branding and signaling that makes companies keep going to firms that hire primarily from the top schools, even when there is nothing, legally, that prevents them from taking it to firms that have more diverse hiring standards.

Re: 2) The adversarial nature of law means that there is an arms race for the smartest people. While a lot of even high-end legal work can be very routine and boring, some of it can be very complex. That 10% of legal work that requires out-thinking the opposing counsel can have major repercussions for companies, and as such companies are willing to spend the money to ensure that their lawyers are smarter (at least on paper) than the opposing party's lawyers.

This. Agree that these are the primary factors in the insane legal costs for high-value clients (corporations and high-net worth individuals). Also agree that for most folks, it is possible to find a good lawyer to do a will for under $500, an amicable divorce for under $800, or do all the filing to launch a business for under $400.

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

#163

Post by wtvanhest »

DevX101 wrote: post #93
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.

|Since the only way to know if you are hiring the right lawyer is to base it on brand I suspect there's an opportunity for disruption here. Google doesn't hire most of their engineers based on 'brand'. They hire based on ability. If one were to create an efficient way to identify GOOD lawyers from middle tier firms and these solo outfits, this may wrest a good amount of business from top tier firms.

Google doesn't hire most of their engineers based on 'brand'. They hire based on ability.

Someone who works at Google could have better input, but my understanding is that they choose top brand name schools to recruit from. And they recruit from top startups that they acquire.

Also, the discussion about lawyers is not about hiring individuals, it is about hiring an individual within a firm. A firm which has resources to back that lawyer.

--But, you are right that being able to identify great lawyers at mid tier firms would lead you to a very interesting business. If you can figure it out, please recruit me and give me options. :)--

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

#164

Post by rayiner »

learc83 wrote: post #86
andylei wrote: post #68

Earlier quoted context omitted.

> 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)

It's not just about the number of lawyers, but also the cost to become one. In the US, unlike many other countries, practicing law requires a graduate degree from an accredited school. This dramatically adds to the cost of a legal education, and drives up the price for everyone. This is the direct result of "regulatory capture of government protected guilds."

It doesn't make sense to concede that there is a high supply of lawyers and still argue that cost is driving up prices. The price of a service depends on the supply of the service and the demand curve. At a given level of supply, it is irrelevant what the cost of providing the service is, that will not change the cost.

It's valid to make the "guild" argument and say that the education requirement is driving up prices, but only if you argue that the education requirement is artificially restricting supply. When ABA-accredited schools are graduating about twice as many students as are getting hired, that's a difficult argument to make. Would salaries really go down if you added an entire category of potential hires below the current group that already isn't getting hired?

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

#165

Post by nl »

Daniel_Newby wrote: post #157
law wrote: post #109

Earlier quoted context omitted.

I don't understand your first point. Nothing precludes a non-lawyer from reporting an attorney's misconduct. However, the fact that they cannot be compelled to by statute irrefutably proves my point: that the practice of law must be (self-)regulated. Regarding your second, the fact that you pay your company's taxes is irrelevant. "You" can be substituted by any other shareholder or partner; the shareholders/partners…

> Nothing precludes a non-lawyer from reporting an attorney's misconduct. However, the fact that they cannot be compelled to by statute irrefutably proves my point: that the practice of law must be (self-)regulated. Failure to report a crime is a crime. For everybody.

Failure to report a crime is a crime. For everybody.

That's not true. In the US the offence still exists, but:

This offense, however, requires active concealment of a known felony rather than merely failing to report it.[1]

In most other English speaking jurisdictions the crime itself has been abolished.

[1] http://en.wikipedia.org/wiki/Misprision_of_felony

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

#166

Post by nknight »

Daniel_Newby wrote: post #157
law wrote: post #109

Earlier quoted context omitted.

I don't understand your first point. Nothing precludes a non-lawyer from reporting an attorney's misconduct. However, the fact that they cannot be compelled to by statute irrefutably proves my point: that the practice of law must be (self-)regulated. Regarding your second, the fact that you pay your company's taxes is irrelevant. "You" can be substituted by any other shareholder or partner; the shareholders/partners…

> Nothing precludes a non-lawyer from reporting an attorney's misconduct. However, the fact that they cannot be compelled to by statute irrefutably proves my point: that the practice of law must be (self-)regulated. Failure to report a crime is a crime. For everybody.

Irrelevant. Violation of a legal obligation is not the same thing as commission of a crime. An act may simultaneously be a violation of legal ethics and a crime, but usually not. Ethics violations are punishable by, amongst other things, civil sanctions, fines and disbarment, but not criminal penalties.

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

#167

Post by geebee »

antonej wrote: post #141
puppop wrote: post #2

Because there are no H-1B lawyers.

Lawyers from other countries can and do come to practice in the US. It typically means getting an extra degree (LL.M.) and taking the state bar exam, but I've known a few people, particularly transactional lawyers from Canada, who seem to have made this transition. In general it would be easier coming from a common-law country like Canada, UK, Australia, etc.

A few states allow this, but I don't think most do...

From

http://www.americangraduateeducation.com/articles/en/post-ma...

"In order to sit for the bar examination, most states require an applicant to hold a Juris Doctor (J.D.) degree from an American Bar Association (ABA)-approved law school. For those individuals who have not earned a J.D. degree from an ABA-approved law school, bar admission authorities have developed varying requirements and criteria to ascertain if such individuals meet the minimum educational requirements for bar admission. In most U.S. jurisdictions, individuals who lack a J.D. are ineligible to take the bar exam..."

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

#168

Post by rprasad »

DevX101 wrote: post #93
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.

|Since the only way to know if you are hiring the right lawyer is to base it on brand I suspect there's an opportunity for disruption here. Google doesn't hire most of their engineers based on 'brand'. They hire based on ability. If one were to create an efficient way to identify GOOD lawyers from middle tier firms and these solo outfits, this may wrest a good amount of business from top tier firms.

This will not happen, and it is a poor avenue for "disruption".

There are plenty of good lawyers from middle tier firms, solo outfits, and boutique (i.e., specialty) firms. These practitioners already service the vast majority of people needing legal assistance (including small-to-medium businesses).

Corporations choose BigLaw not because they're the best (boutiques and specialized mid-tier firms generally produce higher-quality results in any given area of law), but because BigLaw firms have the resources and capabilities to handle anything that a large corporation can throw at them. When you're dealing with dozens or hundreds of litigation cases across the country in a dozen or more areas of the law, you go with a BigLaw firm b/c that one firm can handle all of your legal matters, reducing complexity and cost.

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

#169

Post by rprasad »

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?

You mean like Lexis, Westlaw, LoisLaw, LegalZoom, and RocketLawyer have been doing for the past decade or so?

The problem is that at some point, you're paying a premium for a lawyer's skill in knowing what to do and for taking on the risk of being wrong, since you can sue the lawyer for malpractice if they fuck up.

Think of it like programmers: with all that open source code out there and all those GUIs, programmer's rates should be going down. Instead they're going up (at least for the good-to-great programmers): once the market has corrected for reduced costs, it readjusts upwards to correct for increased competition for talent.

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

#170

Post by rprasad »

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?

The irony is that BigLaw was the disruption -- the standard legal model until the 1960s was to have small, local firms. What we think of today as mid-tier firms would have been considered behemoths in those days.
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