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 what the law says. When you want to find out what the law says, it's not easy--it's certainly not available in a standardized format. When you want to interpret what you find, assuming you find it, that's not easy either. Courts interpret things in new ways all the time.
The federal court system charges you to access public information contained in court proceedings, with limited exceptions--that is, if you even know where to look for it. See http://www.thinkcomputer.org/20120209.pacer.pdf. The interface is terrible and hard to use. The way in which you write lawsuits is obscure, counterintuitive, and creates additional needless work.
In addition to all of these factors, and perhaps because of them, lawyers (especially at big firms) have institutionalized fraud. It's taken for granted that legal billing is often fraudulent. If you charge $500 per hour and your system only resolves to the tenth of an hour, that means if you spent four minutes writing an e-mail, you can charge for 0.1 hours, or $50. But really you only did $33.33 of work. That's a nice cushion. But what actually happens is that an attorney might do 45 minutes of work and round it up to an hour--even though that work is formatting in Microsoft Word that the client could have done; or printing out a Word document in order to scan it in as a PDF. Still seem worth $500 per hour?
For those lawyers not at large firms, they're covering expenses (such as law school) that are enormous. High rates are a necessity, and who would charge far lower than market rates anyway? It might be interpreted as a signal that something is wrong.
Of course, don't for a minute think that paying $800 per hour will get you a better lawyer than paying $300 per hour. It might. Either way, you'll be paying someone in a staggering number of cases to unscientifically guesstimate What The Government Might Do, when the answer is, "who knows?". That doesn't mean all lawyers are the same; some are definitely better than others. But it has nothing to do with price.
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. See http://www.nytimes.com/2011/10/25/opinion/are-law-schools-an....
Lawyers know, too, that you can't get rid of them (also thanks to the ABA), and so you're locked in. There's a monopoly on business representation, for example. See http://www.plainsite.org/issues/index.html?id=137. It's absurd.
>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 some places even interior decorators.
If you've ever had to hire a commercial electrician, it's absolutely terrible. Once they pull a permit and start working, it's extremely difficult to replace them, and they know it.
Recently the general contractors in Georgia convinced the state to raise the net worth requirement for contractors. They are already required to have massive insurance coverage, so the only reason was to protect the incumbent contractors from new competition.
Anywhere you end up with government sanctioned guilds ran by industry or ex-industry people, you're just asking for regulatory capture and the resulting protectionism.
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?
On the building front, this is BS. I was an electrician in the UK, and because of the regulatory capture here in Canada it's not worth my time to become an electrician.
I'm completely unqualified as an electrician here in Canada, but I have more varied experience with electrical circuits, safety testing and literally everything to do with the job than 99% of electricians here in Canada (and the US for that matter).
I can tell you the very simple system that works for the rest of the construction industry outside of those requiring "qualifications". It's called permits and paid on completion. If the electrician doesn't pass on his permit, it doesn't reach completion and you don't pay. Why does this system work for framers, brick layers and every other trade, but it doesn't work for an electrician. Sorry that's fishy.
I legally can do my own wiring on my own house here in Canada and get it inspected by the ESA and then the building inspector to pass permit. An electrician has to pass the permit anyway. Why can I not work on someone elses house and get the ESA to pass my work? Why can I not apply for the ESA to inspect my work and verify that I'm a competent electrician. Because I would like to tell you the truth, in that only 20% of those "qualified" electricians are actually doing work to code and more importantly safely.
My stepdad was a nuclear power electrician in the Navy, but when he got out he found out that he'd have to spend years as an apprentice to someone less qualified than him in order to be licensed.
I'm sad that you've been downvoted, though I disagree with you.
Occupational licensing doesn't just improve service quality (if it improves service quality), it also increases the price. The result is often that instead of great quality, the consumer gets nothing at all because ze can't afford it. This hits the poorest people hardest. In the USA, the poor have a famously bad time with healthcare and legal advice.
There are mechanisms other than mandatory qualifications by which consumers can measure quality, including voluntary qualifications, reputation, and price signaling. These aren't perfect, but neither are mandatory qualifications. Each mechanism has advantages and disadvantages.
With healthcare at least, there are walk-in clinics and nurse practitioners. Without licensure you wouldn't have a surfeit of cheap doctors; you'd have quacks running around representing themselves as doctors. With licensure you still have the quacks, but they call themselves "alternative medicine" and you can still go to them if you want. So there's no real loss of choice there.
Medical licensing isn't just about the right to call yourself a doctor.
Alternative medicine practicioners, or even experienced doctors who qualified in another country, are not allowed to perform the same procedures as doctors regardless of whether their patients would like them to. There is a very real loss of choice.
Internationalization is a valid point, but I'm not too choked up about my witch doctor not being allowed to perform open heart surgery. Besides, he would probably rather prescribe me water or stick needles in me instead.
Sarcasm aside, you're missing the point. Why isn't it sufficient to regulate the title 'Doctor' without preventing other practitioners from practicing?
People who wanted a traditional medical practitioner would be protected, and those who were willing to take more risk would have the choice.
Because it assumes there would be a real informed choice.
The staggering amount of money that do get paid to quacks selling stuff that is proven not to work show us very clearly that informed choice is largely a fantasy when dealing with the general public.
Homeopaths and acupuncturists don't even do normal medical procedures; that's kind of the point. If you are doing normal medical procedures, you should be licensed and regulated to make sure you know what the hell you're doing. The freedom to have an unlicensed witch doctor perform open heart surgery on you isn't an essential human right; it's not even something a sane and informed person would want to do. It's a non-issue.
Mentioning witch-doctors, homeopaths and acupuncturists is a straw man.
It seems to me that that private group of scientifically grounded medical practitioners who certified their members, but had different criteria from the state licensing system could be a very good thing.
This alternate certification would need to prove its reputation just as the institutions that certify doctors have. It seems likely that there are ways to train and certify doctors that produce better professionals than the current ones.
I doubt you're arguing that current state approved medical institutions cannot be improved upon. Why not allow alternatives to compete with them?
> It seems to me that that private group of scientifically grounded medical practitioners who certified their members, but had different criteria from the state licensing system could be a very good thing.
Could be, perhaps. Now weigh that hypothetical scenario against what actually happened in history that led to the state medical boards being created.
> I doubt you're arguing that current state approved medical institutions cannot be improved upon. Why not allow alternatives to compete with them?
Because we tried that and it didn't work last time. It got so bad that self-proclaimed "doctors" set up self-proclaimed "medical schools" as a con, paid large sums of money for cadavers "no questions asked", and ended up getting people murdered.
Do you have some legitimate problem with your state's medical board? I'd suggest you take it up with your state legislator.
Besides, there are alternatives--some states have separate osteopathic boards that license D.O.'s rather than M.D.'s, yet licensed D.O.'s have the exact same privileges as any other doctor.
Only self-proclaimed licensing boards? If you want an alternative licensing board, the osteopathic boards are it. Otherwise you're just engaging in ideological privatization for the sake of privatization; you don't even have a rationale for what's wrong with the licensing boards we do have.
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?
Because it results in uncontrollable externalities.
Take the electrician example: what happens if an unlicensed electrician kills himself when performing work? Does his family get to collect from your homeowner's insurance? Can they sue you? Are you criminally liable?
What about when you sell the house? Should you have to disclose that someone unlicensed did the wiring? What if you don't and the house ignites in a fire one night caused by improper wiring, killing the future owners, are you responsible? Is the electrician?
And you don't even want to touch the potential for abuse... regulation causes a lot of problems, I completely agree. But it serves to protect the public; we're effectively paying for protection against deception that capitalizes on our lack of knowledge in a specialty. That's worth protecting.
There's nothing in the current law about granting you immunity from criminal liability as long as you hire a licensed electrician, so that's a completely moot point.
>What if you don't and the house ignites in a fire one night caused by improper wiring, killing the future owners, are you responsible? Is the electrician?
In most jurisdictions you can already preform electrical work on your own property. If you install a ceiling fan should have to disclose to the new owner that it wasn't installed by a licensed electrician? Are you responsible for killing the future owner? There are scores of people installing their own light fixtures, where's the public outcry over all the dead homebuyers?
What happens when you hire the unlicensed kid next door to cut your grass, and he cuts off his foot?
What happens when an unlicensed painter falls off a ladder and kills himself?
If you want protection from damage caused by people you hire to work on your house, only hire contractors who are insured. Make them present proof of insurance before the job begins.
Fun fact: in California and New York, you are legally required to inform the new owner that the fan was not installed by a licensed electrician if the installation involved any more electrical work than simply plugging it into an outlet.
You would not be entirely responsible for killing the future owner...but yes, under the doctrine of negligence, you would be at least partially responsible for killing the future owner. In fact, this is one of the first things you learn in your first year of law school.
The unlicensed kid: That depends on how he cuts off his foot. Was he distracted? Was your wife distracting him at the time sunbathing nude next to the pool? Was he using your mower? Was your mower broken?
Unlicensed painter: Also depends on the specific facts. Was it his ladder? Why did he fall off the ladder? What did he fall onto? Would such a fall normally have killed a person? What special facts in this situation resulted in the painter's death?
Protection from damage: You're spot on. In fact, in Ohio, you're required to hire only licensed and bonded (i.e., insured) contractors for renovations or construction work. Moreover, contractors are required to provide proof of license and bond before they begin work or try to collect payment.
@learc83: the difference between professions requiring and not requiring licensure is the foreseeability of the risks. A reasonable person should be able to foresee the risk that a painter might fall from a ladder. A reasonable person might not be able to foresee the risks associated with installation of wiring by an unlicensed electrician.
>the difference between professions requiring and not requiring licensure is the foreseeability of the risks.
No, the difference is in the lobbying power of industry incumbents. A quick search will show that there are states where interior decorators, and trumpet players are required to be licensed.
I think the law can assume a reasonable person would be aware of the dangers of electricity. Most states have moved away from requiring gas pump attendants--is a reasonable person aware of the dangers of gasoline? If so why not the dangers of electricity?
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.
The reason you can not represent anyone other than yourself in court without passing the BAR examine is because the defendant might not be properly represented and cause problems such as mistrial or open up loads of appeals. Why? The bar examine is used to ensure that an attorney knows and understands the legal rules and procedures. That's it. If an attorney fails to object to a motion [on behalf of their client], fails to file a motion [on behalf of their client], or fails to respond to a claim or motion [on behalf of their client] then their client isn't being properly represented. Why can YOU represent YOURSELF? Because if you fail any of those things, well, it's your own fault. What is the number one topic we are failing to teach in our education system? BASIC [foundational] law and legal issues.
You have the right to represent yourself, but not another person or entity, which is what you would be doing if you attempted to represent your limited liability entity in court. It doesn't matter if you're the sole shareholder or not, you and the company are not one and the same.
Except that such logic seems to vanish in small claims court (where I can represent my corporation), and before the USPTO Trademark Trial and Appeals Board (where I can represent my corporation)...which means that it's really not very logical at all.
The details of small claims courts vary wildly from state to state, but more importantly, they're not courts of general jurisdiction. They have severe restrictions on what they can and can't do, and the losing party is often entitled to a de novo trial in a court of general jurisdiction.
The USPTO appeals board you mentioned is not a court at all. It is an administrative body whose holdings are again subject to review in US District Court.
Small claims courts are not much different from arbitration. There are no consequences to not showing up or participating, as losing simply means that you can move the matter to a new (i.e., independent) case in a real courtroom with a real judge.
I cannot defend the USPTO; much of what they do is indefensible.
There's nothing wrong with certifying organizations, but there ought to be competition and free market choice. Leave it to the buyer to determine if they wish to hire a "State Certified Electrician" or "Professional Electricians" certified electrician, or the electrician with not credentials. But also place legal civil obligations on the buyer. "OH NO!" you scream because how can the buyer know what the local codes are and make sure the electrician is following them? The buyer needs to know and be educated to transfer that risk to the electrician. State in the contract that the electrician is responsible for any/all civil fines due to work they perform. The certifying (and competing) organizations can/will work with insurance companies to also transfer some risk off and away from the contractor.
The contractor and buyer still should be criminally liable for any willful noncompliance.
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...
> 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."
the cost of law school is a fixed (and by the time you become a lawyer, sunk) cost, and therefore has no bearing on supply decisions.
moreover, how does the cost of law school jack up prices in a world where there is an excess of lawyers? if you're a lawyer, do you charge the amount that covers your loans, or the amount that nets you the most profit?
the very fact that there are excess lawyers is evidence that regulation of who gets to become a lawyer is not increasing prices. now i'm not saying that lawyers are efficiently priced, merely that regulatory capture is not the reason for this.
There is an excess of lawyers in certain areas; an excess of IP lawyers doesn't map to an excess of divorce attorneys.
>if you're a lawyer, do you charge the amount that covers your loans, or the amount that nets you the most profit?
If all lawyers were interchangeable, your argument might hold, but the artificially high price of legal education leads to a misallocation of resources--The increased cost of student loans can cause lawyers to move into specialities that are higher paying, causing shortages in one area and surpluses in others.
> The increased cost of student loans can cause lawyers to move into specialities that are higher paying, causing shortages in one area and surpluses in others.
This is circular. You're arguing that shortages in some areas are causing higher prices, but then arguing that lawyers are leaving certain areas for the areas that pay higher salaries. You can't say that prices are high for corporate legal services because supply is restricted while saying that the high cost of legal education causes a surplus of lawyers in areas where salaries (i.e. prices) are the highest.
You can't make sense of the legal market by thinking of it in terms of regulation cutting off supply leading to higher prices. That is not the major operative force in the legal field.
The major operative force is branding, and that drives everything else. Companies pay substantial fees to hire firms with brands. Firms with brands pay substantial salaries to hire attorneys with brands.
There are 200+ ABA-accredited law schools, with 45,000 graduates each year. Only about 10-15% get a job working with a big firm that does corporate work. This is because at a big New York firm, fully a quarter of the new hires might come from Harvard and Yale, and 90% from the top 15 schools. Even with the high cost of legal education there is a huge untapped supply of attorneys who would jump at the chance to work for half as much as Harvard grads to do corporate work. There are no ABA restrictions to hiring these people to do corporate work. What there is is a lack of demand for lower-price lower with lesser credentials in that particular subset of the market.
>You can't say that prices are high for corporate legal services because supply is restricted
I'm not saying that. I agree with you that there is a surplus of corporate lawyers, and so deregulation wouldn't really reduce the price in that sector.
Even if there were cheap lawyers who learned through apprenticeship instead of law school, large companies still wouldn't hire them.
I'm talking about prices being driven up in other areas, where law school grads with insane debt don't want to work.
I know several law school grads who couldn't find the kind of high paying job they were looking for. However, since they had so much debt they ended up taking non legal jobs (one is a project manager, the other an entrepreneur), instead of moving into another lower paid area of the law.
Because of high education costs (and the requirement that lawyers posses a graduate degree, which means most of them are going to be at least 25 by the time they can start practicing, plus the psychological factors involved in having spent 7 years in school), there is a minimum price below which most lawyers will not work, and will seek other opportunities.
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?
The supply of lawyers doesn't quite follow the simple market relationship either. The study and practice of law are still associated with some prestige, and the high cost of legal services leads many to believe that they'll quickly pay back their inflated student debt.
There definitely is regulatory capture going on. Small, more affordable schools are in a real bind over having to meet stringent and arbitrary accreditation criteria, but that doesn't affect the number of lawyers because students are willing to pay anything to become a lawyer anyway.
So you do not need to go to law school to be a lawyer. Anyone can take the BAR and be a lawyer. Again, as Antone points out, this all comes down to a perception of quality. Many people (and I am not saying you) would not hire a lawyer who did not go to law school.
Did not check on this until now. Meant to say, "in California" considering the heavy conversation surrounding startup lawyers and the location of the author. Good catch! Anyone can take the BAR in California and yet legal prices here are some of the highest in the country.
> But what actually happens is that an attorney might do 45 minutes of work and round it up to an hour--even though that work is formatting in Microsoft Word that the client could have done; or printing out a Word document in order to scan it in as a PDF. Still seem worth $500 per hour?
I might charge $X00 per hour as a "blended" rate, taking into account that:
A) some of my $X00 time might be spent doing $15 per hour clerical tasks, but then I won't have to spend as much $X00 time instructing a $15 per hour person, then reviewing his work to be sure he got it right; and
B) some of my time will be spent doing work that's worth $1,000 per hour or more. (Cue Hedley Lamarr in Blazing Saddles: "My mind is a raging torrent, flooded with rivulets of thought cascading into a waterfall of creative alternatives.")
So it averages out, or at least that's the rationale. (Of course, that doesn't justify time-sheet padding.)
Thinkcomp, I agree with almost everything you say about the economics of the legal profession, but I think you miss out on something crucial.
Before I went to law school, I unconsciously thought of law as a branch of engineering: Learn the rules, twist the right dials, and things will happen as you expect. That was naive. Law does have rules, and dials to twist, but for socio-political reasons I won't go into here, the rules and dials aren't tightly locked to outcomes. As a result, law has long struck me as being more akin to weather-guessing than to engineering.
The article "The Myth of the Rule of Law"[1] has been linked a few times on HN, and I think it sums up this idea pretty well. It basically says that in many (most?) cases the law is subject to interpretation that depends on the politics of the interpreter (be they a lawyer, judge or member of a jury). The "letter of the law" isn't nearly as simple as people believe, ambiguity is the name of the game.
As an engineer, that's why I went to law school. I thought law could be represented deterministically...but that's a naive assumption. A stochastic model fits much better, which is why I'm now extremely interested in artificial intelligence.
I appreciate the passion with which you advocate for decreased barriers to legal information. In many respects, I could not agree more; U.S. jurisprudence is synonymous with hyper-technical mutability, and the public is kept in the dark because of pay walls. But, that marks the full extent to which you and I agree on this matter.
In terms of "institutionalized fraud," you are totally wrong. The legal profession is one of the most heavily-regulated professions that exists today. The duties imposed on lawyers--which are legal obligations to act or refrain from acting--should not be taken lightly. For example, Rule 8.3 of the Model Rules of Professional Conduct[1] (adopted in whole or in part by 49 states) provides:
(a) A lawyer who knows that another lawyer
has committed a violation of the Rules
of Professional Conduct that raises a
substantial question as to that
lawyer's honesty, trustworthiness or
fitness as a lawyer in other respects,
*shall* inform the appropriate
professional authority.
(emphasis added). Note the word "shall:" it means that a lawyer who has actual knowledge that another lawyer (regardless of jurisdiction!) violated the rules MUST report the violation to the appropriate authority.
The reason I explain this rule in particular is because of Rule 1.5, which provides in excruciating detail a lawyer's ability to collect fees from a client.[2] Everything you said is wrong.
Here's the short, plain English version of Rule 1.5: the lawyer must communicate the fee arrangement to the client before the start of representation (except when charging an ongoing client the same rate in subsequent matters). There's a blanket prohibition against "excessive fees" and "minimum fees," and a set of factors used to determine whether a fee is reasonable.
Reasonable fees are judged by time and labor, the issues' difficulty/novelty, the lawyer's experience/reputation/abilities, the nature and length of the lawyer-client relationship, whether the lawyer must turn away other cases, whether it's a fixed or contingent fee basis, and the customarily charged fees. When dealing with contingent fee arrangements, they MUST be reasonable and signed by the client, but may not be used in criminal cases. Similarly in criminal cases, a lawyer may not ask for incentive fees, and is proscribed from taking a percentage of publication rights (i.e. Casey Anthony's lawyer asking for a percentage of any subsequent book deal in exchange for his time) until after all appeals have been exhausted. Contingent fees also may not be used in domestic relations.
When dealing with division of fees in law firms, it's not actually a "division of fees" in the legal sense. The lawyers are salaried employees of the law firm, which is hired to represent the client. Again, when you hire a law firm, you are not hiring a single lawyer; you're hiring the entire firm. Division of fees occurs when a single billing client is covering the fees of two or more lawyers who are not in the same firm. When this happens, division is permitted as long as it's proportional to the services each lawyer (or firm) provides to the client, and the client must agree to this allotment in writing.
Further in this thread, you announced that you should have a right to represent your company in litigation. That's absolutely ridiculous, and in criminal matters in the United States, is dissonant with the Sixth Amendment. In such cases, the corporation has a right to assistance from counsel. Because corporations are fictitious entities incapable of self-representation and thus incompetent, corporate pro se representation is impossible.
But, there are good reasons why a client shouldn't have a right to non-lawyer representation. The Model Rules
of Professional Conduct attach an enormous burden to lawyers by compelling them to disclose to the authorities another lawyer's violation therefrom. Without strong industry self-regulation in this form, there would be no way to protect clients from invidious representation.
As much text as might exist around the subject, it looks like the "blanket prohibitions" aren't working and everyone knows it. There's a small loophole in the rule you describe--what happens if a non-attorney learns of an attorney's misconduct? Nothing, that's what!
It's not ridiculous for me to want to represent my company without having taken the bar exam--you're using a legal fiction to argue that even though I pay my company's taxes, I should not be allowed to represent its interests in court if I so choose. But even if I didn't pay my company's taxes, I would still want that option because the fictitious entity you describe is a creation of my capital and my labor and in every other respect its Board of Directors has the ability to guide its direction.
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 are not the corporation. The corporation is its own, independent legal entity. Because it's fictitious, it cannot make decisions, which means (as a matter of law) it's incompetent to stand trial.
Some jurisdictions may have rules deviating from this to allow corporate pro se representation by 100% shareholders in small claims matters, but they would be the exception.
The corporation is its own, independent legal entity. Because it's fictitious, it cannot make decisions, which means (as a matter of law) it's incompetent to stand trial.
I don't follow the logic here. If it's fictitious and incompetent to stand trial, then why it can be brought to trial at all?
> 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.
And, just to be clear, lawyers' fees are reasonable because lawyers have a duty to report fraudulent billing practices. If they don't, they can be disbarred. That duty to report covers all of the rules (excluding Rule 1.6 and information gained by lawyers participating in approved lawyers' assistance programs), and the reasonableness of fees absolutely includes consideration for this duty.
What about law firms with a single lawyer and the rest associates. Nobody reports anything. Lawyers round billing, type 5 words per minute, templatize their documents but charge as if writing from scratch, and play the system in many ways, double bill for multitasking status hearings, and so on. I would be more than happy to pay the billing rate if they actually worked those hours.
What do you mean by associates? Do you mean non-lawyers engaging in document preparation? If so, they might be criminally liable for the unlicensed practice of law. If they're also licensed attorneys, then again, you're paying for the firm's time, not a single lawyer's time. If a partner tells an associate to do something against the rules (i.e., superior tells subordinate to act illegally), "the subordinate is bound by the Rules of Professional Conduct notwithstanding that the lawyer acted at the direction of another person." (Rule 5.2(a)). The only exception is if it's an "arguable" question and the superior's instructions were reasonable in light of this.
For non-lawyer assistants, (see Rule 5.3), the lawyer must make reasonable efforts to ensure that the non-lawyer's work complies with the professional obligations of the lawyer. This mostly applies to cases when a non-lawyer assistant is sorting through documents and accidentally loses one that's later found by the media. Again, if they're doing anything that's the practice of law, they're committing a crime. The subordinate would be criminally liable, and the supervising lawyer would be professionally liable under Rule 5.3.
Associates are lawyers. The difference between an associate and a partner is the same as the difference between an employee and a founder in a startup: the employee gets paid a salary, the founder might get a salary but primarily draws his income from the success of the business.
Paralegals and office staff are not lawyers. Paralegals are allowed, by law, to draft legal documents. However, they cannot offer legal advice, and any documents they draft must be reviewed by a practicing lawyer.
Your opinion that a Wachtell attorney isn't worth >$1,000/hour is immaterial. As a matter of law, what they're charging is not unreasonable, because you're paying for more than the amount of time an attorney spends typing on a word processor. You're paying for the firm's experience and reputation. Moreover, many lawyers would have actual knowledge of the firm's fraud, were it to occur. By not reporting this information, they risk being disbarred and losing their livelihood. I don't generally like to endorse the efficient-market hypothesis, but it appears highly unlikely that there's a giant conspiracy that results in systemic under-reporting and non-enforcement of the rules...
I'm not buying it. There are a lot of reasons that reporting could be just as devastating as not reporting, except it's more likely to happen.
Imagine a James Lawyer at your prestigious $1000/hour partnership. He finds out Joe Partner is up to no good. What are his options?
Blow the whistle, get Joe Partner in trouble, get black-balled (if not outright fired [but, of course, not for whistle blowing]) and eventually (or immediately) have to find a new job. In trying to find other jobs, James finds nobody is interested in him in any capacity remotely near his previous level of employment, because, like any close professional community, everybody knows James is a whistle blower. He eventually has to settle for a position in a local law firm, make 1/3 what he was making before.
Or, don't blow the whistle. If Joe Partner eventually gets caught, James might get caught up in it, or he might be able to skate around it.
Do you really think no lawyers knew about Bernie Madhoff or World Comm or Enron? To say this ethical code of conduct justifies the high prices is laughable.
Lawyers regularly get in very severe trouble for breaches of legal ethics. The Enron, etc, examples aren't availing. Lawyers are required, legally, to rat out other lawyers for violations of legal ethics. They are not required to rat out their clients (and indeed are ethically prohibited from doing so). I'm sure lots of lawyers knew about Bernie Madoff and Enron, etc. But they were legally obligated not to disclose their clients' crimes.
Moreover, in your hypothetical, it's not just James Lawyer who can report the business practice. A judge reviewing a claim of attorneys fees could find something suspicious. An in-house guy reviewing bills could find something suspicious. Somebody at another law firm working jointly on a case could find something suspicious. Those people have no disincentive to report that conduct, and indeed their ass is on the line if they do not.
Do lawyers charge you for time while thinking about your case in the shower? Probably. Like any contractor, there is some margin for estimation while remaining ethical. But is there some grand conspiracy to systematically over-bill clients? There are just too many people who would have access to that knowledge, and who could only get in trouble for not ratting it out for that to be likely.
@SoftwareMaven: I never said "justifies," but I did say it's one factor that contributes to the inherent reasonableness of the fees. My argument is based on the law and professional practice, while your counter-argument is based on a hypothetical, conspiracy theory.
You're not paying a lawyer $X00/hour to do word processing; you're paying them to figure out what laws apply to your situation, how those laws apply, and the best course of action given the legal consequences.
If they're doing word processing, it is because the language matters. Consider that the City of Cleveland lost the Cleveland Browns to Baltimore over a comma which completely changed the meaning of the exit provisions in the contract. The owner of the Dodgers likewise lost a $500 million stake to his ex-wife based on the language in his prenuptial.
Finally: if you want easy access to documents in the court docket: go to the courthouse where they are kept. It costs a lot of money to implement and maintain a digitizing system, and most courts simply do not have the resources to maintain such systems.
For example: you're expected to follow the law even without knowing what the law says. When you want to find out what the law says, it's not easy--it's certainly not available in a standardized format. When you want to interpret what you find, assuming you find it, that's not easy either. Courts interpret things in new ways all the time.
The federal court system charges you to access public information contained in court proceedings, with limited exceptions--that is, if you even know where to look for it. See http://www.thinkcomputer.org/20120209.pacer.pdf. The interface is terrible and hard to use. The way in which you write lawsuits is obscure, counterintuitive, and creates additional needless work.
In addition to all of these factors, and perhaps because of them, lawyers (especially at big firms) have institutionalized fraud. It's taken for granted that legal billing is often fraudulent. If you charge $500 per hour and your system only resolves to the tenth of an hour, that means if you spent four minutes writing an e-mail, you can charge for 0.1 hours, or $50. But really you only did $33.33 of work. That's a nice cushion. But what actually happens is that an attorney might do 45 minutes of work and round it up to an hour--even though that work is formatting in Microsoft Word that the client could have done; or printing out a Word document in order to scan it in as a PDF. Still seem worth $500 per hour?
For those lawyers not at large firms, they're covering expenses (such as law school) that are enormous. High rates are a necessity, and who would charge far lower than market rates anyway? It might be interpreted as a signal that something is wrong.
Of course, don't for a minute think that paying $800 per hour will get you a better lawyer than paying $300 per hour. It might. Either way, you'll be paying someone in a staggering number of cases to unscientifically guesstimate What The Government Might Do, when the answer is, "who knows?". That doesn't mean all lawyers are the same; some are definitely better than others. But it has nothing to do with price.
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. See http://www.nytimes.com/2011/10/25/opinion/are-law-schools-an....
Lawyers know, too, that you can't get rid of them (also thanks to the ABA), and so you're locked in. There's a monopoly on business representation, for example. See http://www.plainsite.org/issues/index.html?id=137. It's absurd.