Biglaw, Billable Hours, Money

Why Are Lawyers So Expensive? Well, Are They Really?

Occasionally it’s fun to see what non-lawyers think about the profession. Yes, we know they “hate” lawyers because, well, most people don’t like getting screwed out of alimony or dealing with insurance companies. But it can be interesting to remember just how little non-lawyers understand about the legal profession.

They don’t even really understand why lawyers get paid.

The other day, there was a good question on Quora: “Why are lawyers so expensive even with the excess supply of lawyers?”

You kind of love clients who bitch about the high price of lawyers, yet wouldn’t take a phone call from one of the thousands of unemployed or underemployed lawyers who are begging for work.

But, sure, some lawyers are still highly priced — maybe even overpriced — despite an excess supply of lawyers in general.

Let’s see if any of the lawyers here can actually give some helpful answers to this question….

The main response was penned by a non-lawyer who appears to have worked with start-up companies. Some of his answers were complete nonsense, but I think by the end, he started to hit the core of the issue. Here’s what I thought were the most salient points:

CORRECTION: The original poster below actually is a lawyer, the follow up poster was is not an attorney.

In placement, law schools and students focus on the large, top-tier firms to the exclusion of most other opportunities. This is because they pay the highest starting salaries and are prestigious names to have on the resume at the beginning of a legal career (see “obsession with prestige and rankings”). This isn’t just about greed and status; student loan burdens can be huge (another subject) and recent graduates are rightly concerned about earning enough to pay them off….

The middle is missing. There used to be a class of mid-sized regional firms with billing rates and salaries significantly lower than the big national/coastal firms, but significantly higher than most small firms. That’s mostly gone now, as during the good years, many of those firms merged with megafirms as part of the pursuit of ever-higher profits (justified by the need to keep those profits growing to attract/retain the best partners).

A follow-up posting put the problem even more plainly:

[T]here is no disconnect. There are too many inexperienced junior lawyers above and beyond the positions available for them in the current market structure. At the same time, there are too few expert, hotshot lawyers who get the job done no matter what and collect whatever fees that choose to charge. EDIT: As a result of the glut of junior associates and new legal graduates, prices at the low end of the market are indeed collapsing

Basically, that seems right to me. If you want to hire a young, inexperienced lawyer, you can hire one for beer money. If you want an old, experienced lawyer, who can handle your complex litigation or transaction and throw tons of man-hours at every aspect of your case, well, you are going to pay. A lot.

And if you are one of those old, experienced attorneys, chances are you deserve your high fees. Chances are, you’ve hung on to an extremely difficult job while a number of your peers simply got out of the race. As another poster (one who is a lawyer) points out:

Because there really are only so many people who can do legal work well and on a consistent basis, year in and year out. Not all of law is glamorous — in fact, most legal work includes some serious grinding. People burn out. Lots of folks quit law because it is (relatively) a thankless job with lots of risk of taking the blame, and none of the glory. Many lawyers go “in-house” as a way to try to find some compromise between work and the rest of their lives. As the career-years go by, a larger and larger percentage of lawyers stop practicing law.

So, in short, the experienced talent is a big driver, and the supply of top talent becomes limited over time as many mid-level and senior lawyers (the expensive and most experienced ones) QUIT the profession and/or take on jobs in law or business where you, the business person, cannot hire them.

Honestly, how many people even want to be a big time, senior rainmaking partner at a large law firm? From a certain point of view, it’s a terrible job! You work insane hours (and you have worked insane hours for most of your adult life). Even if you are intellectually stimulated by the work, it’s not “fun.” It’s not playing centerfield for the Yankees or directing pornography. It’s not a barrel of laughs. And despite the fact that you are relatively rich and probably at or near the very top of your field, you have to spend all day talking to clients who disrespect you, make more money than you, and act like you’re the a$$hole in the room who is stealing their money.

Who the hell wants to do that all of their life? Well, you have to pay people a LOT of money to make them want to do that.

Why are lawyers so expensive? Because it’s a crappy job that most people don’t want to do! Sanitation workers get paid more than teachers because most people would rather deal with trashy children than old trash.

And if you really don’t like the cost, you can always go find a cheaper lawyer. Unless you are afraid:

Because of fear (and CYA).

Fear enables the best lawyers and the best law firms to charge more. You don’t know the law, you don’t understand the law, and if you make a critical error without top counsel, you can really screw a lot of things up.

The rates are obscene relatively to the basic, mundane work done. But for the non-mundane work, you not only need advice – you need to CYA.

And that’s the final answer: lawyers are so expensive because clients are really that stupid. If clients could overcome their fear, if they could learn the difference between important work and mundane paper-pushing, then they could make intelligent decisions about when to pay the high fees, and when to find a cheaper lawyer.

But it’s easier, for clients, to just pay top-freight or near top-freight instead of taking the risk of finding low-cost solutions to their average legal problems.

It’s expensive to find a lawyer? No, it’s not. It’s expensive to find a good, experienced lawyer.

UPDATE (1:15 PM): For additional discussion of why lawyers are so expensive, see this prior ATL post, A Challenge to Startup Lawyers from Fred Wilson, and this Washingtonian magazine cover story by Kashmir Hill and David Lat, Why Lawyers Make So Much Money.

Why are lawyers so expensive even with the excess supply of lawyers? [Quora]
Why Lawyers Make So Much Money [Washingtonian]

Earlier: A Challenge to Startup Lawyers, from Fred Wilson

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