Legal Rents

Jonathan McLeod

Jonathan McLeod is a writer living in Ottawa, Ontario. (That means Canada.) He spends too much time following local politics and writing about zoning issues. Follow him on Twitter.

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60 Responses

  1. LeeEsq says:

    Matt Bruenig is wrong. Liberalizing the licensing regime on lawyers is not going to lead to lower prices for legal services. There are already lots of lawyers, more than enough to provide legal services to lower and middle income people. The law schools and licensing regime have done a remarkably poor job of keeping the number of lawyers down. Only a few lawyers earn the real big bucks but many don’t. The real reason why the lower and many middle income people can’t afford legal services when they need it is that even the cheapest possible legal services costs too much money because lawyers do need to earn enough to pay for administrative costs and their daily livelihood at least if not make some money for the little luxuries in life.Report

    • Gabriel Conroy in reply to LeeEsq says:

      The real reason why the lower and many middle income people can’t afford legal services when they need it is that even the cheapest possible legal services costs too much money because lawyers do need to earn enough to pay for administrative costs and their daily livelihood at least if not make some money for the little luxuries in life.

      It seems to me, though, that some of that is implicated in paying off the high price necessary to get the credential in the first place.

      Also, it’s not just an issue of there being too many lawyers and if there were even more, then we’d have to pay even less. It’s also an issue of only lawyers being permitted to do certain things that other people with some legal training could do.

      On the other hand, maybe there is a floor on legal costs and liberalizing the regime might not necessarily lower that floor. It could, however, provide opportunities for some people to enter the profession with lower debt. What would their quality be? Probably varied and perhaps edging closer to “poor” than “excellent.” Still, liberalizing the regime would not necessarily mean the end of signaling mechanisms such as the bar association and law schools. It could mean putting an end to the legal compulsion to obtain such signaling.Report

  2. Saul DeGraw says:

    I semi-agree but largely disagree. The current way of licensing lawyers is probably too onerous and burdensome. I don’t think we can or should go back to the days of reading law as clerks* but we can modify law so it is not 4 plus 3. Perhaps it can be a 5 year undergrad program like engineering. Or even a four year period with a time as a junior lawyer which is how many European countries handle licensing.

    Lawyers and doctors are skilled professionals though and an improperly trained (and often a properly trained but old or unethical) lawyer can cause major damage to a client out of negligence and/or malice. Even the most due diligent of lawyers is bound to fuck up at least once or twice in his or her career. Medical doctors need training because they do things, serious things to the human body.

    When it comes to other occupations I am on the fence? I heard it takes 1500-1600 hours to become a licensed barber in CA. That is probably too long but a good 6 month program seems right.

    Training is important for lots of things.

    Lee is also right about how fees won’t go down either because they are set by law or I also suspect that people would not trust a lawyer who changes 25 dollars an hour.

    There are also plenty of licenses that are privately enforced through cartels without the government. I’m not a fan of caveat emptor as being the basic building block of all commercial transactions.Report

    • Saul DeGraw in reply to Saul DeGraw says:

      Forgot my asterisk

      I think going back to clerking is just going to lead to more nepotism in law because the future generations will either be related to lawyers or somehow know people who are lawyers. Law School is far from perfect but it certainly allows for avenues into the profession when someone doesn’t know lawyers.Report

      • Keep in mind that one of your proposals is for a person to serve as a junior lawyer, which sounds a little like reading law, albeit after certain hurdles have been cleared.

        But regardless, nepotism is a danger, I suppose. But it’s not clear to me that the current system really effectively militates against nepotism. There are a lot of lawyers who have at least one parent or other family member who is a lawyer. Getting good jobs or judge-clerkships probably depends on who you know or the connections you cultivate at law school (and therefore which law school one can get in or afford).

        I suppose it depends on the numbers, and I don’t know the numbers. And your point doesn’t appear to be that there’s no nepotism now, just that there’s more possibility for entry now than there would be under a “reading law” system.

        But I think liberalizing the rules could allow for both reading law and and going the law-school route. Maybe…and if it’s done right.Report

    • “….or I also suspect that people would not trust a lawyer who changes 25 dollars an hour.”

      That seems to me like an argument in favor of liberalizing the rules. If people won’t trust a lawyers charging that little, then they can opt (if they can afford to) for the more expensive ones who have the credentials and associative affiliations.Report

      • Saul DeGraw in reply to Gabriel Conroy says:


        There is still a surplus of lawyers many of whom are underemployed and lacking student loans. Many of whom have been encouraged to hang up their own shingle (which some do to varying degrees of success*)

        This raises the questions:

        1. Why won’t clients go to new lawyers just out of school? I suspect because there are plenty of experienced lawyers out there.

        2. Law might be a Veblen good to a certain extent. There seems to be something disreputable to a lawyer who will charge 25 an hour especially for litigation. Contingency fees are possible but that requires a decent amount of upfront capital and is only really useful for certain kinds of litigation. I suspect people can either afford a decently priced lawyer or they just can’t afford a lawyer at all. Would you just a criminal defense lawyer who charged 25-50 dollars an hour? He or she is going to need to be really clever. How could they pay for expert witnesses, etc?

        I agree with Burt’s claims.

        *I know people who hung their own shingle to a few months to a few years. Most ditched the solo practice as soon as they built up enough experience to get real jobs with government/firms. One guy went into medical marijuana and acts as a business person/general counsel. I don’t know anyone who was offered a real job but turned it down to ride out the solo practice life. Where are new lawyers supposed to get clients, etc? Most of my friends who did the solo thing said the hardest thing to do was get clients to pay.

        150-200 an hour seems to be the lowest a lawyer can charge while still being seen as reputable.Report

      • I was going to respond with, “yeah, but that’s what I was saying, liberalizing wouldn’t obviate the need for credentialing and signaling.” And I still believe that. And if $25 an hour is too low, it doesn’t mean that $150 an hour isn’t too high (and there might be regional variations, too).

        But your questions here got me thinking”

        Would you just a criminal defense lawyer who charged 25-50 dollars an hour? He or she is going to need to be really clever. How could they pay for expert witnesses, etc?

        My answers are probably no and I don’t know, respectively. The “I don’t know” underscores a lot of what I don’t know about law practice. Do lawyers charge expert witness fees in addition to their hourly rate or is that included? Would it matter if the criminal case were something that might not require the expert witnesses?

        My “no” depends at least partially on he current market. I understand that lawyers usually (always?) charge more than $25 per hour, so I would be suspicious of such a cheap lawyer. There’s also the free counsel I could get in a criminal case, so I’d have to wonder if a $25 per hour lawyer is better than a free (to me) counsel who probably earns….I don’t know what they earn.

        But taking the free counsel out of the question, it would probably be better to have a lawyer than no lawyer, so I might opt for the $25 per hour lawyer if I couldn’t afford more. I would, however, probably instinctively distrust the $25 per hour person more than I’d distrust the more expensive guy or gal. So you’re right there.Report

      • zic in reply to Gabriel Conroy says:

        @saul-degraw this is anecdotal, from legal troubles I’ve experienced via my own children and their friends, (meaning criminal trouble): it’s not so much being a lawyer that matters, it’s being a lawyer connected to a particular bit of the judicial system that matters. Knowing the judge, the prosecutor, the kind of stuff they’ll accept in plea bargain. For instance, in one particular county in Utah, a bit of weed costs the defendant either $5,000 combined legal fees and fines or six months in jail.

        That’s the kind of rent seeking I see in the legal system; and the victims of that rent seeking are the folks who don’t have $5,000.Report

      • Barry in reply to Gabriel Conroy says:

        This has been extensively discussed on the various scamblogs. Suffice to say that practicing law is hard to do part-time, unless you have a day job where you can:

        1) Tell your boss over the weekend that you can’t come in on Monday, because you have a client being arraigned who was arrested over the weekend, and you need to be at court from 7 AM until whenever the judge gets to them.

        2) Oh, and you won’t be in one or two or three days over the next couple of weeks, depending on how the case is scheduled, and what you need to do to prepare for it.

        3) You can actually effectively represent somebody in a case (civil or criminal), when you don’t deal with any particular situation more than once or twice a year, because you’re practicing part time. I’m a statistician with five years of graduate training, 16 years of full-time practice, and am acutely aware that there are a lot of things where I’d advise somebody who actually understood the statistical field in question.

        Note that much of this applies to somebody who was doing a more flexible consulting job – if you have a job due Friday, and somebody from your social network urgently needs law work done that week, you have to turn them down, which hurts your ability to get future legal referrals from that network.Report

    • Kim in reply to Saul DeGraw says:

      Medical doctors need research, so that they can do Good Things to a patient’s body. Otherwise, they’re just doing the last thing that they remembered working, not actual evidence based medicine.Report

  3. Saul DeGraw says:

    In other news, I find the idea of an amatuer thetrical performance of Rent to be somewhat horrifying especially if done by law students. Though it could be a parody I guess..Report

  4. RTod says:

    Wow. The guy in the middle of the long, grueling slog is against forcing people to do the long, grueling slog? What are the odds?

    I’d probably hold off to see what his stance is in 10 years before giving him Humanitarian of The Year.Report

  5. Stillwater says:

    Abe Lincoln never went to law school and we know how that turned out.Report

  6. Stillwater says:

    creating an artificial shortage

    The word “artificial” is doing a lot of work here, no? Doesn’t it beg the question against the entire purpose of licensing to begin with? Do you really want your house wired or plumbed by some guy who may not understand the basic requirements of the trade?Report

    • “The word “artificial” is doing a lot of work here”

      Yup. But doesn’t that lead to the question, “is “artificial” necessarily bad?”

      If I didn’t make it clear, I’m not against licensing. I am against overly onerous licensing that is decided to favour the licensed rather than the customers.Report

      • Saul DeGraw in reply to Jonathan McLeod says:

        Artificial originally was a positive word 🙂Report

      • Mike Schilling in reply to Jonathan McLeod says:

        Old father, old artificer, stand me now and ever in good stead.Report

      • Stillwater in reply to Jonathan McLeod says:

        But doesn’t that lead to the question, “is “artificial” necessarily bad?”

        I was going in a different direction, contrasting artificial with something like natural. But if licensing leads to better outcomes – so is necessary atleast in that sense – then it’s just a practice that naturally establishes service provision. I agree with you that certain licensing burdens can be so onerous that they suppress supply, but I don’t think that’s the case with lawyers or a whole bunch of other business practices.Report

    • Saul DeGraw in reply to Stillwater says:


      I think that most licensing regimes work to make better qualified practioners and do rent seeking. Now keep in mind that someone can take the bar numerous times and be a practicing lawyer. Every law student gets the list of “really famous and successful people who failed the bar on their first and sometimes second attempt” when studying for the Bar.

      I suppose it just depends on the individual about whether they think a little rent seeking is worth more qualified practioners or or not or whether it is all just pretense.Report

      • Stillwater in reply to Saul DeGraw says:

        I think we need to distinguish a definition of licensing that entails the concept of rent-seeking from one that doesn’t. If the argument is that licensing is by definition a form of rent seeking, then we’ve begged a bunch of questions. IF the argument is that some licensing requirements are intentionally and unjustifiably onerous for the express purpose of restricting supply and thereby driving up prices, we can talk about what solutions and whatnot. But as far as the rent case applies to lawyers, I’m not sure I’m seeing it since there are apparently lots of unemployed licensed lawyers out there.

        But maybe I’m not understanding what you’re getting at. Are you saying that having to graduate from an accredited law school (or whatever) in order to receive a license constitutes an onerous burden?Report

      • Stillwater in reply to Saul DeGraw says:

        And actually, I don’t think that’s true. Maybe you know if this is right, but I think a person can pass the bar and be a practicing lawyer without a degree, but not a practicing attorney. Or something like that.Report

      • Saul DeGraw in reply to Saul DeGraw says:


        It depends on the state. Each state gets to set their own requirements for who can take the bar exam or not in said state. New York and California both allow someone to clerk for X amount of time (I think in CA it is 2000 hours) and then sit for the bar exam. California also allows someone to take the bar if they attended a CBA (Cal Bar Association) or unaccredited law school instead of an ABA accredited law school. These candidates need to take an exam called the “baby bar” at the end of their first year of law school. Many to most fail the baby bar on their first attempt. Many students who pass the baby-bar but go the non-law school route also fail the Bar Exam on their attempts.

        There are a handful of other states that allow people to clerk instead of attending law school but I believe most states require graduating from an ABA accredited law school before being allowed to take the bar.

        The requirements vary all over. California lets you file your moral character application at anytime. New York does not let candidates file their moral character application until after they take the bar. If you take the bar in Manhattan like I did, you need to wait until after you pass the bar before being allowed to file your moral character application. NY also has a (very pro-forma) interview before being sworn in, California did not.

        My main point was more philosophical than anything else. One person’s rent-seeking is another person’s quality control. I am willing to concede that a licensing regime can both act to train candidates/protect the consumer and also be rent seeking. I have an extreme aversion to cavaet emptor as a philosophy so I prefer systems that allow a consumer to know that a service-provider achieved at least a modicum of training, maybe more depending on the profession.Report

  7. Patrick says:

    Wait a second, don’t we have a dozen threads just here on the blog about lawyer types not being able to find work?

    I can understand the idea that lowering the bar (hahaahaha!) can increase supply, but… don’t we have more than enough supply at the moment?

    It doesn’t seem to me that you’re really collecting much in the way of rent when you have a surplus of the licensed professionals in spite of the burden of the licensing requirement…Report

    • Stillwater in reply to Patrick says:

      Right. And if the price of legal services are still viewed as unjustifiably high given surplus on the supply side, then those prices are in effect set by other considerations, like industry standard or overhead or whatnot.Report

      • Barry in reply to Stillwater says:

        “Right. And if the price of legal services are still viewed as unjustifiably high given surplus on the supply side, then those prices are in effect set by other considerations, like industry standard or overhead or whatnot.”

        One of the many ‘funny’ things about Matt’s article was not only did he look at things with a simplistic ‘Econ 101’ model, but he even got that wrong.Report

    • Kim in reply to Patrick says:

      Depends. Do we really have enough lawyers on traffic cop duty? (Friend of A Friend, decided he’d rather help in his spare time, than save the world as a lawyer).

      AFAIK, people are still making lifealtering decisions without lawyers and getting fucked over by conflicts of interest because of it. Get rid of real estate agents, put lawyers in their place.

      Problem Fixed.Report

      • Patrick in reply to Kim says:

        Well, that’s an interesting note, Kim, but there’s a problem, there.

        The number of people who appear to be willing (and capable) to attend additional schooling past undergraduate degrees is limited.

        You want more of them to become lawyers, but still be accessible to people with less money, you have a giant subsidy problem. I also don’t know that you can get that many more quality lawyers out of the system than you do now.Report

      • Kim in reply to Kim says:

        people have been talking about how there are too many lawyers for the jobs that exist.Report

    • Barry in reply to Patrick says:

      “Wait a second, don’t we have a dozen threads just here on the blog about lawyer types not being able to find work?”

      Yes, that guy Matt was 100% full of sh*t, and some people here are jumping on a CATO bandwagon.Report

  8. Burt Likko says:

    A substantial body of people, who do not hold law licenses, already exist. Paralegals, document preparers, notaries, real estate agents, escrows, title agents, estate planners, tax professionals, social workers, advocates of any number of this advantage groups, union representatives, and more that I can’t think of off the top of my head, all provide assistance to other people in navigating complex questions with legal implications. Nearly all of them do this correctly, or at least causing minimal harm to those to whom their services are rendered.

    The existence of another class of people, who are held to a higher standard of more generalized knowledge, submission of their intellect to a purportedly objective test, and ongoing professional oversight over their ethical conduct provides all of these other people with a backstop. You may hire a CPA, who will give you advice about ways to manage your corporation. What the CPA tells you to do with the corporation is probably a good idea from a tax perspective. But the fact that the CPA can say, “that’s tax advice, you want to run that by a lawyer before you actually do it,” allows the CPA to isolate the kind of risk that the CPA takes on while dispensing that advice. The lawyer, who must accept a more generalized, and therefore greater, risk profile when dispensing advice, necessarily must charge a higher rate for so do it.

    Another proposal, in addition to the idea of changing the way legal education is structured, is the idea of a limited law license. This would create a middle tier, between the other kinds of professionals described above, and general service lawyers. If you had a problem whose universe was easy to identify, for instance a divorce or a business formation, you would probably seek out a lawyer who had the bulk of her experience in that field anyway. So why create a high-level of regulatory barriers to entry for a lawyer who knows the outset of her professional career that she will practice only in a specific subject matter area?

    I don’t have a particular problem with the idea of making it easier for lawyers to pass the bar in the future, even though I was “hazed” in a way that those future lawyers would not be. “Hazed” goes in quotation marks because I don’t think it was actually hazing. The process imparted upon me a tremendous respect for the profession, and that it be a profession rather than a job. We might relax standards for admissions in the future, but I would oppose the idea that we relax standards for ethics. And whatever we do to relax admission standards in the future, what is created to replace the status Cuomo should still impress upon these future attorneys the cultural, political, moral, fiduciary, etc. importance of what they propose to do, regardless of the fees they can command or the hurdles they must jump to practice.Report

    • Saul DeGraw in reply to Burt Likko says:

      These are all very good points.

      I am amused by the autocorrect of “status Cuomo”Report

    • Road Scholar in reply to Burt Likko says:

      I particularly like the idea of a limited law license. No one goes to school and comes out with a degree in “Engineering”. Your degree will be in [Mechanical/Electrical/Chemical/Nuclear/Software/Bio/Etc.] Engineering. And while there is a common core of math and science that these disciplines (more or less) share, apart from the dorm, student union, and quad, you don’t see each other a lot past your sophomore year.

      Not every lawyer needs to be Matlock.Report

      • LeeEsq in reply to Road Scholar says:

        Most lawyers are specialists these days but there still more than a few lawyers that do general practitioner work because they are solo practitioners or in small firms that do real people law for lower and middle income people.

        I’m skeptical of the idea of the specialized law degree mainly because of the nature of the legal job market. It makes sense to train lawyers as generalists because besides the obvious candidates for clerkdom, big law, or the DA’s office, most lawyers aren’t going to know what sort of career they are going to have. Limiting them is going to make finding a job much more difficult.Report

      • It’s a little different in smaller markets than big cities. The small market lawyer has more need of generalization. The big city creates both opportunity and demand for specialization. Alsotoo, more money in big cities than small towns.Report

      • LeeEsq in reply to Road Scholar says:

        I live in the biggest city and one of the biggest legal markets in the United States. Most of the lawyers I know are specialists but there are more than a few general practitioners who do a bit of everything in Manhattan, the outer boroughs and and the suburbs. I’m an immigration lawyer but had no idea that this would be my career trajectory as a lawyer when I was studying for the bar.Report

      • Kim in reply to Road Scholar says:

        Small certificates make it easy to pick up a variety of specializations. Take a 1 year “general lawyer” curriculum, and then you can get started practicing after another half year, rather than waiting until you have all your specializations done.Report

    • @burt-likko

      I should have read this comment before I responded to Lee and Saul above.Report

    • Kim in reply to Burt Likko says:

      Nearly all of them do this correctly??? hahahaha. It’s a rite of passage for first time homebuyers to get screwed over by the real estate agents. There’s a severe conflict of interest for the real estate agents, and they nearly always manage to screw over one party (fair bargains are a bitch, granted). You would not believe the shenanigans that we pulled to not get screwed over by our real estate agent.

      You’re lucky if it’s just pressuring you to ask for fewer comps, the horror stories are about seeing problems at closing “well, this just came up” and being pressured into paying for it.

      Let alone the poor shmuck who said that they’d pay for the oil on the property, when it was a gas furnace. (yes, the real estate agent should have seen that coming).Report

    • Jonathan McLeod in reply to LeeEsq says:

      Which I linked to. And, seriously, that guy has a vested interest in perpetuating the status quo.Report

      • Barry in reply to Jonathan McLeod says:

        “Which I linked to. And, seriously, that guy has a vested interest in perpetuating the status quo.”

        BTW, for those unfamiliar with the author of the post on Lawyers, Guns and Money, Paul Campos is an early ‘scamblogger’, a hard-core critic of the legal education system, and a guy who’s done yeoman work in warning others.Report

  9. zic says:

    It’s not like there’s a lack of need , it’s a problem of inability to pay for good legal representation.Report

    • LeeEsq in reply to zic says:

      Or a lack of lawyers. There are lots of lawyers out there because many crapy law schools basically have an open admissions policy to take advantage of student loans. The problem is that that these lawyers are in no shape to actually practice law on their own.Report

      • Barry in reply to LeeEsq says:

        1) The job placement rates are miserable for mid-ranking schools.

        2) The ‘open-admissions’ schools would also be there in a CATO system; it’s true that they would not be making sweeeet, sweeet cash off of subsidize loans, but that just means that they’d have crappier buildings and the professors would be wearing cheap schools.Report

  10. Barry says:

    Jonathan: “Matt (yeah, we’re on a first name basis now) is a law student. Soon, he will be a law school grad. He has gone through the over-priced torturous regime he decries. If his preferred policies were implemented tomorrow, he would be a significant disadvantage compared to previous law school cohorts in his job prospects and income potential. He wants to drive salaries down for all lawyers, get a whole bunch new lawyers in the market and he will still be on the hook for all his student loans. Unlike many of his detractors who also have a vested interest in the status quo, he is willing to present a principled argument even if it winds up hurting him in the long run.”

    IIRC, he’s on a scholarship.

    Please, take the several minutes to read the comments.Report