...is something I'd like to get into after getting into the health job market.
Tyler Cowen has a post here.
The legal profession is a little funny. It seems reasonable to say that it's glutted from everything I can tell. I haven't looked at the data closely, so I don't know what salary trends are. It's still extremely well paid but that can be a misleading guide to things depending on what supply looks like, and because it's so cartelized. But even with the cartelization one odd thing is the god-awful hours they keep. How does this fit in with the glut story?
I imagine it's something like the extensive hours for scientists - something having to do with asset specificity. Lawyers are not interchangable when it comes to clients (or are they?), they have specific knowledge so they can't respond to by reducing their hours as easily.
I am not entirely satisfied by that. It seems unlikely that people are working sixty, seventy plus hours a week on a single client after all. But maybe people with legal experience can chime in.
The other weird thing about lawyers is that while they do produce output they also produce demand for more lawyers (doctors are sort of the same way). That seems have multiple equilibria potential but it also makes it more difficult to think about gluts.
Daniel
ReplyDeleteReading your comments on legal services is an excellent reminder of the wide Gap between real knowledge and the BS of academia.
Here are some of the true economic facts about the practice of law. It would be interesting to see someone actually take these facts and tell the truth about the corporate practice of law.
1. The day-to-day behavior of lawyers, number of hours worked, etc., is driven by two propositions unique to the law. First, as a matter of law it is unlawful for lawyer and client to enter into a long term contract. Clients can fire lawyers at any time, for any reason. Second, per Beckwith (Selling the Invisible), clients have no means or method to know whether they are getting good or bad legal service. Accordingly, the best way to keep a client is to keep the client from coming in contact with other lawyers. This is the reason for the up and out system. Young lawyers are kept 3 to 7 years and the fired so as keep clients from switching to the younger lawyer. This is also the reason for all the uncivil behavior, and jealously. Lawyers hate other lawyers, not because you might loose a case to one, but because you might loose a client.
2. Lawyers do not work for the corporate firm that pays the bills. They work for the CEO and their job is to keep the CEO in office, pigging out, as long as the CEO wants to remain. IOW, lawyers are second order agency problems and nothing more.
3. The legal profession contradicts Adam Smith's fundamental principal of the division of labor. If you are IBM and make the best software in the world, you can sell such to every bank, every retailer, every plane mfg. etc. Not true in the practice of law. Only one person can hire the best lawyer. All the rest have to make do with second best. The best IP lawyer cannot work for Samsung and Apple, for example. This badly hurts the economy when good legal service is important.
This makes a profound difference on a small scale, as well. If you are one of five criminal defendants, the defendant with the most money will hire the best lawyer and everyone else's lawyer will be second best, at best. And the better lawyer will be trying to put you in jail, if that benefits his client.
There are sound studies showing that the success of Silicon Valley was built on a departure from this rule, with lawyers changing from representing firms to representing "deals." The effect was deals were done in SV which could not be done elsewhere. Look for writings by Suchman.
4. The vast bulk of corporate legal work is the providing of criminal services,comprised of two parts.
First, insurance defense is criminal. Here is a link to a recent paper on SSRN http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2174649
If you read through the paper you will find a discussion about how insurers hire and compensate under schemes that give adjusters and claims counsel incentives to breach the insurers contractual duties to the insured. This is nothing but garden variety mail and wire fraud, with insurers falsely promising to live up to their insurance contracts to insureds while actually creating internal systems to breach such contracts and avoid payment.
Second, in 1995 the Supreme Court held in Central Bank of Denver that it was lawful for a lawyer to tell a client how to violate the securities laws. Aiding and abetting is telling someone how to violate the law. Accordingly, today, the entire practice of securities law consists of telling clients how to lie in offering or selling securities. The clients demand such services. Those of us who actually understand this knew that the result of Central Bank of Denver would be, and was, a massive collapse in the stock and other securities markets. Look, for example, at S&P, who was very obviously counseled every step of the way how to lie, cheat, and steal.
In sum, it would be very interesting to see a sound economic study of such a large, dysfunctional, criminal endeavor.
Daniel
ReplyDeleteReading your comments on legal services is an excellent reminder of the wide Gap between real knowledge and the BS of academia.
Here are some of the true economic facts about the practice of law. It would be interesting to see someone actually take these facts and tell the truth about the corporate practice of law.
1. The day-to-day behavior of lawyers, number of hours worked, etc., is driven by two propositions unique to the law. First, as a matter of law it is unlawful for lawyer and client to enter into a long term contract. Clients can fire lawyers at any time, for any reason. Second, per Beckwith (Selling the Invisible), clients have no means or method to know whether they are getting good or bad legal service. Accordingly, the best way to keep a client is to keep the client from coming in contact with other lawyers. This is the reason for the up and out system. Young lawyers are kept 3 to 7 years and the fired so as keep clients from switching to the younger lawyer. This is also the reason for all the uncivil behavior, and jealously. Lawyers hate other lawyers, not because you might loose a case to one, but because you might loose a client.
2. Lawyers do not work for the corporate firm that pays the bills. They work for the CEO and their job is to keep the CEO in office, pigging out, as long as the CEO wants to remain. IOW, lawyers are second order agency problems and nothing more.
3. The legal profession contradicts Adam Smith's fundamental principal of the division of labor. If you are IBM and make the best software in the world, you can sell such to every bank, every retailer, every plane mfg. etc. Not true in the practice of law. Only one person can hire the best lawyer. All the rest have to make do with second best. The best IP lawyer cannot work for Samsung and Apple, for example. This badly hurts the economy when good legal service is important.
This makes a profound difference on a small scale, as well. If you are one of five criminal defendants, the defendant with the most money will hire the best lawyer and everyone else's lawyer will be second best, at best. And the better lawyer will be trying to put you in jail, if that benefits his client.
There are sound studies showing that the success of Silicon Valley was built on a departure from this rule, with lawyers changing from representing firms to representing "deals." The effect was deals were done in SV which could not be done elsewhere. Look for writings by Suchman.
4. The vast bulk of corporate legal work is the providing of criminal services,comprised of two parts.
First, insurance defense is criminal. Here is a link to a recent paper on SSRN http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2174649
If you read through the paper you will find a discussion about how insurers hire and compensate under schemes that give adjusters and claims counsel incentives to breach the insurers contractual duties to the insured. This is nothing but garden variety mail and wire fraud, with insurers falsely promising to live up to their insurance contracts to insureds while actually creating internal systems to breach such contracts and avoid payment.
Second, in 1995 the Supreme Court held in Central Bank of Denver that it was lawful for a lawyer to tell a client how to violate the securities laws. Aiding and abetting is telling someone how to violate the law. Accordingly, today, the entire practice of securities law consists of telling clients how to lie in offering or selling securities. The clients demand such services. Those of us who actually understand this knew that the result of Central Bank of Denver would be, and was, a massive collapse in the stock and other securities markets. Look, for example, at S&P, who was very obviously counseled every step of the way how to lie, cheat, and steal.
In sum, it would be very interesting to see a sound economic study of such a large, dysfunctional, criminal endeavor.
The legal profession is fascinating. Maybe that's a potential area for collaboration when we actually get together . . . don't you ever respond to emails? :P
ReplyDeleteDaniel, When I was practicing, it was very common to spend 80-100+ hours per week on a single matter for a single client. Caution: I worked at top fancy corporate NYC law firm, so my experience may not be the norm. Also, I only practiced for less than 3 years, so I was still a junior associate when I decided to make the leap to philosophy phd route. I would guess that it is very unusual for a partner to spend 40 hours a week on a single client, let alone a single matter. So you should think about different tiers: senior partner, junior partner, of counsel, senior associate, mid-level associate, junior associate.
ReplyDeleteInteresting - thanks
DeleteAnd by "top fancy law firm," I do not mean to be a d**che bag, but only to indicate that these firms may operate differently than other places, usually for the worse. For example, my firm has a reputation for being a "factory." This is not something to brag about, and many junior associates do not obtain the same lawyering skills that others at smaller shops develop due to greater responsibility at an earlier point.
ReplyDelete