Why are lawyers so expensive?

by on 13 November, 2015
















7 thoughts on “Why are lawyers so expensive?

  1. As someone heading towards the end of his law degree I find myself agreeing with a lot of this, I must admit my biggest problem is working for someone else for those 2 years before i can open my own office. Especially as a mature age student I would like to be able to run my own business not be stuck making someone else money

  2. I think the AFR recently said that there will be 16,000 law graduates this year whilst there are about 66,000 solicitors in practice across the country. That suggests that barriers to entry such as the cost of studying don’t really present problems. The ready inference is that people are willing to pay the costs you have identified in the quest for high paying jobs. Whether it is fair is another question but the costs (other than the costs of the undergraduate degree) are, in comparison to the income those people are chasing, minimal.

    The question of unnecessary standards is a little more complex. I think there is something to be said for a broad knowledge of the law as a pre-requisite to practice. Each area of the law impacts on others. There are major overlaps between family law, wills and estates, corporate and commercial and, on occasion, even criminal. Having a basic understanding of the broad sweep of the law is necessary to give proper advice in specific areas. So, I don’t think you can say it’s a waste of time to study outside the area that, as a teenager, a student has decided will be his/her dedicated area of practice.

    Part of your complaint, as I understand it, is that unnecessarily high standards are demanded of those wishing to practise law and that this is unfair. Less qualified, less motivated people ought to be given a crack at it as well. Whether or not it is fair, one doubts whether dropping those standards would make very much difference.

    That just doesn’t reflect the reality. If graduates of a very high standard can’t get a job in the current environment, why is there reason to suppose that inferior candidates could? Law firms are rational actors; usually so absolutely rational as to be ruthless. Why wouldn’t they drop the incomes they pay graduates and hire more, less accomplished graduates if they could still deliver the services their clients demanded, but at a cheaper rate?

    The answer is that clients in the legal market – particularly corporate ones – want a high standard of legal services and are prepared to pay for it. Delivery of that requires high quality people and they cost. Those people would, likely as not, choose a different, better paying career if they could not achieve the income they wanted within the law. For the reasons set out above, the barriers to entry are trivial and do not underpin those high incomes. The real driver is the expectations of the higher end of the market.

    The problem we have with our law is that it is ridiculously complex and understanding it is the domain of very well-qualified, very experienced people. Those people demand, and usually get, the high incomes that go with such difficult and complex jobs. The laws inaccessibility to much of the population is explained by that. It is unfair but opening the practise of the law up to anyone who wants to hang a shingle is hardly the answer. That intrepid soul is unlikely to have much better understanding than the people who hire him. In those circumstances, the clients will still find themselves effectively unassisted.

  3. Years of full-time study are certainly not trivial barriers to entry. They are financial barriers to entry that have nothing to do with the applicant’s skill, knowledge or competence.
    Supervised practice and PLT is not a trivial requirement. Again it is a financial barrier to entry for perfectly qualified practitioners–including experienced and highly competent overseas barristers and solicitors from the UK and other Commonwealth nations.
    Police prosecutors already practice exclusively in criminal law. Migration agents, conveyancers, etc. do the same in their respective fields.
    Opening up the profession will bring the price of representation down at the margins. Simple as that.

  4. “Trivial” was the wrong description. I accept that there will be a decent chunk of people who look at what it takes to become a lawyer and decide not to pursue that career.

    The effect of your argument is that those people, if they were not required to jump that hurdle, would enter the market and drive down prices. The problem is that the evidence does not support that conclusion. With the barriers of which you complain in place, there is a massive over-supply of people willing to provide legal services. You say that flooding the market with more, less qualified people will drive prices down, but the market is already heavily over-supplied and prices are maintained.

    High prices are driven to some extent by high end customers, the point I made above. They are also driven by very heavy regulatory and ethical burdens on practice (as opposed to entry). Law firms have significant overheads. It only makes sense to employ extra people if a significant amount of revenue can be generated from them.

    Allowing a lower-qualified person to perform legal work would make no difference if that person still had to meet all the regulatory burdens that other participants in the legal market have to meet (things like trust accounting, office systems, insurance etc). That is where the real cost is.

  5. It would make a difference at the margin.

    Keep in mind a lot of people these days can independently operate from a home office with a laptop and a printer if they wanted to. A lot of those people could be first year lawyers making a go of it. That would make a difference at the margin.

    You could have a perfectly well-qualified criminal law practitioner, at least in the Magistrates Court or County Court, out there practising in the field after a year or so of study. That’s what a police prosecutor is, in effect. Saving 3 to 4 years of practicing time and setting up shop after a year would make a substantial difference at the margin for the law student and his clients alike, without much in the way of prejudice to either. It would be a substantial cost reduction. People talk about access to justice for poor, disadvantaged clients–this would be stop number one for them, I suspect, when dealing with criminal law issues at least.

    There is similar scope for reductions at the margin when dealing with other areas of the law.

    Similarly keep in mind that for graduates going into the big firms that don’t practice in criminal law, that’s one less year of study for all of their graduates if they study a commercial law course that doesn’t include criminal law. It’s one less PLT course to take. It makes a difference at the margin because they have a wider field to choose from though, as you point out, it makes much less of a difference for the bigger firms and the bigger clients.

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