Planning for Life

Why Are Lawyers So Expensive?

Posted by Harry S. Margolis on March 6, 2018

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By Harry S. Margolis

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Lawyers are too expensive to be affordable by most Americans. The result is that most people who need legal advice and representation don't get it. This can have dire consequences with people losing their homes, getting less than adequate care and even having their lives put at risk. A recent story on National Public Radio described the plight of political asylum applicants who are unrepresented by counsel. Most lose their cases and rather than going back to life-threatening situations, going underground, joining the masses of undocumented immigrants who fear their next traffic stop.

The lack of legal representation is also problematic for the court system which does what it can to assist people representing themselves, known as pro se. Court personnel can spend a lot of time trying to assist them, as do judges who often conduct long interviews from the bench attempting to determine the facts and legal issues involved in the claims and counter-claims. (This also adds to legal costs for others while their lawyers wait for their turn before the judge.)

So, why are lawyers so expensive and what can be done to make the cost legal representation more reasonable? Here are some reasons lawyers are so expensive:

  • Limited competition. Due to licensing requirements, the number of lawyers is somewhat restricted, though this has changed as law schools have expanded significantly in recent years. In 1964, there were 22,753 first-year law school students. This increased to 40,717 in 1979, to 44,298 in 1994 and peaked at 52,488 in 2010. It has since dropped back to 44,518 in 2012 and 37,107 in 2016 in reaction to the oversupply of attorneys and the difficulties new graduates were having finding jobs during the recession. So, while the number of lawyers is far greater than in the past, to the extent the number is restricted, there’s less competition and lawyers can set higher fees.
  • High cost of law school. Law school tuitions plus room and board cost more than $70,000 a year for private law schools and for out-of-state residents going to many public ones. The cost can be half this much for in-state students at some public universities. Entering the legal profession $200,000 in debt, not counting any undergraduate loans, many young law graduates are compelled to earn as much money as possible. Once on the track of seeking to earn a high income, it's hard to leave it.
  • Value of legal work. Legal representation can be vital to the welfare of individuals, companies and non-profit organizations. They are willing to pay for the right representation because so much is at stake.
  • Much of what lawyers do is time-consuming. Lawyers must sit with their clients, learn their situations and goals, and together work out an individualized plan that will help the client achieve those goals to the extent possible. Then they must help implement the plan, including drafting documents, explaining their terms to clients, revising them as necessary, and negotiating with other parties. Depending upon the client’s circumstances and goals, the plan may be more or less complex and the time involved greater or lesser. Litigation, especially, can swallow huge chunks of time with all-day depositions, discovery requests and court appearances.
  • Lawyers are often inefficient. In part because of the mom and pop nature of law firms, few have the wherewithal to develop efficient systems that bring down cost of doing business and the time involved in other businesses. Without national law firms investing in state-of-the-art computer systems, the delivery of legal services is likely to become more efficient relatively slowly.

How Can Legal Costs Be Reduced?

Of course, one way to lower legal costs is for attorneys to simply lower their fees. This won't sit well with most attorneys. After all, would anyone else voluntarily agree to receive a lower income? So, here are a few ideas that could make a dent in the cost of legal services for those who can't afford the going rates:

  • Technology. While the legal profession is slow to adopt technological change for some of the reasons mentioned above, advancements are coming along. For instance, a new website, InterActivePlanning.com, is powered by IBM Watson with the goal answering users’ questions and helping them reduce legal costs. (Though, to be honest, it doesn't seem to work very well.) Most law offices are using technology within their offices to reduce costs and produce more consistent results for clients. This cost savings should help lower prices.
  • Offshoring. Many large law firms are moving a lot of their functions overseas. Law school graduates in India doing paralegal work will be much less expensive than US paralegals or junior associates doing the same work. And given the time difference, they can get the work done while the lawyers in the United States are sleeping.
  • Loan foregiveness. Some law schools help their graduates pay off their law school loans if they are working for non-profit organizations or legal services. This is only available to the richer law schools, but could be expanded.
  • Increase legal services funding. Free or sliding scale legal services for people with lower income has always been in meager supply. It has also been under attack by those who oppose lawsuits aimed at creating systemic change rather than simply representing one individual at a time. Expanded legal services would help protect the legal rights of the poor and relieve the courts of having to assist pro se individuals who appear before them.
  • Limited representation. Some lawyers are beginning to assist their clients with preparation of papers, but not representing them in court or before governmental agencies. This reduces the cost, but can also reduce the benefit of the legal assistance.
  • Sliding scales. Some law firms have begun experimenting with charging differential fees based on the client's income. A non-profit in Massachusetts, Justice Bridge, does this by offering office space and mentoring to new attorneys who provide services to lower-income clients. This provides the dual benefit of lower-cost legal representation for clients and training for newer attorneys. (I serve on the panel of mentors to Justice Bridge attorneys.)
  • National law firms. As mentioned above, one of the barriers to more efficient, less expensive legal services is the absence of large law firms providing services to individuals and small companies rather than to large corporations and rich people. Two rules governing law firms are significant reasons for this absence. First, law firms may only be owned by lawyers. This means that they cannot get outside investors or raise money like other businesses, which deprives them of the resources necessary to invest in systems and personnel to drive efficiency. Second, lawyers, and thus law firms, are licensed by individual states which makes it difficult to have a national business. These rules have been relaxed in Great Britain, with the growth of consumer legal services there. They are beginning to be relaxed in the United States, which should lead to more, better, and less expensive consumer legal services.
  • On line legal services. More legal services are being offered on line. For the reasons that restrict the creation and growth of national law firms, LegalZoom and RocketLawyer, among other pioneers in this field, purport not to be providing legal services, just forms. They instead link their users to independent lawyers who have agreed to their fee structure. This should lead to expanded, less expensive, and better service over time.

The bad news is that quality legal services are still expensive and unavailable to the vast majority of US residents. The good news is that this can change. However, there's no silver bullet. The legal profession should work to make all of the changes listed above to facilitate the availability of legal representation to all residents of the United States (as needed).

Topics: Legal profession

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