“The biggest problem,” says Ury, “is that ordinary citizens cannot afford to hire a lawyer. The bread and butter of small firm practices are criminal defense work, wills and trusts, leases, closings and divorces. Yet in Connecticut, 80 to 85 percent of divorces have a self-represented party because most families can’t afford to hire one lawyer, let alone two. Nearly 90 percent of criminal cases are self-represented or by a public defender because families can’t scrape together a retainer.”
I'd call that a 100%, red-line, sirens-blaring, system failure. "Less people are hiring us for $500/hour! What shall we do?" might not be the right question. "Why did anyone ever do so in the first place?" might be closer.
It's not just a lawyer failure, but a legal system collapse. People are being denied justice.
The lawyers themselves are not necessarily to blame. There are two or three interlinked aspects:
1. The growth in regulations, which draws away limited legal resources toward big companies, leaving less (or higher fees) for criminal or civil defense
2. The growth in criminal prosecution of victimless crimes and especially ramping up the war on drugs
3. The collusion between politicians and the prison industry, which has created a monetary incentive to incarcerate people (looking 'tough on crime' has more than just electoral benefits)
I hope you don't take this as a flippant comment, because it isn't meant to be, but the answer to your latter question is - it's what the market bears (or did bear).
There's plenty of lawyers out there - but, like in programming, there are a lot fewer good ones. In general, people are willing to pay $500 / hour because they can't find one of similar quality for a lower price.
""Why did anyone ever do so in the first place?" might be closer."
I'm interpreting this as "why would we need lawyers, we did fine without them", but that is very untrue. In the past there simply was much less rule of law, with the cronyism and systemic state of fear of citizens that follows from it; as is still the case in most of the Third World and especially in places like China and Russia. But to a lesser degree also in Westerns countries in Europe and the US, and especially in places and/or social strata that don't trust the legal system, or where those who are supposed to uphold the law are corrupt.
Lawyers may seem to be a net tax on the system, and the rule of law could theoretically exist without lawyers, true; but history has proven that systems where people have access to specialists who can fight for their rights are more efficient and, more importantly, better to live in than others.
> I'd call that a 100%, red-line, sirens-blaring, system failure. "Less people are hiring us for $500/hour! What shall we do?" might not be the right question. "Why did anyone ever do so in the first place?" might be closer.
I've heard the reason described as such:
"People will pay the highest possible amount they can afford for things like doctors and lawyers because if there is a screw up they die or go to jail.
When the stakes are so high you pay the most you possibly can to ensure, to the best of your ability, the best possible outcome for yourself."
Atleast this line of thinking makes sense to me. If I'm ever up on trial for something that could send me to jail, you can bet I'll spend every penny I have to ensure that I'm found innocent.
I've spent the past 10 years working in global corporate law firms as a software developer and have witnessed this change first hand. The legal profession is based around chargeable hours. This is not a good deal for the consumer of legal services. Billing by the hour does not encourage lawyers to work more efficiently or effectively, in fact it rewards the opposite. Recently larger clients have started to stand up to the legal firms and demand that work should be done on a fixed fee basis or a shared risk/reward basis. Suddenly lawyers are beginning to to act like business people and are looking at improving their own internal efficiencies now that their fees are capped. One example of this are lawyers trying to empathise more with their fixed fee clients' business strategy and point out legal pitfalls before they happen - wow a proactive lawyer! Observing how much money law firms are currently investing on improving their efficiencies then I think what we are witnessing is a shift to a new model and not just a blip.
Based on your experience, I'd love to chat with you offline. My law firm (together with another firm in London) is building software for deal lawyers. If you're interested in meeting, you can reach me via the email address on my firm's page: http://yusonirvine.com/
If nothing else, I'd like to introduce you to my UK counterparts.
Fundamentally, law remains a guild system, with the governing licensing restrictions severely limiting the ability to innovate. Only licensed persons can be owners of firms and only licensed persons can provide the key services. No fee-splitting or profit sharing is permitted with any person who is not licensed. Even one who is licensed is limited is performing services other than in the locale for which he is licensed. All of this may be well and good for "maintaining standards," as the bar associations say, but it means this is and will remain a closed profession that remains remote and removed from average people.
This is not a knock on professionalism. A really good lawyer is well worth the price, even at high rates, for many business transactions. But making services broadly affordable remains a challenge. Technology can help as long as the laws bend enough to allow firms to adopt innovative business models taking advantage of it - how far this can go will ultimately depend on the rules of the guild.
This article is spot-on (I'm one of the few on HN that have worked as an attorney in biglaw).
One theme it barely touched is that, like any other technology, legal innovations inevitably get commoditized. Fundamentally, law firms have been unable to properly adjust to this commoditization due to a lack of technology (outsourcing is a short term solution). The only solutions they come up with are to cut overhead costs, which only gets you so far.
The big picture for the legal industry, is that you have extremely bright young people fleeing the industry because this lack of technology forces them to do this mundane commoditized work. And like any commoditized product, the basis for competition ends up on price, which ends up just forcing these people to handle intense amounts of mundane commoditized work. This is obviously not sustainable, if you want to maintain a law firm with the best and brightest legal minds. It's my observation though, that most partners in a position to do anything either do not see this or do not care (because they'll be gone by the time things fall apart anyways).
Exactly! What I've learned, though, is that there is always a need for a human being at the end of the process. That's where lawyers will always be needed: to exercise nuanced judgment that just cannot be systematized (yet). The trick is to be a lawyer who can work as part of a bigger process that includes smart technologies and less expensive (and perhaps, less skilled) labor.
I live and breathe this topic. After 12 years at big law firms in NYC, myself and a collection of our best and brightest broke off and founded our own firms (mine in NYC, another in London).
This is actually very relevant to the HN community, because it's all about how to run a business. The problem with legal services begins and ends with poor business practices.
Law firms are addicted to covering their own lack of spending discipline by raising their hourly rates and pushing attorneys to bill clients more for less value. The "solutions" that they're undertaking now (cutting associate salaries, etc.) are equally wrong-headed.
Four years ago, I was making $400K+ at a top law firm. When I became eligible for partnership at my firm, I decided to leave instead. Why? Because I did not want to own a tiny amount of equity in a poorly-run business. Down the hall from me were several men in their mid-eighties who were drawing $1MM+ pensions and turning up for work two days a week. They had teams of secretaries who printed off their email and read them a digest each morning. I watched the firm spend, spend, spend to recruit "the best and the brightest" from Ivy League schools. After those new lawyers were hired, they would be put to work doing tasks that any decent temp worker could do. Young attorneys were being billed out at $500+ per hour and pressured to make their minimum hourly quotas every year. Our offices were expensive. Our parties were expensive. The I.T. support was expensive because it had painted itself into vendor lock-in and a huge (and useless) support staff. I flew first class everywhere. I stayed in the Four Seasons for months on end.
Sounds great, right? Nope – not when you're considering becoming an owner of that company. I saw the writing on the wall. Clients were bailing. They were getting better at doing my job with in house people. They were pressuring firm management to write off big bills and compete in RFPs.
So I got out, and I've never looked back. I did it because I think I can run a business better than they do. I did it because I actually care about whether my clients feel like they've gotten their money's worth. Also, I did it because I wanted to build an IT platform for lawyers that wasn't hampered by incompetent IT staff and poorly-chosen, expensive solutions.
Today, I have many of the same clients that I had back then. My clients are some of the biggest names in their field, and they stuck with me instead of sticking with the big name law firms. When my clients ask me to quote a fixed price for my work on a project, I give them a reasonable fixed price because I can afford to do that. I have low overhead (ridiculously low, actually). I can provide better service than ever before, because I have better tools at my disposal. I don't waste time fighting my way through clumsy solutions like Sharepoint, Deltaview, Worksite, or whatever other POS is in vogue at big law firms today.
I could go on about this forever, but suffice it to say that this article and the phenomenon behind it is extremely interesting to me. I also think it's a great case study for entrepreneurs. Think of it this way: what if your target market was dominated by companies that charge way too much, are extremely inefficient, and are carrying a huge, ever-growing cost basis? Sounds like a good opportunity, right? Well, it is!
Absolutely! BigLaw is (was?) a house of cards waiting for the right circumstances to blow it over. My law practice is only part time, and I run it like my software company operates - lean, innovative and hellbent on providing really good value for clients. I have more than enough legal clients in the pipeline to keep me busy and my startup background gives me a great foundation for advising my target clients. As for tools to run my practice, if I can't get what I need at a reasonable price I build it and make it available to my colleagues at a reasonable price.
The problem is that law school is an absurdly expensive exercise that, incredibly, doesn't actually teach graduates how to practice law. How else can you explain the fact that there are tons of unemployed JDs out there, and yet the average citizen can't afford basic legal services?
Shrinking market for legal services is good news to me. People becoming less litigious? It is actually possible to do anything without a highly paid expert to tell you whether you're not breaking some complicated law? Does not sound like something to worry about.
The market is not shrinking; the problem is access to justice for ordinary people who cannot afford $500 an hour. Also, perverse incentives like "No win, no fee" encourage settlements and litigation without helping those who have been genuinely wronged or have an actual case that needs to go to trial.
This article correctly points out that pricing for legal services is undergoing a shift toward the true marginal cost for the service. So the law firm business model where much of partners’ profits are markups on simple, repetitive work done by junior associates is on its way out.
That said, the doom and gloom of this article (and much of the profession) is overblown. Maybe it’s because law is such a conservative profession, but any change is greeted as if it were the coming of the Four Horsemen. It’s as if the entire software industry spent its time worrying about how the internet was going to put Windows programmers out of business, instead of being excited about the opportunities it presented.
Major law firms are filled with smart and experienced lawyers who actually provide a lot of value to their clients. That value is still worthwhile--as the article points out, the rule of law is not going away.
As a law school student, I'm not (unduly) worried about this. Sure, there will be some winners and losers, but that’s what happens in business--and basically what this is about is that law firms are looking more like businesses. Why should I expect anyone to feel sorry for me because of that?
JACK CADE.
Be brave, then; for your captain is brave, and vows reformation. There shall be in England seven half-penny loaves sold for a penny: the three-hoop'd pot shall have ten hoops; and I will make it felony to drink small beer: all the realm shall be in common; and in Cheapside shall my palfrey go to grass: and when I am king,- as king I will be,-
ALL.
God save your majesty!
JACK CADE.
I thank you, good people:- there shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers, and worship me their lord.
DICK.
The first thing we do, let's kill all the lawyers.
JACK CADE.
Nay, that I mean to do. Is not this a lamentable thing, that of the skin of an innocent lamb should be made parchment? that parchment, being scribbled o'er, should undo a man? Some say the bee stings: but I say, 'tis the bee's wax; for I did but seal once to a thing, and I was never mine own man since.- How now! who's there?
What would be really nice is if law was machine-readable (and interpretable). But that would probably require computers being able to understand language.
That'd be a neat trick. Not even the humans can understand legal language. Perhaps the singularity begins with an expert system suddenly grokking the entirety of law, resolving the paradoxes and contradictions, and then suing all humanity for infringement. Hard-takeoff trolling...
What's an interesting segue to this is that fundamentally the "language understanding" issues are mostly red herrings. The gold standard within the legal profession we are constantly led to believe is to pursue a standard of objective fairness and justice which would be better defined by deterministic, logical languages like programming languages rather than fuzzy, broad languages like English.
It is far, far easier to have laws written in code and execute test cases based on those laws before even investing any capital into a venture which may require edge cases of a given law, rather than the current scenario of hemming and hawing around a fundamentally subjective and fuzzy area and eventually subjecting your endeavour to the rigors of being a legal "test case" consisting of much ado about nothing and the outcome is as close to random as anything else.
When you reduce the legal profession to coding and writing test cases though, hell will freeze over the next day. Such a politically powerful faction will never allow themselves to be marginalised in this way, even if they claim to desperately be striving for exactly the kind of scenarios that this would allow; universal access to a completely objective justice system with etc etc etc. The extent to which this is actually impossible is somewhat depressing because it's something of an expose on the hypocrisy implicit in the claims of the legal system to actually serve the public, rather than itself.
But hey, that's life. If it ever does happen my wager is it will be because it is forced on them through market forces, the public at large simply uses alternatives venues for mediation and the legal system is forced to compete with it. I predict much artificial legal protection to prevent this from happening before it actually comes to pass, though.
We're enjoying the substantive conversation this story has generated over at the ABA Journal! I've been jotting down future story ideas based on some of the comments and invite anyone to send insights and tips to [email protected].
- Rachel M. Zahorsky, Legal Affairs Writer
I am waiting for the day when there are laywers in single practice who charge rates of less than $100/hr like many other professionals do. I know some laywers who are complaining about tough times but they still think they are worth $250/hr.
To play devil's lawyer: lawyers have very high fixed costs due to insurance + bar fees. In Ontario they're about $6k a year. Database subscriptions are also very pricey. The expenses are considerably higher than that associated with programming.
Law School doesn't really teach what lawyers need to practice law. I've been tempted to do some videos on open source compliance, basics of contract negotiations, etc. but I just don't have enough time to do everything I want to! Maybe if someone else wants to collaborate, I would make it more of a priority.
This is an absolutely fascinating thread-- thanks to Rachel Zahorsky for the original article, and to sunchild and other commenters for thoughts and inspiration. Am very interested in contacting others on this list with an interest in both law and code.
[+] [-] noonespecial|14 years ago|reply
I'd call that a 100%, red-line, sirens-blaring, system failure. "Less people are hiring us for $500/hour! What shall we do?" might not be the right question. "Why did anyone ever do so in the first place?" might be closer.
[+] [-] iwwr|14 years ago|reply
The lawyers themselves are not necessarily to blame. There are two or three interlinked aspects:
1. The growth in regulations, which draws away limited legal resources toward big companies, leaving less (or higher fees) for criminal or civil defense
2. The growth in criminal prosecution of victimless crimes and especially ramping up the war on drugs
3. The collusion between politicians and the prison industry, which has created a monetary incentive to incarcerate people (looking 'tough on crime' has more than just electoral benefits)
[+] [-] swampthing|14 years ago|reply
There's plenty of lawyers out there - but, like in programming, there are a lot fewer good ones. In general, people are willing to pay $500 / hour because they can't find one of similar quality for a lower price.
[+] [-] roel_v|14 years ago|reply
I'm interpreting this as "why would we need lawyers, we did fine without them", but that is very untrue. In the past there simply was much less rule of law, with the cronyism and systemic state of fear of citizens that follows from it; as is still the case in most of the Third World and especially in places like China and Russia. But to a lesser degree also in Westerns countries in Europe and the US, and especially in places and/or social strata that don't trust the legal system, or where those who are supposed to uphold the law are corrupt.
Lawyers may seem to be a net tax on the system, and the rule of law could theoretically exist without lawyers, true; but history has proven that systems where people have access to specialists who can fight for their rights are more efficient and, more importantly, better to live in than others.
[+] [-] chollida1|14 years ago|reply
I've heard the reason described as such:
"People will pay the highest possible amount they can afford for things like doctors and lawyers because if there is a screw up they die or go to jail.
When the stakes are so high you pay the most you possibly can to ensure, to the best of your ability, the best possible outcome for yourself."
Atleast this line of thinking makes sense to me. If I'm ever up on trial for something that could send me to jail, you can bet I'll spend every penny I have to ensure that I'm found innocent.
[+] [-] wooUK|14 years ago|reply
[+] [-] sunchild|14 years ago|reply
If nothing else, I'd like to introduce you to my UK counterparts.
[+] [-] grellas|14 years ago|reply
Fundamentally, law remains a guild system, with the governing licensing restrictions severely limiting the ability to innovate. Only licensed persons can be owners of firms and only licensed persons can provide the key services. No fee-splitting or profit sharing is permitted with any person who is not licensed. Even one who is licensed is limited is performing services other than in the locale for which he is licensed. All of this may be well and good for "maintaining standards," as the bar associations say, but it means this is and will remain a closed profession that remains remote and removed from average people.
This is not a knock on professionalism. A really good lawyer is well worth the price, even at high rates, for many business transactions. But making services broadly affordable remains a challenge. Technology can help as long as the laws bend enough to allow firms to adopt innovative business models taking advantage of it - how far this can go will ultimately depend on the rules of the guild.
[+] [-] sunchild|14 years ago|reply
I believe this is no longer the case the UK and some other places.
[+] [-] swampthing|14 years ago|reply
One theme it barely touched is that, like any other technology, legal innovations inevitably get commoditized. Fundamentally, law firms have been unable to properly adjust to this commoditization due to a lack of technology (outsourcing is a short term solution). The only solutions they come up with are to cut overhead costs, which only gets you so far.
The big picture for the legal industry, is that you have extremely bright young people fleeing the industry because this lack of technology forces them to do this mundane commoditized work. And like any commoditized product, the basis for competition ends up on price, which ends up just forcing these people to handle intense amounts of mundane commoditized work. This is obviously not sustainable, if you want to maintain a law firm with the best and brightest legal minds. It's my observation though, that most partners in a position to do anything either do not see this or do not care (because they'll be gone by the time things fall apart anyways).
[+] [-] sunchild|14 years ago|reply
[+] [-] sunchild|14 years ago|reply
This is actually very relevant to the HN community, because it's all about how to run a business. The problem with legal services begins and ends with poor business practices.
Law firms are addicted to covering their own lack of spending discipline by raising their hourly rates and pushing attorneys to bill clients more for less value. The "solutions" that they're undertaking now (cutting associate salaries, etc.) are equally wrong-headed.
Four years ago, I was making $400K+ at a top law firm. When I became eligible for partnership at my firm, I decided to leave instead. Why? Because I did not want to own a tiny amount of equity in a poorly-run business. Down the hall from me were several men in their mid-eighties who were drawing $1MM+ pensions and turning up for work two days a week. They had teams of secretaries who printed off their email and read them a digest each morning. I watched the firm spend, spend, spend to recruit "the best and the brightest" from Ivy League schools. After those new lawyers were hired, they would be put to work doing tasks that any decent temp worker could do. Young attorneys were being billed out at $500+ per hour and pressured to make their minimum hourly quotas every year. Our offices were expensive. Our parties were expensive. The I.T. support was expensive because it had painted itself into vendor lock-in and a huge (and useless) support staff. I flew first class everywhere. I stayed in the Four Seasons for months on end.
Sounds great, right? Nope – not when you're considering becoming an owner of that company. I saw the writing on the wall. Clients were bailing. They were getting better at doing my job with in house people. They were pressuring firm management to write off big bills and compete in RFPs.
So I got out, and I've never looked back. I did it because I think I can run a business better than they do. I did it because I actually care about whether my clients feel like they've gotten their money's worth. Also, I did it because I wanted to build an IT platform for lawyers that wasn't hampered by incompetent IT staff and poorly-chosen, expensive solutions.
Today, I have many of the same clients that I had back then. My clients are some of the biggest names in their field, and they stuck with me instead of sticking with the big name law firms. When my clients ask me to quote a fixed price for my work on a project, I give them a reasonable fixed price because I can afford to do that. I have low overhead (ridiculously low, actually). I can provide better service than ever before, because I have better tools at my disposal. I don't waste time fighting my way through clumsy solutions like Sharepoint, Deltaview, Worksite, or whatever other POS is in vogue at big law firms today.
I could go on about this forever, but suffice it to say that this article and the phenomenon behind it is extremely interesting to me. I also think it's a great case study for entrepreneurs. Think of it this way: what if your target market was dominated by companies that charge way too much, are extremely inefficient, and are carrying a huge, ever-growing cost basis? Sounds like a good opportunity, right? Well, it is!
[+] [-] ronp|14 years ago|reply
[+] [-] 127001brewer|14 years ago|reply
Can you go into more detail about the tools you use?
This seems like a good opportunity (as a software product) for selling to smaller firms.
[+] [-] gamble|14 years ago|reply
[+] [-] chopsueyar|14 years ago|reply
[+] [-] praptak|14 years ago|reply
[+] [-] Robin_Message|14 years ago|reply
[+] [-] asr|14 years ago|reply
That said, the doom and gloom of this article (and much of the profession) is overblown. Maybe it’s because law is such a conservative profession, but any change is greeted as if it were the coming of the Four Horsemen. It’s as if the entire software industry spent its time worrying about how the internet was going to put Windows programmers out of business, instead of being excited about the opportunities it presented.
Major law firms are filled with smart and experienced lawyers who actually provide a lot of value to their clients. That value is still worthwhile--as the article points out, the rule of law is not going away.
As a law school student, I'm not (unduly) worried about this. Sure, there will be some winners and losers, but that’s what happens in business--and basically what this is about is that law firms are looking more like businesses. Why should I expect anyone to feel sorry for me because of that?
[+] [-] ahi|14 years ago|reply
ALL. God save your majesty!
JACK CADE. I thank you, good people:- there shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers, and worship me their lord.
DICK. The first thing we do, let's kill all the lawyers.
JACK CADE. Nay, that I mean to do. Is not this a lamentable thing, that of the skin of an innocent lamb should be made parchment? that parchment, being scribbled o'er, should undo a man? Some say the bee stings: but I say, 'tis the bee's wax; for I did but seal once to a thing, and I was never mine own man since.- How now! who's there?
http://www.spectacle.org/797/finkel.html
[+] [-] ahi|14 years ago|reply
[+] [-] civilian|14 years ago|reply
[+] [-] ph0rque|14 years ago|reply
[+] [-] noonespecial|14 years ago|reply
[+] [-] etherael|14 years ago|reply
It is far, far easier to have laws written in code and execute test cases based on those laws before even investing any capital into a venture which may require edge cases of a given law, rather than the current scenario of hemming and hawing around a fundamentally subjective and fuzzy area and eventually subjecting your endeavour to the rigors of being a legal "test case" consisting of much ado about nothing and the outcome is as close to random as anything else.
When you reduce the legal profession to coding and writing test cases though, hell will freeze over the next day. Such a politically powerful faction will never allow themselves to be marginalised in this way, even if they claim to desperately be striving for exactly the kind of scenarios that this would allow; universal access to a completely objective justice system with etc etc etc. The extent to which this is actually impossible is somewhat depressing because it's something of an expose on the hypocrisy implicit in the claims of the legal system to actually serve the public, rather than itself.
But hey, that's life. If it ever does happen my wager is it will be because it is forced on them through market forces, the public at large simply uses alternatives venues for mediation and the legal system is forced to compete with it. I predict much artificial legal protection to prevent this from happening before it actually comes to pass, though.
[+] [-] swampthing|14 years ago|reply
http://www.lexmachina.org/
[+] [-] thwarted|14 years ago|reply
There seem to be a lot of law/lawyer related posts in past week.
[1] http://news.ycombinator.com/item?id=2693432
[+] [-] lhnn|14 years ago|reply
[+] [-] RMZahorsky|14 years ago|reply
[+] [-] JoeAltmaier|14 years ago|reply
1) More sophisticated clients armed with more information and greater market power to rein in costs.
2) A globalized economy, which increases the complexity of legal work while exposing U.S. lawyers to greater competition.
3) Powerful information technology that can automate or replace many of the traditional, billable functions performed by lawyers.
[+] [-] tomjen3|14 years ago|reply
[+] [-] guelo|14 years ago|reply
[+] [-] maxxxxx|14 years ago|reply
[+] [-] a3camero|14 years ago|reply
[+] [-] chopsueyar|14 years ago|reply
[+] [-] sunchild|14 years ago|reply
[+] [-] arihersh|14 years ago|reply
I recently wrote about version control and law on quora: http://b.qr.ae/kRgGyk, and about 'open sourcing' access to the tax code here: http://blog.tabulaw.com/2011/06/open-source-tax-code.html.
[+] [-] DrManhattan|14 years ago|reply
[+] [-] unknown|14 years ago|reply
[deleted]