The Price of Law: How the Market for Lawyers Distorts the Justice System

Bill Clinton’s legal bills in connection with the Lewinsky scandal topped $10 million; the bill for Ken Starr’s investigation of the President exceeded $50 million. The cost to the eight families portrayed in the bestseller A Civil Action for their tort suit against a manufacturing company accused of dumping hazardous chemicals into the water supply was $4.8 million (paid from a settlement of about $8 million); the cost for the defense exceeded $7 million. Lawyers who represented the three states in the nationwide suit by state attorneys general against tobacco companies to recoup smoking-related health care costs were awarded $8.2 billion in legal fees, averaging in some cases over half a billion dollars per lawyer. Total revenues to legal service providers in the U.S. now reach over $125 billion annually, having grown at a rate that far outstrips the growth in the economy generally in the past few decades. These astronomical and seemingly exceptional figures betray a more widespread reality: legal process has become extraordinarily expensive, for all matters. The legal fees for a Canadian judge successfully suing a satirical magazine for $75,000 in damages were $20,000; the magazine’s fees $40,000. Fees for a personal injury action by a young model who miscarried at four months and suffered a facial scar due to a slip in a grocery store were $11.7 million of a $30 million damage award; disbursements for costs and expenses alone topped $750,000. Divorce litigation routinely costs those few who can afford it hundreds of thousands of dollars; for most litigants, it commands what wealth they do have. Why do lawyers cost so much? Surprisingly, we have few insights into this basic question. Conventional popular culture has one suggestion: lawyers are an avaricious lot who will bleed you dry. Conventional economics has another: legal training is expensive. And conventional professional wisdom has another: lawyers enjoy a stategranted monopoly over which they control entry for the purposes of protecting the public. None of these is particularly compelling. While each seems to hold some grain of truth, each also raises more questions than it answers. How is it that the profession has come to be dominated by vice? Why is law so complicated that legal training is so expensive? Is the public better off with inexpensive low quality legal advice or high quality legal advice it cannot afford?