My favorite professor, Professor
Michael I. Krauss, from my days in law school is now a contributing author for Forbes. He recently wrote an article, “Law School Begins: Here’s A Message to the New Crop of 1L’s”, which I am pretty sure is the
current version of a speech he’s been giving for long time including when I
first met him twelve years ago.
Near the end of the article he
encourages some 1L’s (first year law
students) to “Get thee out now whilest a partial refund of tuition is still
available”, which gives you a good flavor for his overall message. Professor Krauss ought to be commended
for acknowledging the very real struggles that young lawyers today face given
the exorbitant cost of law school and the overall grim employment prospects for
new graduates. He does not quite
say that law school is a bad investment, but he comes close.
However, in the midst of his
discouraging he also encourages with nuggets like this, “Are you interested in
helping the 50% of Americans with legal problems who cannot currently afford
the legal help to resolve them? ... welcome to law school, we need you badly…” (Emphasis added).
Sure law schools need students, but Professor Krauss meant society needs the law students. To some degree, I doubt that. Of course, it would be bad if all law
schools in the United States closed.
Society will eventually need some
of today’s 1L’s to replace older lawyers as they retire. But does society need them all? If, for example, half of the law
schools closed, would society be better off? Maybe.
Lawyers are a transaction
cost. In the United States, we
largely follow the “American Rule”, which means each party pays its own legal
fees. Thus, the costs of legal
services should be taken into account
when making legal decisions.
Because of that, sometimes it’s a good thing that Americans cannot “afford”
the legal help to resolve their problems.
Being one of the newer attorneys
to my firm, I share in the responsibility to respond to “cold calls” – calls that
come from the yellow pages, the Internet or were otherwise not referred to a
particular lawyer in our firm. I
tend to think of legal problems in monetary terms because, most of the time,
the matters that I am involved with in one way or another come down to
money.
A cold call came into the office
recently, which I will refer to as $3,000 problem. By this, I mean the potential damages the potential client claimed
to have suffered stemming from a breach of contract struck me as being worth
$3,000 at max. After listening to
the issues, I quickly thought if I am reasonably lucky it would take me 20 hours
to get this person a 50-66% recovery – a 100% recovery would take much, much,
longer. However, if I am really
lucky, 2 hours might get that same 50-66% recovery. My current hourly rate is $200. What should I
do? Politely and quickly, tell the
potential client that I cannot help.
I should do this because I can
reasonably expect to recover $1,500 to $2,000 after $4,000 (20 x $200) of legal
work. In other words, if I were to
“help” the potential client, I can expect to make them worse off by $2,000 to
$2,500 ($4,000 - $2,000 or $4,000 - $1,500).
What happens when the market is
flooded with lawyers and not everyone has enough work? Lawyers start “helping” these types of
potential clients. For example, I
could have suggested to the potential client that I might be able to do two
hours of work and obtain a 50-66% recovery. In other words, I could say that I might be able to obtain $1,500.00
to $2,000.00 for $400 (2 x $200). If
the potential client says “yes” then he or she is at the casino.
This, however, is not just a
$3,000 problem problem. It’s an
every case, matter, contract, etc. problem. Economists – and certainly George Mason University School of
Law professors – will tell you that things need to be analyzed on the
margin. Clients and lawyers can,
and most of the time should, analyze every decision to purchase/sell legal
services on the margin.
The question becomes not simply
should this case be taken, but should this particular motion be made, letter
sent, revision suggested, etc.
These decisions are often complex and cannot be made in an instant. The
lawyer, usually – but not always – has a better idea as to the likely result. In other words, the lawyer is usually in
the best position to say whether the particular action should be taken. However, the lawyer – like most people
- needs work to survive.
Lawyers are often placed in the
unique position that they should
advise their clients in a manner that is against their own self-interest. I would say that I do this almost
daily. Consciously or not, I bet
that the wrong choice is made more often when there is not enough work to go
around. Thus, having too many
lawyers makes the improper choice more likely. Therefore, society might
be better off if we killed half the lawyers – or closed half the law schools.
That’s My Argument.
