

Do Too Many Lawyers Spoil The Economy? [1994] - a5seo
http://www.csmonitor.com/1994/0215/15081.html

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rayiner
It's an interesting article, though the conclusion is somewhat underwhelming:
according to the study, there are 40% more lawyers than the optimal number.

The article also points out some legitimate sources of imprecision in the
data. GDP is a poor measure of the economy as a whole. Consider the classical
example of the broken window fallacy. GDP goes up when people go around
breaking windows! In a more real world context, consider the two huge coal
plants that were recently shut down here (thanks to litigation) in Chicago.
They were responsible for about $100m/year in health damage to the community,
and each created only about 50-70 jobs. Shutting down the plants is clearly a
net benefit for the economy, but GDP mis-measures this situation. GDP will go
down after the shut-down, not only because of the lost jobs, but perversely
because fewer people will seek medical treatment for respiratory illnesses!

There is a narrative about their being too much litigation in the economy, but
I'm inclined to believe there is too little. I'm doing pro bono work for a
village in Illinois that was heavily polluted by a subsidiary of a major oil
company. Like, children playing and going to school in heavy-metal
contaminated soil level of polluted. The village didn't sue until it was past
the statute of limitations because it thought the government would take care
of them. This story is replicated all over the US. It's great for GDP when a
company pollutes and hurts peoples' health, because that damage to human and
environmental capital is "off the books" for the purposes of the GDP
calculation.

~~~
ericd
I think the general feeling is that there is too much frivolous litigation,
but you may be right that there's not enough of this other type.

~~~
nhebb
The other general feeling is that even when a case is legitimate, the
plaintiffs often get very little per person from the settlement, but the
lawyers make out handily.

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joshuaheard
There aren't too many lawyers, there are too many laws. I would bet that if
the study had correlated the number of laws and its effects, it would find the
same result. After all, when a complex set of laws is passed, some lawyer must
become a specialist in it. There were no personal injury attorneys until
products liability laws were passed in the twenties. Likewise, there were no
securities lawyers until the SEC was formed and securities laws were passed in
the thirties. Patent lawyers, bankruptcy lawyers, etc. Obamacare was 2000
pages of law alone. The resulting regulations and case law will be tens of
thousands of pages dictating the actions of people who will need a lawyer to
know it all, analyze it, and apply the law to their clients' situations.

~~~
DeepDuh
tl;dr: correlation != causation

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noonespecial
That's like blaming accountants for income tax. Too many (bad) regulations
spoil the economy. They lawyers are the symptom, not the cause.

~~~
litek
With more or less 40% of congress consisting of lawyers* , they might be the
cause as well as the symptom.

* [http://economix.blogs.nytimes.com/2012/02/23/first-thing-we-...](http://economix.blogs.nytimes.com/2012/02/23/first-thing-we-do-lets-elect-all-the-lawyers/)

~~~
rayiner
Lawyers are really bad at gaming the system in their own favor. Whereas the
AMA tightly controls the number of accredited medical schools to keep supply
low and salaries high, the legal profession sued itself (law schools sued the
ABA) to remove accreditation restrictions that would limit the supply of
lawyers.

I know this will be an unpopular opinion, but law is one of the few remaining
ethical professions. If lawyers acted more like the rest of the business world
(e.g. the financial sector, small businesses), in pursuing their own self-
interest, lawyers would be a lot better-off.

~~~
tsahyt
> law is one of the few remaining ethical professions.

No, it isn't, at least not in general. There are lawyers who enact their job
as an ethical profession and we should be thankful for them. But there are
lawyers who couldn't care less about being ethical who _do_ pursue their own
self-interest or unethical interests of others. Therefore it's not an ethical
profession. Just one where you might find someone who cares about your rights.

I don't want to throw the same insults at each and every lawyer, because there
are clearly some who don't deserve it but the majority of lawyers I had to
deal with so far definitely deserved every bad name they're called.

~~~
rprasad
And those lawyers get disbarred when they get caught, and are forced to
compensate their victims, and can't use bankruptcy or other means to evade
paying such reimbursements.

Individual lawyers may not be ethical, the profession as a whole is. In order
to remove the bad apple, _you need to report them_ to the state bar
association.

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udpheaders
For many a sensible person, lawyers seem to be more a liability than an asset.
Rightly so. Indeed they are more often than not rent-seekers, and the rent is
sky high. That is, until you are faced with a serious problem.

Imagine you are falsely accused and facing charges that could land you in some
maximum security prison, sitting on death row. Or, even worse, imagine you get
caught downloading too many JSTOR articles in a university library. Then,
lawyers don't seem like rent seekers. They are an asset, not a liability. And
you need one. Or two. Or a whole team of them. You can't have too many. The
more the merrier.

As with anything else in life, context is relevant.

~~~
rayiner
"More often than not?" The article says that there are 40% more lawyers than
the optimal number. Thus taking the article at face value, at most 30% of
lawyers are more of a liability than an asset. Under the model of the article,
decreases the number of lawyers beyond that level would decrease GDP.

~~~
udpheaders
I'm surprised you would actually take the statistics seriously. At face value,
the article is pure entertainment. I would not consider an evaluation of a
lawyer as a liability or an asset to be something that can be measured
objectively. Every client is different and every client's situation is
different. And it is the client who ultiimately decides whether the services
are an asset or a liability, and no one else. My opinion is that lawyers do
not add anything to the client's bottom line (but it doesn't matter what I
think, only what the client thinks). In my view, lawyers function to limit the
costs of the client's activities to the client (while at the same time adding
to the client's costs themselves with legal fees). In other words, they
operate to try to minimize the client's losses, to limit the client's
liabilities. But we often have no evidence that such losses would have
occurred absent the lawyers' involvement. We resort to speculation.
Unfortunatley, lawyers play on fears to generate business. But there are some
situations where this is not necessary, because the fears come from a real
situation not a hypothetical. In these situations, there is a real, measurable
risk of loss.

That's why I gave the (extreme) example of facing criminal charges. That's a
situation where the losses seem quite imminent. The chance of serious losses
is real and the accompanying fears are justified. I would argue society needs
enough lawyers to handle those types of situations. Clients with serious
problems where loss is imminent. But beyond that, it gets very subjective and
very speculative. Needless to say, lawyers are very good at arguing the need
for their existence and for their value to the client.

Whether it's 40% more than we needed in 1994, more than that or some lesser
percentage, is anyone's guess. We all know it's too many. You don't need to
conduct a study to see that.

~~~
rayiner
If you think lawyers don't add to the client's bottom line, why are the
Chinese rushing to develop their legal systems along western models? Why is
the maturity of the legal system included in every international ranking of
nations' desirability as a location to do business? Is it all just fear?

Lawyers are the dispute resolution mechanism that allows an economy full of
people trying to screw each other (and trust me, as long as economies are full
of people, they will be trying to screw each other) to work. The article is
based on the reasonable premise that a bigger dispute resolution system
contributes to GDP to a point, then starts hurting the economy beyond a
certain point.

Note bene: you say "in 1994" as if we should assume the problem has been
getting worse over time, but in reality the size of the legal sector as a
%-age of real GDP has been decreasing since it peaked in the late 1980's:
[http://amlawdaily.typepad.com/.a/6a00e55044cbaf883401543574d...](http://amlawdaily.typepad.com/.a/6a00e55044cbaf883401543574d918970c-400wi)

~~~
udpheaders
"as if we should assume"

Whoa. Where are you getting that?

I will let the @strawman take it from here. Because that's who I think you are
trying to argue with. :)

~~~
rayiner
Before your ninja edit, you had a "(in 1994!)." The exclamation point implied
that it may be more than 40% today.

Also, your argument is the strawman:

> My opinion is that lawyers do not add anything to the client's bottom line
> (but it doesn't matter what I think, only what the client thinks).

> But beyond that, it gets very subjective and very speculative. Needless to
> say, lawyers are very good at arguing the need for their existence and for
> their value to the client.

It was an economist, not a lawyer, who made the case for the value of lawyers
to the economy.

~~~
udpheaders
"the exclamation point implied"

Well, if it did it wasn't intentional.

I am always editing. It's just how I write. HN faux pas I guess.

I'm not sure I follow the rest of your comment.

I was not suggesting the author of the article was arguing for the value of
lawyers, I was saying that as a general statement. (And not that it proves
anything but in this very thread we have a lawyer - you - arguing in favor of
lawyers.)

It may be I'm just too stupid to undertand whatever else you are trying to
show me with your quotes. But it does seem like you are reading things into my
words and coming up with your own interpretation which, alas, does not match
my intent.

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EliRivers
Speaking in general terms, lawyers are a sign of a sick society. The law
should be a set of agreed rules by which we all agree to abide in order to
create a better society for everyone. If we need a specialised profession to
explain to us what the rules we all implicitly agreed to abide by say we
should do, or as is often the case not even explain to us but just tell us the
outcome, the rules are no longer fit for purpose.

~~~
celer
You assume a total lack of self interest: A perfect adherence to Kant. I
disagree with you about it reflecting a sick society: I think it reflects a
real one.

~~~
EliRivers
I disagree that my view assumes a lack of self-interest. I think it's possible
to have real societies in which people can understand the rules (not
necessarily choose to abide by them, but understand them) without a
specialised profession to tell them what the rules mean. Self-interest has
nothing to do with my suggestion that it should be possible to understand the
rules of the society one lives in.

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michaelochurch
First of all, except at the top end, I don't think lawyers are any worse,
ethically speaking, than any other category of private business. And they are
absolutely necessary.

The glut of attorneys definitely ruins the economy _for other attorneys_.
Their income distribution is bimodal, depending on the first law job out of
school. If you get "biglaw" or a decent positions at, at the least, a mid-
sized regional firm, you'll make a six-figure salary. If you don't and you
fall into the legal underclass, you make less than an entry-level software
engineer, and have student loans to pay off.

