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September 28, 2010

Alleged Lawyer Greed

Are lawyers greedy?

The charge that lawyers are motivated by greed is one of the most widespread public complaints about the profession. Over the past two decades, more than half of Americans surveyed have agreed with the statements: “lawyers are greedy,” “lawyers make too much money,” and “it is fair to say that lawyers charge excessive fees.” In 2002, the polling organization Leo J. Shapiro and Associates (LJS) probed public attitudes about lawyer behavior and motivation. In an online report summarizing its findings, LJS has explained:

Of all the criticisms that consumers [who have previously hired lawyers] raise about their personal experiences with lawyers, the greatest number of complaints arises around lawyers’ fees. Consumers say that lawyers charge too much for their services; are often not upfront about their fees; and are unwilling to account for their charges or hours… Consumers complain about fees charged by all types of lawyers.
Legal scholars also often accuse the profession of greed using as evidence disciplinary opinions involving practitioners who have charged high fees, overbilled or misused or stolen client funds. The charge of greed is one that lawyers should take seriously. If lawyers are routinely cheating clients, then lawyer behavior is routinely both tortious and criminal. Drastically enhanced policing of the profession would be warranted were the charge to be verified. Lawyers should also be aware that one of the principal reasons Americans avoid seeking legal help is the belief that lawyers are greedy.

But are practicing lawyers inordinately grasping business people? The data do not support this proposition. Among other things, available information suggests:

(1) The real average hourly fee charged by private practitioners in any given state is likely to increase at an average compounded rate of less than 1% per year. Increases of this size have occurred over periods as long as many decades in most states concerning which I have gathered data. Average fees have not increased drastically over time in any state I have looked at.

(2) Since 1991, the real average hourly fee billed by law firms and lawyers for paralegal work has increased at less than 2% per year.

(3) The productivity of individual lawyers and legal assistants has increased over recent decades as technology has allowed them to increase the volume of work produced per hour. It is understandable that real hourly fees charged by practitioners have been rising – at least at the common and modest rate of increase of less than 1% per year.

(4) Lawyers often do not charge for their services. Clients are not charged for many reasons including these: pro bono services have been provided, clients are friends and relatives, clients have received free initial consultations, and clients have lost contingent fee cases. Fairly frequently, a lawyer charges a client for work done on a complicated matter but charges nothing for work done on simple unrelated matters. Additionally, the percentage of fees that are uncollectable is high for the majority of lawyers, and this is not a recent phenomenon. Uncollectable fees as a percentage of fees charged has been high for most lawyers for decades. The average lawyer does not pursue all unpaid fees aggressively.

(5) The average lawyer does do a significant amount of civic and pro bono legal work, claims by some observers to the contrary notwithstanding.

The impulse of greed afflicts every person. The best that any of us can do is try to control it, limit its manifestations, and counterbalance selfish behavior with acts of altruism or kindness. A great deal of empirical evidence suggests that most private practitioners behave simply like most private business people behave. They try to control the prices they charge in order to better compete; they strive to be as productive as possible; they provide free services most often to generate or keep business but very often to help the poor and underserved. The average lawyer behaves like an ordinary and prudent business person. The charge that the profession is overflowing with greedy practitioners is nonsense.

Paul Teich

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