On Legal Technology and Conservatism

I'm back from my brief vacation, and today I'd like to first point out an informative, yet somewhat repetitive, article from Texas Lawyer about trends in the legal industry. What really caught my eye is this tidbit on lawyer technology:

E-Discovery Costs: The annual litigation survey published by Fulbright & Jaworski reports that nearly 40 percent of the respondents expressed the need to increase spending on electronic discovery. This concerns them, given the already high cost. As one possible solution, a few firms are partnering with e-discovery vendors because they believe it is cost-effective for both the client and the firm.

Keep that in mind. Next, I'd like to point out this tidbit from a recent article on legal research, entitled "Legal research moves from the print library to expensive digital databases:"

This same generation is now leading the legal industry's leap to the Web -- a revolution with major implications for clients, bringing more firepower to those who can afford it and more headaches to those who can't.

"Today, virtually 100 percent of practitioners use online research," said David Dilenschneider, who oversees content development for LexisNexis. "You really cannot practice in books these days. It isn't doable because of the risk of missing information."

LexisNexis and Westlaw provide massive databases of statutes and judicial opinions, plus proprietary goodies like analyses and explanations.

It's that proprietary content, along with advanced search algorithms and other fancy tools, that make the two services the most effective in the industry -- and the most expensive.

First, the "proprietary content" is available for free in brick-and-mortar libraries if you already know directly where to look, and you can find it in about 30 seconds. The advantage of the online services is mostly speed and volume, being able to search thousands of cases and documents at once for key phrases. The most valuable "proprietary" services are probably the ones that tell you if something has been overruled or not, and maybe the notifications on new cases in a particular area, but neither of these is impossible to the layman without the services.

Second, it's a really odd time to complain about the expense of Lexis and Westlaw. Why? Well, because both are facing significant competition from free sources and have had to take measures to keep traffic up. Westlaw has introduced WestlawNext, which is dramatically cheaper and provides more services, not necessarily because old Westlaw was bad, but rather because they feared losing customers to free sources. Lexis decided to start a free service, called LexisOne, that's basically a large archive of caselaw.

Contrary to the implication of both of these articles, technology is a cost-saver over the long term. The cost "raises" in both legal research and in discovery is because the technology was fundamentally abused, or used not as a tool of efficiency.

In legal research, both Westlaw and Lexis used the technology more or less as an excuse to jack prices. While sets of books under the old system of expansive law libraries were not cheap, it was a one-time expense to purchase the book and there was something of a secondary market that could exist for the volumes (from law offices closing or law libraries updating their collections) and for those resourceful enough to go to a law library, there was very little access cost. The existence of the internet changed that by letting Westlaw and Lexis charge for mere access to the materials and not just ownership.

Of course with the internet and what are, ultimately, readily-available materials for the resourceful, that set-up can't last, and it didn't, and that's why both services are desperate to retain customers now in a dwindling marketplace.

The same basic idea applies to discovery abuses. I know less about complex litigation than legal research, but it seems to me that the advent of the internet did not make discovery more expensive aside from broadening what discovery could include. The most obvious example of this, to me, is e-mail. Previously, 99% of what is sent over e-mail would have been phone conversations without record or would have never been sent or would have been used and discarded. Now there's terabytes of data storage of useless shit that plaintiffs want to get at for that microscopically small fraction that may be useful. That's not technology making a process more expensive, it's the people using it changing their behavior.

In theory, computerized technology should lower costs and it should be fairly straightforward if basic ethical principles are plainly laid out, but it hasn't immediately been readily adopted or accurately priced in the legal profession, and there seem to be no shortage of seminars or symposiums or verbal sewage about the implications of technology, as if the legal profession is run by antediluvian buffoons.

Because largely, it seems, it is. From the first article I cited:

Social Media: Issues are arising. Clients are increasingly asking for counsel on employees' use, and the management, of social media. Firms are now recognizing the need to develop electronic and social media policies for themselves.There are ethics considerations. There are challenges for lawyers in maintaining the confidentiality of client information. And there are many issues with respect to the use of social media in litigation. One report may have summed it all up: "The law has significantly lagged behind social networking."

Really, there aren't "many issues" unless you start making them up. How hard is it to tell people not to post something on facebook about a client? Or to develop a social media policy? It's really no different than telling employees not to gossip about clients at the coffeehouse, is it? Basic ethical principles applied to a new setting; this is not new.

And who is "the law?" It isn't students, ground-level working attorneys, or the like. It's the regulators, the wizened old men who like to spout platitudes with no substance, and, ultimately, the bar associations run by "seasoned veterans." Together, they implant a very conservative, retrogressive way of doing business, where new technologies are hostile because they all bring major ethical crises (real or fictional) and concocted expenses.

If the legal profession were really concerned with justice, it would welcome new technologies and the cost-savings associated with them. Furthermore, you virtually never hear any of the legal talking heads suggest that technology make actually improve ethics considerations even though, in some cases, it becomes easier to comply with ethical mandates as technology advances.

But the legal profession really isn't concerned with access to justice or cost savings or ethics; it, like every other profession, is concerned with keeping the kings of the hill at its profitable apex. Any tectonic shift may shake them from their place, and it's better to keep litigation costs artificially high. Because those in the business have an incentive to keep the status quo, the market was slow to respond to the need for cheaper research tools and cheaper e-discovery mechanisms.

This system also snakes its way into law school corridors. Properly using technology could result in major cost savings in legal education. For example, textbooks are now archaic fossils no longer necessary; all the materials needed for a legal education can be found by plugging into the internet and bringing a moderately-priced laptop to class. And yet, the thick >$100 volumes persist, a tremendous waste of resources, time, and energy. Worse, some people have the audacity to suggest that technological advances are making a legal education more expensive. That's out-and-out bullshit and a lousy justification for the rampant tuition increases of the last 15 years.

While it's not the biggest of the profession's problems, the fact that crusty Luddites seem to disproportionately work as lawyers compared to other professions seems to cause more problems than it solves.

NC State Cuts Pre-Law Advising; Silly Responses Abound

So N.C. State has decided to cut its pre-law advising service, which - to me - is perfectly understandable given that (1) there's no real need for a separate pre-law advising department aside from normal advisers and (2) almost every state in the union has to slash public expenditures. I genuinely feel sorry for the long-term adviser who will lose her job, but I have to say some of the responses in the article are downright absurd.

The first one isn't that bad:

"When I found out [pre-law services] were getting cut, I was pretty shocked about it. They have done so much for me," [senior Erin] Walker said. . . ."I didn't know what I needed to do to get ready to go to law school. I was completely lost," Walker said.

Did pre-law services take your LSAT for you? Did they get you a high GPA? No? Then, despite appearances to the contrary, they really haven't done that much for you. But it's understandable that one would think that. After all, law school is a long, glorified disabusing process. You start a doe-eyed undergraduate with one slate of perceptions and when you're through the meat grinder you realize a variety of truths, including that there are very few things that actually matter when it comes to getting into law school. Furthermore, if you're "completely lost" in dealing with schools' websites and LSAC, which are straightforward about a simple process, you're going to be even more lost when you try to figure out what the governing law is on some issues.

And then we have this:

Melanie Nutt, director of admissions and financial aid at the Wake Forest University School of Law, said she wants her name added to the letter to the Provost. She reinforced the impact of losing Tetro and pre-law services on N.C. State.

"Losing Mary [Tetro] would be a real blow to the students and to the law schools as well," Nutt said. "[Tetro] has just been a phenomenal resource."

No kidding. You're losing an inside sales person at the state's 2nd-biggest public school. Already, one should note a theme in the article: no one is actually articulating what pre-law services actually did that was so indispensable for N.C. State students. Instead, they merely dish out platitudes like "it was so valuable" and "losing this sucks." Seriously, are N.C. State students so utterly dumb they can't figure this stuff out? Do none of N.C. State's other advisers have an hour to read up on law school?

I did not have pre-law services in undergrad, so I honestly have no idea what they do for you and - again - I see no pressing need to have one. But apparently others do - even if they can't articulate why:

"Cutting something in a big college, like engineering, would be more efficient, because they have so many resources," [senior Harrison] Do said. "If you cut this small, little thing that helps so many students, that to me isn't being very efficient."

Efficient? Efficiency is about resource maximization and waste reduction. I don't care how many programs there are in the engineering college, they're probably all a better use of resources than a pre-law department. Again, I'm sorry a dedicated educator is losing her job, but a pre-law advising service is basically $350k down the sinkhole. Every second a student spends in there would be better spent figuring out LSAT tricks, studying for higher undergraduate grades, or chatting it up with bored professors to get better letters of recommendation.

One of the biggest problems in education - legal and otherwise - is that when someone says "we really need [x]," too few people stand up and say "bullshit." Guaranteed government-driven revenues have never encouraged thrift, and so now we have bloated university structures with all sorts of useless centers and services that are economic deadweights but - oh no! - we can't cut them because we actually hired nice people to fill those positions.

Well, if schools had any interest in teaching their students about the real world, they'd be far more aggressive in shedding excess baggage when budget cuts proved necessary, and they'd be far more hostile to people who try to tell them otherwise. No one in the private sector ever had his job saved because he was a good person or even good at his job in isolation. The fact that we treat public/non-profit university employees differently when many states are flat broke is absurd.

When BigLaw Fails: Howrey

You might have missed it, but last week, but Howrey, the 50th largest law firm in the United States and a major player in Washington D.C. litigation, voted to dissolve.

Steven Pearlstein of the Washignton Post has a nice postmortem that hypothesizes what went wrong:

Howrey expanded too much too fast, its overhead expenses growing even faster than its revenue....

Fixed costs are a challenge for all law firms, but particularly so for litigation firms such as Howrey that can’t count on a relatively steady flow of work from corporate clients — leases to review, mergers to handle, securities filings to make. Revenue in the litigation business tends to be lumpy. You get paid only when there is a case to be tried and then often only after the trial is over. Howrey, in particular, had come to rely increasingly on revenue from such contingency fee cases, which rose to $35 million in 2008 and then fell to $2 million a year later.

Pearlstein also notes that Howrey ran into conflicts of interests problems as it grew, as well as a weak partnership in general that was not as committed to the firm itself as the partners were committed to themselves. This paragraph in particular struck me as interesting:

For me, it is of symbolic and substantive importance that law firms are no longer partnerships in the strict legal sense. Most, like Howrey, had transformed themselves into “limited liability corporations” or “limited liability partnerships,” a new hybrid form of business organization. Unlike old-fashioned partners, those in an LLC or LLP are shielded from individual responsibility for the liabilities of the firm. That means that they are apt to be less careful in making decisions about what risks and expenses to take on, knowing they do not face the prospect of losing all of their net worth.

This seems to be yet another instance where the respective bar associations rubber-stamped fundamental changes to the legal profession without fully digesting the consequences. When state legislatures started adopting the LLC and LLP business formats, law firms were some of the first on the boat (at least on the latter), and I wonder if anyone actually voiced opposition, claiming there was intangible value in the general or limited partnership structure (I'm not sure about this, nor am sure how law firms that operate as corporations play into it - will have to research in the future). But I will say that it's clear many intangible values in the legal system got left on the side of the road as excess baggage on the speedy voyage to multinational, 1000-firm behemoths.

But what about the future of the BigLaw model? As the Howrey example suggests, large firms dependent on big-money litigation to see profits have a volatile existence. It also seems to me that such firms are going to be more dependent on ace litigators who may have incentives to use the firm's resources to build their reputation and then spin off on their own when their own value exceeds that of their peers.

This seems, to me, like a problem stemming from law firms trying to run themselves like normal businesses. Law is analogous to sales in that your rainmakers rake in clients that the entire firm benefits from. However, a routine salesman has little power to leave because his future success is tied to continuing to sell the product, which is ultimately company property. Law doesn't work that way; the "product," the rainmaker's loyal and devoted service, is not really unique property of the firm. Thus, such a model fails. The cynic in me thinks that people realized this a long, long time ago and that's why law firms went towards partnership structures (liability for each others' debts promotes cooperation; tighter controls on people leaving) while other businesses incorporated as a matter of course, but I digress...

But what about transactional law firms? Surely, there's a BigLaw future for the white shoe operations that handle securities filings, mergers, etc., isn't there? For the most complex scenarios, yes. But my hunch is that transactional business profits will dwindle in the coming years as automation becomes an even greater force in the legal profession. If places like legalzoom can offer wills now, what's to say Fortune 500 companies won't figure out how to simplify all the transactional business they have to do? Securities filings are fairly standardized anyway. With more sophisticated electronics, I can't see 500+ attorney firms being a necessity for large companies in the future to do their routine transactional stuff. Heck, every company on the NYSE/Nasdaq/Amex would benefit if someone found a way to cut out the white shoe lawyers, and with increasingly-impressive computer technology, I'm sure someone will find the armies of Harvard and Columbia grads completely unnecessary.

Remember that most BigLaw have higher operating costs and overhead to even play the game, thus making them more susceptible to significant shifts in revenue. A solo P.I. attorney can feed his family on one or two juicy settlements. Not so at the top firms.

With it appearing that 2010 may have seen the peak of law school applications, perhaps it's time to ask if we're also seeing a peak in large law firms. I honestly don't know for sure, but given the confluence of certain events, it seems like a good possibility.

For further reading on this topic, I'd recommend a recent post over at the Legal Dollar citing the recent demise of several big firms and how to look for stability in a law firm.

Virginia Law Weekley's Dan Gocek on Above the Law

Dan Gocek at Virginia Law Weekly has an interesting rant on Above the Law:

What I dislike about Above the Law is its penchant for encouraging distaste and resentment between various groups of people, such as students from different schools or those with jobs and those without. This can be seen in posts such as their “Douchiest Law School” competition, in which students presumably with very little knowledge of schools other than their own vote on which law school they think is the “douchiest.”
...
[A] large percentage of the posts on Above the Law displaying this sort of ignorant obnoxiousness seem to be penned by Mr. Mystal, who, in another post, claims that he and his wife’s combined salary of nearly $250,000 does not provide him with enough money to buy a decent computer. Although I’m normally not very sympathetic to those who complain about money troubles while simultaneously admitting to living “as far above their means as possible”, the idea that Mr. Mystal doesn’t have a 42” Mac desktop on which to write this fecal matter posing as language really brings a tear to my eye.

Encourage you to go and read the whole thing. Great stuff. I don't really disagree with it, and I don't really have much to add.

The "Market" Does Not Drive Law Professor Salaries High

A few days ago, someone a level-headed, but misguided, anonymous comment on my post about the UNLV budget cuts:

(2) Law professors are indeed paid more than virtually any other professional/grad school instructors --- because the market provides that. Med School instructors earn a lot, too, for the same reason. They can go elsewhere or go into the profession itself (practice medicine, practice law) and be paid better than they are as professors. The world might well be a better place if the dedicated professor of whatever stripe were paid the same, be that person a teacher of philosophy, art, literature, or law --- and if all those professors were paid the same as someone who practices as an attorney --- but the market isn't that way.

First, this is a straw man - I never advocated that all professors be paid equally, nor would I.

Second, and more importantly, the "market" is not what dictates that law professor salaries are some of the highest in the business. If normal market forces were actually applied to legal education, professor salaries would drop immediately. Why? Well, the system has been producing an excess of 10k+ people each year who are qualified to teach the subject matter. In some cases, the excess actually being more qualified in the particular subject matter because they've recently passed a stringent bar exam that actual law professors have not.

Law is not brain surgery. There are thousands of people, many of whom are unemployed and have otherwise-great credentials, who are perfectly qualified to teach torts, property, legal research, and anything other than the most sophisticated courses. In normal supply-and-demand terms, there is a massive oversupply and fairly low demand. The nation only needs about 650-800 people who can teach contracts or torts or civil procedure each year, but there are literally thousands upon thousands of qualified people who would gladly take those jobs.

And it's not like people don't want the job. Tenure, even at a fourth-tier toilet, is a career landmark. Elite-graduate BigLaw associates regularly run back to academia after 3-5 years, sometimes because they aren't working out and other times because they'd just rather work a relatively easier schedule for a very handsome wage than work a mind-breaking schedule for a slightly handsomer wage. Assuming it's true that law professors could make more in private practice, many of them would regularly turn down the lucre for allegedly-lower salaries teaching law school. But that is NOT a valid reason to keep law professor salaries high. If anything, it provides a reason why law professor salaries should be lower, namely that, apparently, there are job perks that compensate the attorney for the lower salary.

But we don't even have to address that logical fallacy because there's a bigger one before it: most law professors would not make what they make as faculty members in private practice. Many of them became law professors solely because they couldn't make bank in private practice. It's not uncommon to have law teachers who aren't even members of the state bar. And the option to be an adjunct professor seems to cut out any possibility that tenured law professors are regularly leaving large sums of money on the table. Honestly, human nature being what it is, no one is going to leave 500k+ on the table to take a law professor job for "only" 200k, especially when the professor could make the 500k+ and teach a class or two in order to meet their desire to educate the next generation. A lot of good teachers do just that, and for the most part those not affiliated with BigLaw aren't making it rich.

Above all, the schools' only actual task is to teach its students how to be lawyers. Law professors generally have no requirements beyond having a J.D., and very few law schools require that their professors were actually successful in practice. Nor did they have to take - or do well - in the class they now teach. As the market for legal services shrinks and the number of bar members increases, it's simply absurd to continue paying professors $150k+ for a job that would have no shortage of qualified applicants if it listed for $65k and benefits.

But as we all know, there are forces that distort the market at play. First is the tenure system, whose place is secured by the ABA and the AALS and ensures that certain members of the old guard will be back next year. Second, there's this absurd emphasis on "prestige" driven mostly by things like the US News and World Report rankings. There's no natural need for law professors to have studied at a T-14 and yet, for the most part, those are the people who wind up on the faculty rolls. This focus unduly narrows the labor pool, which is a factor is having higher salaries. This is, of course, ridiculous. No real business operates this way. If you need a plumber, you don't care who went to the best trade school. You care only who can fix the damn pipes. Teaching torts should be no different.

And yet it is. The schools can get away by being thriftless and overpaying people who have relatively cushy, low-stress jobs because they themselves are exempt from normal market forces. Specifically, demand becomes artificially inflated because loans are more or less guaranteed. Meanwhile, the law schools have a monopoly that limits supply only to those who agree to their principles regarding things like professor tenure. This allows the schools to raise prices and force consumers to essentially subsidize their professors' unduly high salaries.

Thus, it is only because there are significant market distortions that law professors are paid what they are. The market is not dictating anything; on the contrary, the powers that be prevent the market from actually functioning properly.

Third, I'd like to reiterate the problem with UNLV's budget proposal. Whereas the dental school decided to cut faculty salaries - even though there is a much lower supply of dentists than there is lawyers - not one law professor was going to have his salary decrease as a result of the cuts. Not one, even though an analogous professional trade school with stricter entrance requirements willingly cut faculty salaries. That is blatant fiscal irresponsibility by the university. It's also a disregard for their moral duties as educators and a slap in the face to any notion of "social justice."

If the UNLV law professors can make more money in private practice, they should quit immediately. But I don't believe that, and neither should anyone else. And even if it were true, it would be best for everyone if they went to private practice and let the university hire others at lower salaries.

After all, like I said, it isn't like there's a shortage of people who can do this work; this isn't quantum physics. Throw a rock on the strip and you'll probably hit an attorney who can teach legal writing. The fact that current law professors have set up a white collar union that has suckered people into believing they're worth the cost doesn't change that fact.

US News and World Report Torn Between Shilling and Journalism

I get that US News and World Report has little actual news or commentary to offer aside from being known as the publication that helps market colleges by ranking them, but at least they could have a consistent editorial view.

For example, this article describes how law schools are adjusting to a "suddenly dog-eat-dog job market" (Really, David van Zandt? "Suddenly?") and a changing BigLaw model.

Starting salaries are flat or down, too, according to NALP—the Association for Legal Career Professionals in Washington, D.C. The median starting pay at firms with more than 700 lawyers in New York and Los Angeles was still $160,000 in 2010, but markets like Boston and San Francisco dropped from that level back to $145,000. Overall, the median starting salary at private firms dropped to $115,000 last year from $130,000 in 2009.

Belt-tightening at larger firms has had a ripple effect, pushing grads to pursue government and nonprofit jobs they previously wouldn't have considered. "I feel that I'm competing with everybody, for every job I've applied for," says Jeremy Wolff, 31, a 2010 graduate of Northeastern University School of Law in Boston who left a technology career to focus on civil rights or social justice work. He currently is working as a research consultant with a team of professors from his law school, covering his living expenses but not providing enough to begin paying down his six-figure debt. "If I knew then what I know now, I would emphatically not go to law school," he says. "I think the legal job market has fundamentally changed."

Okay, so overall, nationwide, starting salaries at private firms have dropped 11.5% in two years. That's big, as is the fact that the graduates now denied BigLaw compete with other graduates for all those other jobs, like whatever work there is at the DA's office, MidLaw, or legal aid foundations. That trajectory should be a priority concern for anyone contemplating applying for law school now.

Now let's head to US News and World Report's Law Schools: Tips and Stats:

First year associates at large private law firms can expect to make $160,000 in metropolitan markets including New York, Chicago, and Washington, D.C., according to the Association for Legal Career Professionals, known as NALP, in its 2010 Associate Salary Survey. In other markets, such as Boston and San Francisco, salaries can range from $110,000 to $160,000, with a median of $145,000.

First of all what a "large private law firm" is to a prospective law student is probably different than what a "large private law firm" is to the NALP. And wouldn't it be responsible to mention that the $145,000 is a falling median? And isn't it irresponsible to suggest applicants now - i.e., job seekers in 2014 - "can expect" to make $160,000 when salaries have fallen in other markets?

And overall, the "article" seems to be a blatant advertisement for going to law schools, e.g.:

If you are set on a career in public interest law, don't let finances stop you.

You mean like the "finances" that there's very little actual work in public interest law?

Intellectual property and energy law continue to be lucrative—and competitive—specialities [sic].

If it's competitive, it's likely not going to be lucrative in the future. See the other article your same news organization put out the exact same day.

My big question to US News is this: Why did the first article I cite espouse a view that there has been a fundamental change in the job market, while the second article sold law school on the premise that the job market is pretty much moving right along, i.e., getting back to the pre-recession normal? ("many partners at large law firms agree that the market has nearly stabilized.")

All these articles seem to show is US News' apparent hypocrisy. On one hand, it feels beholden to its journalistic routes, finding it necessary to report truth and - gee whiz - cite its sources. On the other, it realizes its existence is dependent on the college industry continuing to sell the idea of education as the path to a dream job. To hell with journalistic integrity (Who at the "large law firms" are agreeing with this? Who knows! Just say "Many").

I appreciate their attempt at journalism. The first piece is insightful and should be required reading for those contemplating attendance. But it's hard to take that piece seriously when the same organization trumpets law school as the land of public interest saviors and $160,000 salaries as if it were reading from a admission's department brochure.

Is Reverse Auctioning Coming to Legal Profession?

It appears so-called "reverse auctions" are entering the legal field, where prospective clients can present their case and attorneys can bid to do the service for them.

This is from the ABA Journal:

[Robert Grant] Niznik’s graduation musings led him to contemplate the plight of indebted law students struggling to find a job in a bleak economic climate as well as the expensive and largely inaccessible nature of the legal profession. His answer to both issues is at once goofy and serious. The New York Law School student founded Shpoonkle, a playfully named website that allows attorneys and law firms to bid on legal requests submitted by clients. The service is free for now, but Niznik said attorneys may be charged membership fees in the future.

"Shpoonkle" is a horrible, horrible name, and I think there are numerous potential pitfalls that have to be overcome (e.g., the clients' incentives to lie seems higher than if they're in a one-on-one initial consultation, and if the lawyer's aren't allowed to ask questions before bidding, I could see the site becoming a platform for misrepresentation). However, the fact that people are developing such technologies should surprise no one, and I think this is a positive sign that the real dangers of lawyer oversupply may become present.

By way of example, I'd like to discuss the sports card market's collapse in the early 90s. For example, in 1990-1993, a Ryne Sandberg 1993 Topps rookie card was "worth" approximately $35-40 in mint condition according to price guides that monitored the market. By the late '90s, the price had dropped dramatically (to $15 or so) and today - even after Sandberg has been inducted into the Hall of Fame - one can buy a Sandberg rookie card for about $4.00 on eBay. Sandberg's career trajectory cannot explain that by itself, as the same phenomenon can be witnessed in the value of other cards from the 70s, 80s, and 90s (e.g., this card once went for $100+). Factoring in inflation, that's a major collapse.

Why did it happen? The initial knee-jerk reaction might be that the strike of 1994 and the steroid era forever ruined baseball's popularity. But the same effect can be seen in other sports as well (see this, for example). Rather, what happened in the mid-90s was that the development of the internet (specifically eBay) destroyed the supply/demand illusion that previously dictated prices. See, prior to eBay, sports card values were set by price guides (like Beckett), who purported to monitor sales. People involved in private one-on-one transactions had no idea what the true supply of these cards was, and often the demand was overstated; such is very easy to do with there is limited information about the supply and demand of an object.

When eBay came around, it destroyed that market illusion by showing the market that the supply was much greater than anyone thought and the demand was actually much lower than anyone thought. It provided a superior means of determining supply and demand (ergo price), ultimately benefiting consumers at the expense of those who had been stockpiling sports cards on the false belief that these things would be valuable at some point in the future.

Now apply to law. What does good legal representation cost? Aside for the more "routine" services (simple chapter 7, llc drafting, basic real estate transactions, etc.), no one has a damned clue. Indeed, the ambiguity involved in legal representation - the fear that lawyer costs may skyrocket - inhibits a lot of people from seeking attorney aid. And when someone sits down with a lawyer in a one-on-one setting after a consultation, the potential client lacks any power to bargain if the lawyer says his services cost $200.00 an hour.

This set-up is a market illusion, just as the baseball card market was before eBay. The consumer (client) has no idea what the actual supply of legal services is. The lawyer is thus in a superior position to argue that his particular services are in high demand and short supply, even if they aren't.

If there were a reverse auction site set-up - not just this Shpoonkle thing, but also LawyerBid is in the game - prices for everything worth taking except the most complex litigation will drop. Why? Because lawyers are a competitive bunch and there are more licenses floating around than are necessary to service the current demand for legal services. People are, overall, cheapskates. If one barred lawyer can represent someone for half the price of another - and the individual can see the cost savings in black-and-white - that consumer isn't going to care who went to Harvard and who went to Cooley.

This is the nation of Wal-Mart and McDonalds. Prestige has nothing on cost savings, and not even Fortune 500 companies will turn down lower legal fees if they're clearly being overcharged. Right now, there's a market illusion that keeps people from seeing that they're being overcharged. If an auction site were set up, that illusion is gone.

This, of course, would be great for notions of "justice" and providing access to new parties, but, you see, the people at the high end are obviously worried. Or just ethically-minded attorneys in general. From Simple Justice:

By no means does the need for money make this a justifiable mechanism. It is anathema to what the legal profession is supposed to stand for, implicates a wide variety of unpleasant ethical considerations and reflects a further step, maybe giant step, away from excellence toward commodity. Yet my fear is that the lawyers who would sign up for this mutt couldn't care less.
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I find it hard to blame some anonymous entrepreneurial law student from putting together this horrible idea. He's just trying to make a buck, and the creation of this new concept doesn't compel lawyers to sign up, lawyers to outbid each other to see how low they can go, lawyers to try to glom up cases in areas where they lack competency or lawyers to provide less than stellar services. It doesn't require that things go horribly wrong. But we all know they will.

That's my gut reaction as well, but let's face some facts. Law's professionalism went out the window a long time ago. The profession is now over saturated with 15k excess graduates every year in a market that is threatened to shrink by both outsourcing and technological advances.

And yet, attorneys at the top of the food chain still make a very good living, both the BigLaw partners and those working is solo firms at so-called "boutiques." There are absurd inefficiencies and market illusions harming consumers while the practitioners most burdened by the oversupply of attorneys is carrying a disproportionately heavy amount of non-dischargable debt acquired by entering the "profession."

Real professions don't set up situations such as that. Instead, they regulate who can enter the profession in order to ensure that there are few licensed professionals who struggle to make a living or pay off the costs of join the profession. The legal profession discarded that principle when it opened law school to any Joe and Betty with a 150 LSAT and a federal loan application. It cannot now hide behind professionalism as a shield to keep normal business conditions for penetrating every inch of the "profession" in a veiled attempt to keep billable hour rates unduly high.

At some point, something has to give.

I don't think this site will be a success. Indeed, as Simple Justice points out, other sites like this have failed previously, and I see too many ethical hurdles that may kill this site, especially if bar associations start looking after their interests and prohibit participation in these sites to maintain illusive values.

But people can't live in the dark forever, and you can't keep pumping out attorneys (i.e. supply) without prices, and therefore salaries, collapsing at some point. Maybe reverse auctions won't do it, but something will accelerate the race to the bottom that can already been seen in some areas.