Should Lawyer's Incomes Be Capped?

-In the way that financial/bank CEOs salaries are proposed to be? I can see a lot of merit in this-it would lower the cost of doing business, and allow easier entry into business (for startups). I also think that it would encourage competition in the legal industry, and allow new law firms to challenge the old “white shoe” law firms (who monopolize the lucrative corparate law biz.
What is your take on this?
Heck, if Congress is going to dictate how much bankers can make, we ought to have similar restarints on lawyers.

Congress hasn’t put restrictions on how much bankers can make. It has put restriction on how much bankers whose banks received bailout funds can make.

Everyone who proposes this never volunteers to cap their own salary. I wonder why?

Can we also propose to cap maid salaries. That way hotels can be cheaper.

Actors salaries too? So my DVDs, movie tickets, and Broadway shows, and Shakespeare plays are cheaper.

Teacher salaries should be capped to half their current amount. This way, my property taxes can be lowered. Less property taxes frees up more money to spend on other things such as Ford & GM cars which will help the economy.

I guess it boils down to everyone’s salary should be capped. The entire economy would run on minimum wage. Now with such a utopian system in place, good luck trying to police all the under-the-table deals, the black markets, the off-the-balance sheet favors, the non-monetary bonuses. Now you have a “cap” that exists in name only; all the market participants have mocked the law that supposedly had good intentions.

Decreasing the incentive for new players to enter the market and attempting force everyone to charge the same fee is the exact opposite to what you’d do if you wanted to encourage competition.

You’d be better off looking at why these “white shoe” law firms are mantaining their market share. Is it because they offer a better product than their competitors that is worth the price they charge? Then don’t screw things up out of some distorted understanding of “competition”.

You misunderstand-the “white shoe” firms maintain their monopoly because they have access to the judges (“old boy” relationships). The quality of their work is therefore not a big factor-it is the golf outings with ex-law school buddies that tilts things in their favor. Corporate clients pay (very well) for such access.
What I propose is to limit what these firms can charge-therefore introducing true competition.
Put another way: why should John Edwards become a millionaire through ambulance chasing? This guy doesn’t do anything besides working on gullible jurors.
The legal racket needs competition-otherwise, any court action will bankrupt the average American.

None of those occupations relies on other’s misfortunes to make a living. Something that can’t quite be said about being a lawyer.

Emergency room doctors rely on misfortune of people in in car accidents, poisoning etc.

Mechanics rely on misfortune of car engine transmissions failing for radiators blowing a gasket.

Social workers rely on misfortune of abused and neglected children or wives suffering from domestic violence. They probably make less than 30k, but if we cap their salary to 15k, we could certainly serve more children and women.

The list goes on and on and on…

If so, this is something that I’d agree you need to deal with. But you have to deal with this, not just use it as an excuse for an unrelated government power grab. If the judges are corrupt and are showing bias in favour of their mates, you need to crack down on the objectionable behaviour, by both judges and lawyers, not just pretend that the real problem is that lawyers get paid too much.

Bullshit. If you want true competition, target the anti-competitive behaviour. That is the problem, not the price they charge.

What you need to cap is judicial awards, not salaries. The lawyers only make such money because they allow ridiculous awards.

I definitely want income caps for attorneys–and everyone else–working in firms which have been bailed out with my taxpayer money.

There are a lot of different kinds of lawyers. Some of them never bring suit or step into a courtroom. Are all lawyers going to be capped? Some lawyers? Who determines how much a particular service is worth? Is this something that’s going to be regulated by the state or the Federal government? By what authority do we have to regulate the income of lawyers, doctors, or anyone else?
PS: Regulation of income on bailout companies excepted of course.

Not me. I’d much rather give these firms the best chance of rebounding, so we’ll actually get our money back. Making them less competitive doesn’t do the trick. And Congress has no business deciding how much money anybody makes who either has not received such funds or who received the funds without such a condition attached to it.

Frankly, Congress had no business giving out the money in the first place, but that’s a different story.

IANAL, but there are couple of things here-

first, John Edwards, while an exceptional Plaintiff’s lawyer, wasn’t by any stretch of the imagination at a “white shoe” firm (you don’t seem to understand what the term means). White shoe firms are large, old-fashioned firms, generally full-service, and in litigation are almost exclusively defense counsel.

Edwards was (for the most important parts of his career) effectively a solo practitioner at a two-lawyer “firm” he founded, doing exclusively plaintiff’s litigation–not a white shoe firm, and in fact–not really a “firm” in the broader sense–it was just an entity through which he did business, two lawyers working together, without any real practice beyond what he and his partner did–there was no real “firm” other than john edwards and his partner.

Also, as Chief Pedant points out–john edwards made a lot of money because he won a lot of money for his clients. I fully understand why he wants a share–because that was value he added.

IANAL, but if I do something that makes you a million dollars, I’m going to want to be paid more than $10/hour–there’s nothing wrong with getting paid in proportion to results.

Maybe the results are too big, maybe they aren’t–but that’s not a problem with lawyers, but with tort law–how big awards can be.

In the corporate sense (which you seem to ignore), it’s even clearer. If a big firm is working on a billion dollar deal (say, buying a company) and a good lawyer can make it 0.1% cheaper, their services are worth a million bucks. Like good trial lawyers, their services are expensive because a lot of money is at stake–they’re making a big difference, and on some level it makes sense for them to be compensated for doing so.

Yes, law is expensive. So is law school. So is running a business. You’re paying for expertise–just as if you were paying a specialist surgeon a big fee–because his expertise can make a big difference.

Second, some people think that lawyers have illicit access that lets them win cases. **It’s just not true. ** It may look that way because law is a specialized field, and so it’s hard to understand what lawyers are doing–without understanding why what they’re doing makes a difference, it may seem as if they’re spouting nonsense, or just working on gullible jurors and winning. But that is a failure of perception.

Lawyers have access that helps them win cases in the same way doctors have access that lets them take out your appendix without killing you–it’s a specialist field, and they have specialist training. You may not understand, as an outside observer, why some of the details make a difference–but it’s the very mastery of those details that lets lawyers win.

Ralph124c seems to be talking mostly about corporate lawyers, who do not work on a contingency basis. Nor are they (mostly) doing work that involves seeking damage awards. Yes, such work does exist in corporate law (that’s one of the reasons corporate law firms have litigation departments), but most corporate law seems to consist of compliance work and transactional advice. Much of the work such lawyers are doing (whether at a white-shoe firm or not) is actually done to ensure that there will never be any litigation as a result of a given transaction.

For the record, I believe Ralph124c is very much mistaken in his charge that clients of major law firms are paying for the access such firms supposedly have to the judiciary. This is certainly not true on the federal level. There may be cases of local jurisictions with corrupt judges (or judges with an idealogical axe to grind, especially in areas where judges are elected rather than appointed), but then white-shoe firms aren’t likely to be appearing in those jurisdictions. They’d likely arrange for local counsel if they did have a matter there.

Where are you getting any of this from?

In point of fact, there’s tremendous competition in the legal industry–law schools have been cranking out graduates far past demand for a couple decades now.

Corporations choose white shoe firms because those large firms, besides have top talent, have enough manpower and infrastructure to handle large clients. IBM, besides its in-house legal department, can’t make do with a hundred mom 'n pop streetfront operations. If for no other reason than management economics, large national firms are the obvious choice for large corporations.

Besides, cap legal salaries and you just increase the value of those intangible assets, like connections to judges.

“White shoe” law firms have not been bailed out by taxpayer money; rather, they have dealt with the recession as all other companies have. Some have laid off staff, others have dug in and lowered partners’ income as the firm’s income goes down. See here for information regarding law firm layoffs in the last two years.

White shoe law firms do not win cases by buying off the judiciary, as the OP suggests. The notion that all judges in the US are on the take is not only unsupportable, but irrational (I won’t deny that there are judges who cross the line, and judges who take bribes, but that doesn’t mean all judges are corrupt). While I do agree that, particularly in small towns, there’s an element of favoritism, in many cases that can be corrected on appeal. Overall, though, the notion that in, say, New York, a major law firm wins cases because its partners play golf with the judge is ridiculous (what, does the judge decide cases based on who got the better score? because you know the judge plays golf with both sides…)

Next, while capping attorneys’ salaries may be an idea worth discussing, I don’t understand from the OP what the incentive is. There seems to be a suggestion that doing so will somehow increase competition. But how? Right now people already have choices – big firms, solos, boutiques, mid-size firms, etc. By capping salaries, you’re simply incentivizing lawyers to leave the larger firms and go to smaller places. And for some legal problems, you need more than one lawyer to work on a case. Some cases do require teams of twenty, fifty, even 100 or more lawyers, sometimes in multiple locations. So if you’ve effectively eliminated large firms by incentivizing lawyers to strike out on their own, you’re forcing inefficiency into the system because it’s easier to hire 100 lawyers at one firm to work together than it is to hire 20 lawyers at 5 firms to work together.

And for the plaintiffs’ lawyers like John Edwards, by capping their income you’re disincentivizing them to take on challenging or difficult cases, because you’ve shifted the risk-benefit analysis. Admittedly, many of the well paid plaintiffs’ lawyers are making lots of money without taking on much risk (think of the coupon cases), but to the extent that a marginal plaintiff has a risky case, a lawyer with a capped recovery is less likely to take on that case, leaving the plaintiff without help for a legal problem.

I guess I just don’t understand what motivates the OP other than run of the mill. irrational animus towards lawyers. This is a solution in search of a problem.

There are many, many firms that specialize solely in transactional work. Please explain how these firms rely upon the misfortune of others to make a living.

This is absolutely silly for so many reasons.

  1. Edwards wasn’t a corporate lawyer.
    2.“Not being able to charge high fees” is not a barrier to introduction into the market and even if it were, you can “not charge high fees now,” and corporations are free to hire cheaper law firms.
    3.Corporate work rarely requires the involvement of a judge. This is an absurd argument based on a fantastical premise born of staggering ignorance.

Restrictions on executive compensation, right or wrong, are not intended to create more competition for executive positions (this is like trying to sell more pies by making them taste worse).

One aspect that Ralph seems not to understand about corporate law is that large companies need large law firms because there’s a large amount of legal pick-and-shovel work. One of my previous employers fought a five year battle with another company over a manufacturing and distribution arrangement gone bad. Legal bills ran to six figures on both sides, but the total time spent in court, in front of a judge, was less than a week over that five years, and it was never about arguing the case, since it never actually went to a civil trial. Once it was simply both lawyers getting the judge to sign off on them hiring a forensic accountant together to reconstruct both sides records.

missed the edit window:
Restrictions on compensation for executive of companies receiving TARP funds, right or wrong, are not intended to create more competition for executive positions (this is like trying to sell more pies by making them taste worse). The restrictions are in place to prevent the fleecing of an inactive, uninvolved shareholder body and the damage such fleecing do to the overall market.