[Cross-posted
Maybe it is more pertinent here anyway. All the same, I’d like to here both the regulators’ (like the OP) and the deregulators’ (like Sateryn76 ) reaction to it.
I wonder if you think, economically, this is a very tenable system. Why would paralegals charge so little when the market-clearing rate is apparently much higher? Would attorneys stay in the “simple bankruptcy” game if paralegals were capturing all that business with their bargain-basement prices? And if not, as they probably would not, where would future “simple bankruptcy” paralegals come from? After all, they couldn’t come from the firms, since the firms no longer have that practice area.
You seem to base your notion of the origin of attorneys’ fees on the long discredited “labor theory of value”—namely, that prices are set by summing up the cost of the factors of production (in this case, law school tuition). They are not. Prices are determined by the interplay of supply and demand; if the market-clearing rate for simple bankruptcies were not high enough to allow the practitioner to recoup the cost of her education, she would go into a different practice area or leave the practice of law altogether. Over time, supply would contract and those left in simple bankruptcy (i.e. , those whose comparative advantage lies in that practice area) would be able to change an equilibrium fee (one that balances their revenue with their costs).
There is nothing monopolistic about a regulated bar. There are perhaps more firms in law than in almost any other profession; accordingly it’s about as good a model of competition as you’ll ever see.
Kimmy_Gibbler, Esq.