Assorted links

1. FedEx your horses, with passports I suppose.  Horses, by the way, do suffer from jet lag.

2. The culture that is Ukraine, short video.

3. New European regulations for female chess players and their cleavage.

4. Why are lawyer salaries still so expensive?

5. Bertrand competition?  The law of one price?  Refuted.  Compare this, and this.

Comments

4. Why are football players so expensive even with the excess supply of football players?

Same answer as with lawyers I think. Think about a toll bridge. A drastic increase in the number of qualified toll both operators does not increase the supply of toll bridge passes.

You may be right re lawyers but IMO it's a totally different mechanism with sports stars.

The highest paid sportsmen (and let's be real they are almost all men) are literally the best at what they do in the entire world. They are judged and competing (literally and openly) every day, and there is tremendous scarcity. Only one person on earth can do what LeBron James can. Only one person on earth can do what Messi does.

Lawyers are more interchangeable, but like you pointed out there are massive credentialling, signalling, and other barriers that prevent fees from coming down.

Professional sports players are entertainers -- they are paid what they are paid because lots of people are willing to watch them (on TV or in person).

Talent in only relevant within the context of something people want -- you could be the best paperclip artist in the world, the LeBron of the sport, but since paperclip art doesn't have a fan base of tens of millions of people willing to watch it, it's relatively difficult to monetize.

This is also true but isn't there comparable demand for high end lawyering? Perhaps not.

I would imagine so, yes. Tickling Leviathan should be a growth industry, given what's happened with the size and scope of gov't.

No way are lawyers interchangeable. Most attorneys practice in very specialized niches. The costs of leaving your niche are enormous. You have to learn a whole new body of law. Most litigation must be tailored to suit particular districts or circuits or even particular judges (or juries, as the case may be).

The skills are nowhere near as interchangeable as, say, football or baseball players.

If a top lawyer in a niche charges $600/hr, I am suggesting there are 20 others who could do the job without any noticeable dropoff for $400/hr

If LeBron James/Lionel Messi/Albert Pujols gets hurt, whoever subs in for them will be noticeably less entertaining to watch.

"If a top lawyer in a niche charges $600/hr, I am suggesting there are 20 others who could do the job without any noticeable dropoff for $400/hr"

That is incorrect. First, if your case is over a $10 million dispute, a top lawyer is worth the extra money if he has even a slight edge over the other guy. As in sports, subjective quality of work is not what matters, it is the "W." Even a very small marginal drop off in quality can be the difference between getting $10 million, and paying $10 million.
More importantly, if you are an in house general counsel, and you hire the top firm and they lose, no one can criticize you, whereas if the $400/hour guy loses, the CEO and board are going to be royally pissed that you lost $10 million in order to save $200/hour.

That's the credentialling and signalling I mentioned already above.

I was just trying to counter Andrew's contention that high priced lawyers are like high priced athletes, for similar reasons. I disagree.

bullshit.

We know most lawyers are interchangeable because the most prestigious and therefore expensive law firms, treat their associates like interchangeable cogs. You dont need any special training to due either due diligence or document review.

The reason why so many lawyers are so expensive is because the best law firms are a cartel that charges the same amount of money for roughly the same quality of work and their clients are too conservative to stand up for themselves on pricing. Which is why profit per partner indicators continue to grow and grow, recessions be damned.

4. Why would anyone expect a profession built on directing state force in convenient ways to follow market rules? The more lawyers there are, the more lawyers we need!

Eventually we'll reach a Lawyer Event Horizon, in which it becomes financially impossible to be anything but a lawyer, and then the survivors will curse the ground and evolve wings or go seasteading or something.

Hey, it worked for Pisthetaerus and Euelpides.

I think economists abuse the term "law" (eg. Law of one price, Okun's Law, etc.). Does it ever bother anyone else?

Do you complain that physicists abuse the term "law" when they speak of "Newton's laws"?

English words often have multiple meanings. Get used to it.

Never! Disambiguation or death!

#3.

I saw more than a couple of plunging necklines paired with short skirts when I played in the World Open. But these women were in higher sections than I, so I never had to personally deal with overcoming these challenges.

I think it is utterly ludicrous for government to be issuing dress codes for anyone, other than perhaps saying that you must be dressed while in view of the general public. Another pointless European regulation....

If skimpy clothing or raggedy clothing is a potential problem, then the private organization involved (in this case the tournament organizers) can simply issue their own dress code. One size does not fit all.

@James b. - it seems like they were not talking about that sort of challenge, the link provided has a question : "Don't you think that the dress code for women should protect male chess players, who may be distracted by too open clothes?", to which the answer was "It's a funny question and I don't think it can be taken seriously. We didn't think about that while making the regulations."

The explanation given for the regulation was : "We came up with that idea because we noticed that during the games many of the players were not wearing proper clothes". I wonder why this should be taken seriously either.

Weird, no?

Loved this quote from #1

"Most horses that travel around the world are used to it. They are just like a frequent traveler at any airport"

Also, why are the quarantine, vaccination and other paperwork requirements more stringent for horses etc. than humans? A horse gets tested for a dozen diseases, proof of vaccination for another half dozen and a 3 day quarantine.

People can just walk off the jet-bridge?

People are assumed (perhaps wrongly) to be able to take care of themselves and their own health. If they have something they probably aren't taking an international trip.

Also, contagious diseases in humans are perhaps easier to detect through visible signs?

Off topic, but on Target:

A nice article on Voxeu.
1. German MFI's play a mayor role in the bank run in southern Europe and are pulling their money out of Italy and Greece and the like
2. Which has to be enabled by banks in southern Europe
3. Which use Target-liquidity to do this
4. Which is provided by Germany...

http://www.voxeu.org/index.php?q=node/7700

Re #4, this is kinda like asking "why are NBA players so overpaid when there is no shortage of basketball players who would be willing take the job?"

In other words, he's looking at the salaries of a bunch of white shoe law firms in New York and DC and assuming that's what "lawyers" are paid. I can assure you this is not accurate across the board.

Welp, guess I should learn to read the previous comments before posting.

Is this a sign of markets at work? Ukraine has attractive passport control officers who make an effort to be nice. USA has ignorant, useless TSA oafs. But more people want to go to the USA.

#4: Because we are totally worth it.

My irony meter just exploded.

4. First, because the legal system is designed by lawyers for lawyers. Second, because the bar association and law schools restrict supply relative to demand. Third, because only lawyers who are members if the bar may represent litigants. Fourth, the art and science of law is highly specialized and nuanced.

Anyone can be a lawyer. I am.

To remain a successful lawyer means being able to manage clients to maximize billable hours. That involves both case management and case selection.

I left the profession because, inter alia, I realized we were not giving clients full value for the price they paid. I got tired of being a crook. So I went into financial services where I can proudly say my clients get what they pay for. :)

The bar association and law schools are doing a truly woeful job of restricting supply. Average lawyer salaries are in the toilet.

Contrary to conventional wisdom, the fortunes of the profession are very cyclical. When I got my law degree in 1990, lawyers were a dime a dozen. The conditions are similar now. Growth in the number of law schools, growth in admissions, and lawyer layoffs during the recession have driven average wages down.

Barriers to entry are just one factor contributing to supply. The ABA can't exactly admit zero attorneys just because market demand is bad. Supply decisions are made by admissions to law schools three to five years earlier. The ABA doesn't directly control admissions and there are competing interests between schools that want more students and the ABA which wants to limit supply under the guise of quality. The bar, accreditation, reciprocity, MBE, MPRE, and CLE all contribute to supply elasticity.

4. Is there really an excess of lawyers?

http://www.cooley.edu/news/2011/081111_lawyer_employment_rates_high.html
According to 2010 data reported in the U.S. Bureau of Labor Statistics Current Population Survey, the national unemployment rate was 9.6% for all occupations, while the unemployment rate for lawyers was 1.5%. The vast majority of management and professional occupations had higher unemployment rates, and many had unemployment rates that were much higher, for example:

• Astronomers and physicists had double the unemployment rate of lawyers;
• Computer software engineers and accountants had more than triple the lawyer rate;
• Environmental engineers had more than four times the lawyer rate;
• News analysts, reporters, and commentators had more than five times the lawyer rate;
• Advertising and promotion managers had nearly six times the lawyer rate; and
• Architects had nearly seven times the lawyer rate.

The trick to that study is not counting the law school grads who never got jobs as lawyers as lawyers.

Yeah, but what are they doing and how much are they being paid? They might essentially be doing paralegal work.

Never trust any stats from Cooley. It's a fourth tier law school that came up with its own bizarre ranking in which it is a top ten school. One of the ways they did this was by creating a bunch of bizarre and irrelevant categories - for instance, total square feet in the library and number of chairs in the library - which Cooley just happens to be number one in. Then it weights those categories equally with things like "average LSAT score of student" in coming up with its rankings. They come dangerously close to actually actively defrauding 1Ls.

Perhaps Barnes and Noble doesn't like Krugman and doesn't want to see his ideas disseminated.

#4 You get what you pay for?

Even though the author of No. 4 provides some accurate description, his prescription is to hire his law firm.

#1 - (slightly) fun export regulation fact of the day - you need a license to export a live horse by ocean, but you do not need one to export a live horse by air.

May be one should try rewriting all our laws in simpler and more transparent language. Shorter sentences, bullet points like in power point etc. And then allow non-lawyers to defend themselves?

Non lawyers can defend themselves. They just cannot defend other people or corporations.

Thanks, I didn't know that. Okay, may be we can allow non-lawyers to defend other people,
once law is written in a sufficiently simple format. :)

Without knowing much about law, I do think that there is a lot of complexity in a legal system that is not just jargon and unclear writing. Saying that writing laws in a simpler way would allow anyone to be a lawyer is like saying that avoiding jargon in a engineering book would allow anyone to build a cooling tower.

1. I don't deny the existence of complexity, I said "sufficiently simple", not "simple". So jargon is totally fine. On the other hand, if you read statutes, it should be obvious that it contains long painful sentences, and it is a simple exercise to turn them into shorter, more comprehensible sentences.

If you read physics, math etc. from 18th century, you will in many cases find long unwieldy sentences. Since then they have defined notation that simplifies writing and reading stuff, and gone a long way. I am suggesting doing something like that with the law.

2. I never said "would allow anyone to be a lawyer", please don't misinterpret. What I mean is that it will first of all be easier for people to defend themselves (which one can already do, as Doug's comment says), and moreover, there might well be a much better scope for amateur practitioners who devote enough time to enter the field. Finally, the question of where in the law books to look up may possibly be addressed by something like stackexchange

3. And sorry, your analogy sucks; one can easily understand a court verdict with relatively little effort, but not so with the physics of a cooling tower from just reading it. Science and math are way more profound than literature, liberal arts, law etc. - get used to it.

Your intuition is correct. People can represent themselves (pro se, aka pro per) and courts attempt to facilitate this as much as possible. The law provides that a judge not dismiss a pro se litigant's suit, however poorly pleased, if there exists some set of facts that could support a cognizable claim. In other words, lawyers are held to higher pleading standards than non-lawyers.

However adept the pro se litigant is at researching statutes and the law of the case, the opportunity cost for the pro se litigant is large. Lawyers, paralegals, and legal secretaries have the infrastrucure and technical facility to act quickly and decisively. Even having pre-canned pleadings from similar prior cases saves a lot of effort. Pro se litigants usually have jobs that get in the way of prosecuting their case. Judges are supposed to be more patient with pro se litigants, but they still get annoyed. Pro se litigants don't have experience in voir dire, conducting effective discovery, or making motions in limine or objections in a timely manner.

The deck is stacked in favor of lawyers in general and great lawyers in particular. Simplifying laws and procedures might make the courts more accessible, but the cost would be a departure from common law principles. Pro se litigants will tend to argue for what is fair and right (in their view) rather than what the law dictates. Law is evolutionary - beginning from constitution, code, statute, and regulation but then augmented by precedential decisions. A good lawyer knows the law. A great lawyer knows how to make new law or bend existing law to his will. This takes great skill and deep research. Then there are legal strategies that attempt to throw your opponent off balance and strike. It's quick, like fencing. Often a case is decided pre-trial after discovery when both sides see their relative strength. The best lawyering often never sees the inside of a courtroom. A pro se litigant dreams of giving empassioned speeches to sympathetic juries and judges.

The biggest mistake people make is believing law is about fairness and justice. I withdrew from the profession because of this departure from fairness and justice. Nonetheless I respect common law principles as superior to civil law systems. The odd thing about law is that it is chaotic. Talk about irony.

But back to the economics - law has enormous economies of scale and scope, and profitability comes from case management and case selection. By analogy, the pastor of a church is a spiritual leader and must conduct services for his flock. But behind the altar is a business office collecting money as quickly as possible and doling it out as miserly as possible. Large, prestigious firms have huge advantages, but they often have no interest in low value cases. Independent attorneys eat the crumbs that fall from their plates. The "supply" of lawyers with respect to wages is segmented into ehat is essentially completely different markets. The oversupply is an illusion. There are lots of law degrees but very few lawyers available for top cases.

As someone said earlier, when you have a seven, eight, or nine digit case on the line, you're not going to worry about an extra $200 per billable hour if it increases your probability of success. To put that in numerical context, if the standard of proof is a preponderance of the evidence, a 1% margin of quality can mean all the difference to the decision.

@Willits, Thanks your comment is very helpful.

That'll be $200, Sandeep. :)

1) A multibillion dollar securities transaction requires a very different firm set-up than a small scale incorporation and the firms that run on multibillion dollar deals are set up very differently than small law offices. A multibillion dollar transaction or lawsuit usually requires many lawyers and many paralegals and other supporting roles. The value of the supporting roles is included in the value of each lawyer's salary. The small transaction, which most people see, involves a single lawyer charging for office space etc. So, not only are the two not substitutes, but the entry into the mega-deal firm requires a huge investment in capital, which is simply not going to be done in a recession.

2) While legal fees are often astronomical, legal fees still form a very small part of the total transaction. A couple of million dollar bill is peanuts on a ten billion dollar deal, while a bill of $5,000.00 is outlandish for an incorporation. Accordingly, most legal bills on billion dollar transactions don't cause anyone to bat an eye, but a few thousand dollar bill causes people to go insane. Unfortunately, the market for the people doing the actual work is nearly a perfect substitute.

3) Contrary to popular belief, most lawyers don't charge out the same hourly rate for all clients. Client's with market power beat firms up on fees all the time and pay significantly lower rates than the average joe. If you can provide a huge amount of work to a law firm, then your rate is lower. That just mans mom and pop pay retail, whereas corporate clients pay far less for commodity work.

4) The corollary of 3 is firms targeting mid-sized transactional or litigation work are often beaten-up pretty badly. There were lots of regional firms because they are cheaper to create and cheaper to run than a multinational behemoth, but depended on clients that had lots of knowledge of the industry. Those clients beat-up on the regional firms and many had to share capital to invest more capital to go after bigger and bigger files. Those that couldn't compete disappeared.

So, I suspect one could argue that legal fees have come down, significantly, in the past decade, they just haven't come down for mom and pop.

Regarding you #3: how's that working out for lehman?

I'd also add that a big problem in trying to figure out how a law firm works is that a very large chunk of the business machine is the lawyer. In most firms, lawyers are the sales person, the capital, the employee and the owner. That makes law firms behave oddly because the machine is so dependent on the interplay of its people.

The hardcover (direct substitutes) costs are within 8% of each other.

From my point of view the economics of sport are all messed up.
What I would pay to watch the world's greatest players in a game = zero dollars
What I would pay to watch a bunch of total incompetents who have no idea what they are doing = more than zero dollars

Watching the greatest players like Warren Buffet of George Soros at work would hardly come for free.

"A bunch of total incompetents who have no idea what they are doing" - this may very well describe most of soccer matches.

#3: Getting rid of a misogynist excuse for losing to a woman, while simultaneously making it less pleasant to lose to a woman.

Dumb question #4: Why are lawyers paid so much when there's a surplus of them?

Answer: Because there is no surplus! Hello, it's a cartel! With high and artificial barriers to entry! There's actually of course a shortage of lawyers. And the shortage is by design.

Better question: Why do so many otherwise intelligent people think there's a surplus of lawyers?

My apologies to previous commentators who said similar things, but I felt the need to be blunter than you did.

This is just wrong. The number of law school grads passing the bar greatly exceeds the available jobs. Most of them just don't have the school and class rank to get a shot.

There is a "shortage" of lawyers who graduated in the top half of their class from a top 5 or 15 or whatever school. But lawyers. We have too many of those.

Anecdotes don't beat evidence. See Richard A's comment above. The unemployment rate among lawyers is 1.5%. A temporary market adjustment does not a surplus make.

The "evidence" isn't there, as I pointed out much earlier. Obviously if you include only people who get hired as lawyers to be lawyers instead of all law school grads, you'll find that lawyers have a very high rate of being hired as lawyers.

as others have noted, the comparison to sports is apt: there's no surplus of the kind of lawyers with the skills that are most valuable -- there are lots of ball players (lawyers), few good enough to play div I college in a real conference (get a job at great firm), let alone NBA dev league (keep job at great firm, move up as associate), let alone NBA (partner at great firm), let alone NBA starter (prominent partner at great firm), let alone NBA all star (nationally renowned lawyer)). doesn't track exactly, but you get the point. and the firms that have the most valued lawyers also have some ability to limit supply (by not hiring associates, and/or not making partners, they limit the generation of a new generation of lawyers with certain skills).

Sadly the barriers are quite low and even non-lawyers do quite a bit of legal work these days, such as LegalZoom and various "consultants" and offshore firms.

Three years of law school on top of four years of undergrad plus a bar exam are not "quite low" barriers to entry. US barriers to the legal profession are the highest in the world.

As I recall the *actual* law of one price, it refers to *identical* goods and the conclusion is that the price differential canot exceed the transprtation cost differential of moving one of the identical goods to the location of th eother.

Now, in the case of a print and electronic version of the same books, we're clearly not talking about identical goods. (Just off the top, I can sell my used copy of a pyhsical book, but not my copy of an ebook.) So the existence of an equilibrium price differential between physical and ebooks is hardly a refutation of the law of one price.And, the ebooks are not identical. I can't transfer a kindle file (easily) to a nook owner, so there's no reason that the prices of incompatible-format ebooks would converge. Finally, the prices of the print books are quoted not including shipping costs...and the shipping costs will depend (at Amazon, anyway) on how much else you buy and what shippling method you choose.

I refute your refutation.

#3 There are rules for men as well, its just that the first tournament where the rules are applied happens to be a Women's Championship.

The lawyer article is about salaries, not about bills. Some of the comments go off tangent and focus on the bills the client sees. The article is really about the salaries law firms pay their associates. And that is a simpler phenomenon that the client / lawyer issues: lawyers are not terrifically astute profit maximizers, both by nature and by professional ethics.

Circa 2005 (the story is no longer up) FedEx shipped five kittens from South Carolina to Vermont; the kittens had been accidentally sealed inside a box containing farm implements. The 3 week-old kittens arrived 2 days later -hungrier- but no worse for wear.

When will we ever discover the lost games of NJ chess champion Tyler Cohen? They are out there...waiting to be discovered!

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