This is what I’m working on today. Everyone knows that legal services are overpriced. Some examples: the average criminal case costs about $4000 (almost none of them go to trial, thanks to plea bargaining; otherwise it would be more expensive). The average divorce costs $15,000. Taking a case to trial is especially expensive; lawsuits that go to trial range from $42,000 for an automobile tort case to $122,000 for a malpractice case. Those are just median figures; the range is very wide.

Aside: We say a product is overpriced if it is expensive compared to comparable products. How can an entire industry be overpriced? Roughly, legal services are priced higher than you’d expect from general familiarity with the rest of the economy, and how much people pay for other services. It is very surprising on its face that it would cost thousands to tens of thousands of dollars to get a dispute resolved.

Everyone knows that this is a major problem for anyone who has a legal issue. My argument is that it is also an *injustice* attributable *to the state*. Three reasons for this: (I) the government is responsible for the high prices, (II) the government has an obligation to provide justice to everyone (not only the rich), (III) the high prices enable people to use the government as a tool of unjust actions. Here, I’ll just comment on the first point.

I. The government is to blame for the high prices. How the government unjustly props up prices:

A. Licensing laws predictably increase prices, and serve no other plausible function.

In economics, there is no dispute that licensing laws raise prices. They directly restrict supply, which uncontroversially leads to higher prices in theory, and empirical studies consistently find this effect.

In theory, they could lead to higher average quality by eliminating low-quality providers. They could also lead to lower quality due to reduced competition. Empirical studies show mixed effects; licensing schemes are about equally likely to lower quality as to raise it. A report produced by the Obama administration concluded, “most research does not find that licensing improves quality or public health and safety.” (https://obamawhitehouse.archives.gov/sites/default/files/docs/licensing_report_final_nonembargo.pdf)

Even if they only removed low-quality providers and thus raised average quality, licensing laws would not help consumers. Removing all the low-quality lawyers does not mean that everyone now gets high-quality legal services; it means that the supply is reduced by the amount provided by the low-quality lawyers (David Friedman makes this point about the medical industry, in The Machinery of Freedom). If the low-quality lawyers would have served 1,000,000 customers, 1,000,000 people will instead have no legal services. So far as I can see, there is no rationale for these laws that makes sense other than to raise prices so that existing lawyers can have more money.

The price effect is probably extremely large in this case, because getting a law license requires 7 years of higher education (bachelor’s degree + J.D.), at an average cost of over $200,000. Legal fees have to be high enough to make it worthwhile to take those costs up front, so they have to compensate for delay and risk, in addition to the monetary cost.

B. The government creates an enormous body of incredibly complicated and confusing law. This creates the need for an industry of experts to learn and explain these laws.

Ex.: The Code of Federal Regulations expanded from 18,000 pages when it was first published to over 186,000 pages today.

Laws and legal doctrines are written in language most people find incomprehensible, known as “legalese”. Long, complicated series of clauses, Latin phrases thrown in here and there, etc.

C. There is high demand partly because the government has criminalized too many things.

Obvious examples: drugs, prostitution, immigration.

Besides the obvious ones, there are all sorts of laws that you couldn’t predict. E.g., it’s illegal in Florida to ride a manatee; in Alabama to play cards on Sunday; or in Boulder, Colorado to put a couch on your porch. You never know when you might be breaking the law.

D. Everyone knows that if you have legal trouble, you should hire a lawyer, and you should get the best one you can afford.