Wednesday, January 24, 2007

Lawyer Up

Mike--who's in law school now--and I got in a brief debate about the economics of lawyers. I told him that as society increases its number of lawyers, that tends to encourage the existence of more lawyers. He didn't buy it and he had to go before I could explain myself.

From any one person's perspective, one lawyer is often a substitute for another, just like apples, candles, cars and trips to Japan. However, from a macro perspective, each lawyer complements at least one other. If you and I are involved in a dispute and you get a lawyer, that makes me want a lawyer, too. (This sort of feedback happens a lot in divorces.)

The market for lawyers is similar to that of advertising. When Toyota puts more ads out, Ford has a greater incentive to secure more air time. However, since lawyers work with the law--which the state uses to take capital by force--I'd argue companies are even more careful about keeping their legal budgets up (in recessions, ad budgets are the first things to go but I doubt the legal department takes a big hit). So I claim lawyers breed more like rabbits than any other occupation.

No comments: