Lawyers get paid a lot
Today’s Los Angeles Times discusses the high cost of its corporate parent’s bankruptcy proceeding, again mentioning the specter of $1,000 per hour fees for some lawyers and the average of $500 per hour for all the lawyers. Why should lawyers be paid so much?
At the outset, it’s easy to understand the emotional reaction to lawyers getting so much money. Society, and the media, love to hate lawyers. Just read Shakespeare. Why is it that such visceral reaction is not visited on entertainers or ball players? Why is it that we don’t ring our hands at the low compensation when talking about teachers who mold our next generation of thinkers and leaders? Ah, but that is a different subject, right?
Let’s remain with the lawyers, for now. First, we’ve allowed industry to get huge. In this case, one person, Sam Zell, was able to borrow over $8 billion!!!!! He acquired the Tribune, with all its subsidiaries including the L.A. Times, Chicago Cubs, and others. This alone would make the task one of great complexity.
Then, add to this the federal Bankruptcy Reform Act of 1978, new enough to still be uncertain in some of its applications and broad enough to enable debtors to have a larger hand in the restructuring of their own organization. Next, add the increasing complexity and sophistication of the financial markets, and you have a cauldron that requires very sophisticated counsel and other professional skills. All of this increases the cost of legal services. It’s the opposite end of the spectrum of work … it certainly is not commodity work. In effect, this type of work may be in the category of “bet the company” work … and this always is expensive.Tags: Cash Flow - Finances
Categorized in: Cash Flow - Finances