So what keeps prices high at the top end? The answer is branding. Business clients don't trust their sensitive legal work to firms that don't have brands. And these firms that have brands don't hire just anyone. Only about 10-15% of fresh JD's end up at a medium to large firm working on corporate law, and the majority of them come out of the top 20 (of 200+) law schools. There are only so many graduates of Stanford and Berkeley to go around, so only so many of them get hired and trained at business law firms, and only so many of those make it to partner and build up years of experience. This is the real supply bottleneck.
You've always seen this phenomenon in banking and consulting (business clients trust their M&A to Goldman, who hires from Harvard and Princeton, maybe Yale if they're really feeling pinched). Now, you're seeing it in engineering too. It used to be that large companies didn't care much about where you went to school or what your grades were. But these days, places like Google, Facebook, etc, disproportionately recruits from the Stanford/MIT set. As a result, salaries at these companies have bid up dramatically. I hear a fourth year engineer at Google can make $250k+. That's comparable to a fourth year lawyer at a top law firm. These salaries were unheard of in engineering back when places like IBM didn't care all that much about Stanford versus CSU.
E.g. see: http://www.bizjournals.com/boston/print-edition/2012/04/27/l.... The firm in the article is a 135 lawyer outfit (so solidly on the larger end of mid-sized) with offices in Boston and D.C. and four other Northeastern cities. Partners bill out between $300-$500. (No affiliation, just Google-ed).
Experienced solo practitioners serving individuals in personal matters might charge $100-$150. And if you just need someone with a JD, you can get one for $10/hour on Craigslist.
Then on the other end of the spectrum, you have firms like Wachtell Lipton, who basically only do billion dollar M&A deals. They don't even charge a fee, they charge a percentage of the deal value. People hire them because when you've got a $5 billion deal, you don't care if your legal fees end up in the tens of millions of dollars.
Price is a signal that people use for quality. Nobody wants to get discount legal advice. When things go well, you save a couple of bucks. When things go bad, you can lose a lot more.
This applies to the medical field too.
I know, it's a totally absurd "theory". Just my 2 cents, anyway
According to census, we have one lawyer for every 300 persons (from which I extrapolate that there's one on every 6 people with a degree)
There is something magical that happens in the 100 pennies between 99 per hour and 100 per hour, a mental chasm that is in reality no different than 98/hr vs 99/hr but we make it into a big deal. Why he chose that number, and why people choose any number for an hourly rate is always a curious thing to me. We pick numbers that we think are palatable with no real regard for the same rigor we put into other processes. Has he tested his rate?
But the idea of hourly rates is accepting of the premise incorrectly...
My guess is that if he is truly great he could make some lawyers jealous. Charging $700/hr may seem far fetched for a developer but making 700/hr is a very different thing. 70K bill to a client for something that took 100 hours to make is a much more salient strategy if you give them what they want.
Americans can't hire lawyers from the Czech Republic.
Now suppose you hired Ramsay, but instead of a dinner party it was for your kid's birthday party--and all you want Ramsay to do is boil Oscar Meyer hot dogs and serve then on Safeway hot dog buns with Heinz Ketchup (and only that) on them, and later scoop some store-bought ice cream onto store-bought cake.
This is something you could hire a neighborhood teen to do for $20. Do you think Ramsay is going to do it for $20, because you are asking him to do something much simpler than make his signature food?
Of course not. He's charging for his talent and skill. If you want to misuse that by having him work on something that is trivial and can be done easily by someone with much less talent or skill, that's your problem.
I suspect that's what you are doing with the lawyer. A partner in a major firm has the skill and talent to work on very large and complicated matters that involve big companies and a lot of money--things like major mergers and acquisitions, IPOs, and such.
You are asking him for something that could probably be drafted by a paralegal from his office, and then checked over by a junior associate--the legal equivalent of boiling hot dogs.
I'm sure there is no end of little hand holding that top brass do. So long as the rate is right.
I've never hired a lawyer and I've never directly contracted myself out so I am by no means an expert on this topic. Great question though.
Lawyers are licensed and specialized - the costs associated are passed through to the customers into their rate.
The vast majority of legal work they do for you as a startup is form work, so don't ever pay a partner more than a half hour to review it. 90% of the work is literally changing names in a document: incorporation docs, board notes, issuance of options, option plan, assignments of IP, and financing docs should all be standardized. I know this because I worked at Gunderson as an attorney.
What you want from startup lawyers is a clean form that your investors have seen before. Don't do anything that makes an investor think twice. Any form from the firms I mentioned above will do.
Net net: you shouldn't worry about $700/hour. It's too much, you shouldn't be hiring that particular attorney, and even if you do owe thousands of dollars, you shouldn't have to pay it until you're financed (which means you have the cash anyway).
* I coded this during lawyer meetings.
Are you going to employ him at the $700/hr rate? If so, you would have justified it. Unless the $700/hr were just a ploy to start a pricing negotiation, rather than what he typically bills, the cost is being justified by the people keeping him in business.
That aside, if he works for a big firm, it'd be fairer to compare his rate to that of what a consulting firm bills out its developers (which is very far north of $100/hr).
[1] With the exception of a few states where one can still "read law" under a judge or attorney and take the bar.
One big difference is people brag about a high paid attorney (it's considered a good thing to pay a lot for legal advice) but never brag about how much they pay their developers (it's considered a good thing to pay less for developers).
Moreover the "new grads without jobs" is a fairly recent development.* Recent grads with jobs are certainly not billing $700 an hour, so I'm not really sure what that has to do with the original question.
* Given the recent decline in LSAT registrations it is clear that this supply surplus is temporary and is not the new normal.
There exist at least some software developers who bill $700 an hour or north of that, by the way.
If you want general legal advice for startups, talk to startup-friendly law firms. Many have packages where you give up 1-2 thousand bucks only for X number of hours + turning your startup into an INC or LLC or whatever + a small equity stake. For other law firms, you'll just have to talk to them and figure out what their rates are. Most are more in the 50-100 dollar range. Don't skimp on legal expenses, if you get sued for a few million dollars, you'll regret skimping on paying a better lawyer a few thousand bucks more.
Alongside the shortage, the cost of living in the Bay Area was rising which increased when there was an exodus of lawyers from law firms going to the Bay Area for in-house opportunities at startups. As a result to combat this, Law firms in SF/LA increased their associates pay which was then being matched throughout the rest of the country.
Once this happened it resulted in the increased wages leading to the prices at the level they are because:
- Noone wants to cut their wages - companies also do anything they can to prevent wage cuts even if that means reducing headcount.
- Law firms prestige are linked to money - in order to attract the best talent they compete on price by paying the highest starting salaries and bonuses. Likewise in order to keep the rest of the employees motivated they pay the same salaries across departments. Thus they then had to tackle the issue of the increase overheads so law firms increased their rates to manage increased overheads and to increase profitability of the firm ensuring they keep their best talent around.
However, with that said the reason lawyers are expensive despite the "oversupply" of them is because if you require a law firm with experience that is able to handle complex litigation, transactions etc and is able to allocate a significant amount of man-hours at your case then you're going to have to compensate them in order to do so.
So to answer the question are lawyers expensive, they're not. You can find one to handle basic paper work inexpensively however, if you require an experienced lawyer who can handle complex litigation, complex litigation, transactions etc and is able to allocate a significant amount of man-hours at your case then you're going to have to compensate them in order to do so.
2. I think you're paying $700/hr because you 1) went straight for a partner and 2) you went straight for a major law firm in the valley. It's also a mindset difference. I think lawyers charge based on the value they add, not the hours they work, whereas developers typically think about hours. A developer who writes a piece of code that saves you $1M should charge $100k for it, and a lawyer probably would. On the other hand, your developer would probably charge you 1.5 hrs * $100 / hr. :) * Full disclosure: I'm a developer and I have lawyer friends, but
* You can't just read a legal book over the weekend and call yourself an attorney.
* Open source and Free software. While lawyers do do some pro-bono work, there's not nearly as much of it being done as there is volunteer work being done by software developers around the world.
> $2600/hr for troubleshooting
Hire the $2600/hr guy and be done in ten minutes because of his fifteen years experience and deep knowledge of the system; spend $433 very quickly. Pick the $50/hr rent-an-intern and you're down for a day while they're googling the fixes. Spend about the same amount, but avoid the losses from 7+ extra hours of downtime.
Time is money, after all.
Same thing with an after-hours/emergency call to a plumber. Yes, you'll spend twice as much - but that's nothing compared to what it will cost to repair the structural damage to your house because your toilet overflowed and you ended up with three inches of standing water soaking into your everything.
You've hired an independent developer, at a reasonable rate.
Hiring a lawyer from a law firm, comes at the rate of the firm. He bring to the table the resources of a large law firm, and along with the cost of operating a law firm. In addition to his nice salary.
If you had hired an tech consulting firm you'd be looking a similar hourly rate if you brought in a partner.
thisPresumably the majority of "bread and butter" legal cases don't require an innovative step? Rather, they involve rolling out a set of standard arguments and countering a set of standard arguments put forward by the opposition, a bit like a chess game? I'm talking straighforward stuff, rather than the types of cases that set legal precedent.
If so, wouldn't it be a case of cramming a machine full of the necessary legal information, then doing a search to navigate a path to a winning position? If a winning position with the required certainty could not be found by the machine, the legal advice might be "call a human lawyer".
The law is full of context and interpretation details. One example my business constantly runs into is weather or not we have to register as a 'foreign business" when we do business in other states (my business is an engineering consulting business that does work in many states, sometimes requiring travel, sometimes not).
All of the states we looked into have the same basic wording tin the foreign business statue, but they interpret it different - for some states, you only have to register is you maintain an office presence; for some states you have to register only if you spend a significant amount of time in the state, other states you have to register if the money originates in the state, even if you never set foot there.
I'd love to see someone with ML or AI experience address the challenges involved in this. I would imagine it would be possible, but require a shitload of work, and even then may require some review.
> for some states, you only have to register is you maintain an office presence; for some states you have to register only if you spend a significant amount of time in the state, [...]
then this is doable, in principle. But the overall project and required workload would indeed be vast.. I wonder how much one might have to work to have some kind of a working PoC.. NLTK and their computational linguistics book / python tutorial might be a good start. e.g. http://nltk.org/book/ch10.html - we can do things like
dt = nltk.DiscourseTester(['A student dances', 'Every student is a person'])
dt.add_sentence('No person dances', consistchk=True)
- throws error 'Inconsistent discourse ..[list of predicates etc]'
dt.retract_sentence('No person dances', verbose=True)
- outputs
Current sentences are
s0: A student dances
s1: Every student is a person
But scaling this / making it work for something more than these simple linguistic tasks.. quite an undertaking! In any case, the field in question (and the task at hand) is very interesting, and I hope that lots of interesting stuff will be done in comp.linguistics / nlp in the near future.
Like Jeopardy, the task involves a lot of "soft" information, but results in an easy to measure pass/fail decision. It could be run in real-time, as an advocate in a courtroom, or off-line as a legal adviser. Also like Jeopardy, it offers the opportunity of a public contest, and the associated PR.
[1] http://www.research.ibm.com/deepqa/faq.shtml
---
Edit:
It seems like at least one person inside IBM is already thinking this way. To quote [2]:
"Law, Patent and Trademarks"
"Not only could a Watson-like capability minimize filing through existing databases on laws, prior cases, rulings, hearings, opinions, it could also be used as a method of testing witness questions. or suggest a series of inquiries and questions for litigation. It could be used to simulate certain judges, prosecution and defense lawyers, based on prior cases."
"A Watson-like system could generate questions for a prospective patent claim based on it's ingestion of the entire patent and trademark database."
[2] https://www-304.ibm.com/connections/blogs/davidian/entry/whe...
Regardless, I wouldn't worry about it because software engineers will be automating away lawyers soon anyway. ;)
2. The quantity of workload they provide per job is less, thus pricing is more dense (i.e. companies realize programmers work thousands of hours for a project and that the project viability would collapse at $700/hr)
3. In many cases you have no choice but to hire a lawyer, while more often you can say no to a programmer should the economics not support the project.
4. A lawyer has to go to school for approx. 6 to 8 years (at least in Canada) while programmers have a wide variety of education levels.
I'm sure I could list more...
* legal work is more likely to be boring, so you have to pay people more to do it (this is related to the first point above)
* if an app has a bug, it's usually easy to spot - if a contract has a bug, you may never know about it until it bites you. so you pay for the best attorney you can get, in the hopes of getting fewer bugs
* lawyers are more at the beck and call of their clients - really need something done overnight or over the weekend? they'll do it (though they'll resent you for it)
I'm sure there are as many lawyers who love or hate their job as there are developers that do... some people (like myself) love doing the work but I have many colleagues who find it tedius and boring. I would say also not an excuse.
Security or data integrity flaws are no more apparent than contract holes, and often are equally as disruptive.
Developers aren't at the beck and call? Lol I would say that's a misconception. Late nights and weekends are NO stranger to developers. Especially in actual companies (vs independent) where deadlines are approaching its very common to be strongly encouraged (read: required) to work weekends.
It's more likely that the combination of cheap alternatives (outsourcing, developer living in a carboard box in san diego, etc) are numerous and you don't need indepth knowledge to click buttons on your program to see it works like you wanted it to but you do need all that knowledge to look at a contract and confirm its legitimacy.
and as someone who's been both a developer and a lawyer, lawyers are much more at the beck and call of clients. software engineers generally know when they have deadlines approaching. lawyers get informed Friday night of a deadline they have Monday morning (transactional lawyers, that is).
your last sentence is precisely the point i was making re bugs.
Sweeping floors and cleaning toilets is also pretty boring, but I don't see anyone paying janitors more because of it.
Are you willing to take a risk with your health or getting into legal trouble?
So the price of the best people just keeps going up and up.
With developers, there is more of a concept of "good enough". As long as you find someone that can build the thing and it works, that's good enough.
The second answer, which is also helpful, uses graphs from these articles, which helps illustrate the bimodal distribution: http://www.gradschools.com/article-detail/worst-reasons-law-... http://economix.blogs.nytimes.com/2010/07/26/the-two-track-l...
There are developers who may charge $700/hr, but you've chosen to go with a developer who charges $100/hr because that's what you need at this stage. If he made a mistake, it's not likely to cost you EVERYTHING to fix up. Somebody points out the bug / issue and you can hire him to sort it out and push out an update. Speak to a developer who works at a law firm ;)
Conversely, people device to go with a $700/hr lawyer because of their experience and reputation. You're paying for them to not make a mistake because it may just cost you EVERYTHING. It's not a mistake you can fix after it's found. Something wrong with your patent? Contract? Not something you can say 'oops, it's fixed now' to.
For a lawyer, if they put in 100 hours to come up with a 2-page letter, they charge for those 100 hours. The next time a client comes to them with a similar problem, they charge for 100 hours.
Software developers charge for time actually spent working on a particular project. If they reuse code, they don't (typically) charge anything. If developers were to charge for the number of hours spent writing that code they're reusing, they'd be more like lawyers.
(If you use that firm, such work should be turned over to a less senior staff member and billed at a somewhat lower rate.
If the partner is a friend or friendly acquaintance, s/he might ensure the assignment is to an attorney (and possibly assisting staff) they respect and they might look over the results before they are returned to you.)
go to law school (or take any college really)
pass the bar (or any certification at all)
maintain his membership in bar (or any level of professional conduct or accountability)
be legally responsible for the work he performs (in same way lawyers, doctors and other accredited / certification passing professions must)
See also supply and demand. Every half skilled monkey can be an iOS developer (or any kind of developer. Honestly, it's really not that hard. Compared to lawyering, doctoring. Also developer != architect, lead, technical manager, entrepreneur, etc which are all much more difficult. OTOH people who couldn't hack EE or that drop out of college can be successful developers.)
https://en.wikipedia.org/wiki/Life-critical_system#Software_...
developer auction offers I'm getting is 85k to 130k so far, for someone with close to 10 year experience in the valley! wtf
1. Get a PhD in computer science or software engineering. 2. Submit to state licensing, certifications, fees, examinations and codes of conduct. 3. Buy liabilty insurance in case your screw-ups hurt someone and they sue your incompetent ass.
Look, doctors and lawyers have been around at least since civilization arose, say six to ten thousand years. Programming as a profession independent of, say, doing math or building weapons systems or accounting has been around only since the 1950s, and it wasn't till the 1960s that large numbers of people got paid to do nothing but programming.