Three Reasons Why Lawyers Cost so Much

If you are in a position to review attorney bills, or otherwise familiar with attorney fees, you might be wondering why lawyers cost so much. I lawyers hourly rates can range anywhere from $100 an hour to over 1000. Those who have to pay for legal work are understandably concerned by high legal fees. There are good reasons why lawyers cost so much. Here are three.

Reason one: valuable services. Despite constant complaining about attorney bills, people continue to pay for legal work. Customers who pay legal fees are implicitly admitting that sets these are reasonable. The reality is that legal services are very valuable to many people, and those people are willing to pay high attorney fees to get those services. One explanation of why lawyers cost so much, then, is that they are worth that much to customers. An attorney cannot charge an hourly rate of $1000 unless there is someone out there willing to pay it.

Reason two: supply and demand. If anyone who wanted to could put out a shingle and start offering legal services, you could get legal work far cheaper than you currently can (although the quality of that work would suffer). In reality, though, one reason that lawyers cost so much is that it is so difficult to become a lawyer, and that difficulty creates a shortage of attorneys. To become an attorney in most U.S. states, one must complete a three-year law school education, pass a bar examination, and remain in good standing professionally. Despite the difficulty becoming an attorney, the demand for legal services is high. Virtually every company in the United States has to pay for legal work regularly. The hourly rate they pay is determined partly by the way they compete with each other to obtain the services of top attorneys. Attorney bills are high, therefore, due to ordinary market forces.

Reason three: high-risk work for attorneys. Lawyers must charge high legal fees to account for the riskiness of the work they perform. One reason that lawyers cost so much is that legal malpractice insurance costs so much. When attorneys make mistakes (and even when they don't), they can be sued for malpractice, so they have to carry malpractice insurance. Attorney fees and hourly rates must be high enough to cover this extra cost, as well as all of attorneys and other overhead. Many law firm clients who pay for legal work seem to believe that they are buying insurance in case any of their projects go wrong; if something goes wrong, they can always blame the law firm and even sue. These clients should not be surprised that their attorney bills are high, because they create a huge risk for the attorneys they hire.

Because of supply and demand, the valuable nature of legal work, and the high risk that attorneys and your, it should be no surprise that lawyers cost so much. Customers who pay for legal work will probably always complain about attorney bills and high hourly rates, that legal fees are not set arbitrarily. As long as customers continue to pay attorney fees, we have to conclude that such fees are not too high.