Zero-Sum Competition In Legal Services

Mike Konczal thinks about Peter Thiel and developing a critique of elite higher education:

This critique would go: Right now our best minds go off to the financial sector and high-end business and law programs, channeled through elite education. To pick an example at random, our best minds are hard at work making sure JP Morgan can squeeze local businesses with ever increasing interchange fees, instead of at work in Silicon Valley coming up with a way to circumvent and take apart that oligarchy using technology. They'll continue to find ways to create regulatory arbitrage, or find obtuse mechanisms to manipulate earnings reports, or help one group of corporations sue another group of corporations, instead of creating real new value and innovation. The carrot and stick of meritocratic rewards and debt collection push our elite onto this track, and Thiel's program can break that cycle. I'm not sure where I stand on it in practice, but it's an interesting debate.

I always feel like the lawyer side of this ought to be separated out because it strikes me as unusually clear-cut. Suppose we had a maximum income for lawyers such that no attorney could earn more than 10 times the national median household income (i.e., around $450,000 a year). Well, the quality of really high-end legal representation would decline relative to where it is today. But—so what? Ten times the median household income is still a lot of money, these high-end legal jobs would still be desirable, so it's not like corporate law would be done by total incompetents or that people holding down corporate law gigs would become dangerously slipshod. Any major corporation would be able to obtain competent legal representation, just as they are today.

When Apple and Samsung compete to sell more tablets, consumers wind up with better or cheaper stuff. But when Apple and Samsung compete to hire fancier lawyers to oversee their patent litigation, nothing is accomplished on net. Doing something to curb this red queen's race seems like a relatively easy to obtain win for the economy. It would level the playing field between big businesses and smaller ones, increase the government's ability to get high-quality legal representation, and improve the supply of smart hard-working people available to other fields.