Yesterday I published news that the numbers and wages of lawyers in the magic circle of legal firms in London is increasing. My comments focussed on an article in the FT reporting research on American firms bringing in salaried partners rather than UK partners who own the partnership. I was interested in comment and the blog got it .
Here is one of our most sceptical of commentators – Byron McKeeby – who finds one US research paper concluding:
“Lawyers, along with economists, computer scientists, farmers, accountants, engineers, and social workers are among those workers whose efforts and effects ritually
are stereotyped, often humorously and sometimes unfairly.“We will spare readers a recitation here of jokes about how many lawyers its takes to screw in a light bulb.
“Nevertheless, in this paper, we do not shrink from addressing another almost stereotypical concern concerning lawyers, namely, that they and their work can
constitute an economic drag on society.“We find reasonable evidence that finds this allegation to be true among the 50 states.
“Our review of the literature revealed no lack of studies concerning the effects of
lawyers on economic growth, but we also found that nearly all previous work on this issue has been international in character.“Very little research has focused on the impact of lawyers on the economic growth of the 50 states, which is our focal concern.
“Using two different measures of lawyer’s intensity, we discovered that an increase in the number of lawyers per capita has been negatively associated with the economic growth rates of the 50 states, 2005-2018.
“Further, when lawyers are compensated more and their
share of the national income increases, this also has had a negative impact upon state economic growth rates.”from Do Lawyers Inhibit Economic Growth? New Evidence from the 50 U.S. States, a 2023 paper by James V. Koch Old Dominion University, jkoch@odu.edu and Richard J. Cebula University of Tennessee
Also quick to stoke the fire of this debate is Pension Oldie
The question of value for money can never be far away when considering what legal firms do to enhance or diminish the economy or our bank balances!
Peter will have his say, the legal system beyond his or most people’s affordability. We do not get value for money, we don’t get value full stop – because we don’t have the money.
Which leads us inevitably back to Pensions and the inimitable Pension Oldie
Whether we are of the legal kind or less legal consultants, we need to consider our value to society , the economy and our clients. I am hoping in 2026 we will be doing our best to deliver services to ordinary people as well as the organisations they work for. The taxes that are paid to the public purse depend on all our productivity. We need an alignment of consultants of all kinds to improve GDP. That is the macro measure of VFM. Work harder and smarter, with actual and artificial intelligence.
AI gave me the following bones of contention on this topic:
The question of whether or not lawyers are “economic parasites” or “rentiers” is a complex, critical debate.
Some economists argue that an excess of lawyers (especially “rent-seeking” ones using legal clout for wealth redistribution) can hinder growth, while others highlight their crucial role in enforcing contracts, reducing uncertainty, and facilitating commerce.
The “parasite” label reflects historical complaints and modern critiques of excessive litigation or lobbying for special favours or prolongation of public inquiries.
It’s not a simple yes/no; it depends on the lawyer’s function—productive (facilitating deals, ensuring justice) versus non-productive (creating unnecessary disputes, lobbying for artificial advantages, running up huge costs often at taxpayers’ expense).
And some of the “deals” they claim
to facilitate may not be in the best interests of society, or members of pension schemes?
Arguments for the “Parasite/Rentier” View
* Rent-Seeking Behaviour: Lawyers can use political and legal influence to create or exploit regulations (like patents or complex rules) to extract wealth (rents), rather than creating new wealth, acting as a drain on the economy.
* Excessive Litigation: A large number of lawyers might encourage unnecessary lawsuits, increasing costs and diverting resources from productive activities, as seen in some economic studies suggesting an optimal number exists, but arguably we seem to have more than that optimal number in practice.
* Lobbying & Tax Avoidance:Lawyers are often employed by large corporations or high net worth individuals or trusts to lobby for favourable legislation or navigate tax loopholes, which some critics label as rent-seeking that undermines fair markets.
Arguments Against the “Parasite/Rentier” View
* Economic Facilitators: Lawyers are essential for enforcing contracts, protecting property rights, and reducing business uncertainty, which are fundamental to a functioning market economy.
* Productive Roles: They enable complex transactions, help innovate by structuring new businesses (like tech firms), and provide vital services, even if those services are costly.
* Good vs. Bad Actors: The legal profession itself isn’t monolithic; many lawyers perform essential societal functions, and “good” lawyers are needed to counter those who might engage in unproductive practices.
Conclusion
The “parasite” or “rentier” label often points to lawyers who engage in wealth redistribution through political influence or frivolous litigation rather than wealth creation, a redistribution seen in other “professional” sectors too (like finance).
However, lawyers also provide critical, productive services that underpin economic activity, making it more of a spectrum based on their specific roles, but with an oversupply potentially tipping the net balance towards unproductive rent-seeking.
The silence of lawyers, some of whom you say read these blogs, Henry, is deafening.