concerneddad

And, I would hardly call hard fought victories in front of impartial juries on behalf of seriously injured plaintiffs "screwing" the insurance companies. Sounds more like the leagl system working to me.

Greybeard

I agree, Concerneddad.

By the way, we should never assume that a large jury verdict means a commensurately large attorney fee. I saw an article recently that pointed out that a lot of cases are submitted to a juries after "high-low" settlements have been concluded (e.g., a floor of one million dollars even if the jury finds for the defendant, and a ceiling of three million regardless of how much in excess of that the jury awards).

The real settlement value of a case is limited by the available insurance coverage. It's not unusual for a judges to reduce an award after a finding a jury verdict was enflamed by passion. Many times, there are also post-verdict settlements (for less than the amount of the verdict) to avoid the delay and uncertain caused by appeal.

sakky

Fine, fair enough, Joseph Jamail. Although in my previous post, I put up an old Forbes link. According to the 2004 Forbes list of billionaires, he's actually #472. He made a 1/3 of a billion in fees off the Pennzoil case, although that was in 1980's money, so that money was lot more valuable than today's money. And the key is that he wasn't working for somebody else or wasn't even a partner of a major firm - he founded and ran his own firm. So, really, he was not really a pure lawyer as such, but actually a hybrid lawyer/entrepreneur. But OK, fine, I will accept that there is one billionaire who made his money off lawsuits.

http://www.forbes.com/finance/lists/...Keyword=jamail

Compare that to all the billionaires who made their money from banking/high-finance, and I think my point still stands - it's easier to make more money from banking than from law.

Susan777

"Made a billion dollars of fees? Sure. But to have billions of dollars in his pocket? Very doubtful."

The issue was never dollars-in-pocket, Sakky -- it was simply whether any lawyers "make" a billion dollars. While we're on the subject, I'm sure most investment bankers also have to share many of their proceeds with partners, employees, overhead, etc.

"And the key is that he wasn't working for somebody else or wasn't even a partner of a major firm - he founded and ran his own firm. So, really, he was not really a pure lawyer as such, but actually a hybrid lawyer/entrepreneur. But OK, fine, I will accept that there is one billionaire who made his money off lawsuits."

So now someone who opens his own firm is not really a "pure" lawyer, but rather a "hybrid lawyer/entrepreneur"? News to me.

The truth is, legal knowledge and experience can help people make tons of money in various different fields, including real estate and other investments. I'm not sure why we'd arbitrarily remove these earnings from consideration of how much someone makes in his career as an attorney.

"Compare that to all the billionaires who made their money from banking/high-finance, and I think my point still stands - it's easier to make more money from banking than from law."

No one ever disputed this. The one point I contested was the idea that "[e]ven the highest paid lawyer can be outearned by even a mid-level investment banker." I think we can agree this is an exaggeration. The most successful attorneys do in fact earn more than most mid-level investment bankers.

"Susan777, perhaps you wouldn't call John Edwards "legendary," but I'm not alone in doing so."

I'm sure there's plenty of people that would consider any decent trial lawyer "legendary". However, North Carolina is not exactly the most competitive pool.

"And, I would hardly call hard fought victories in front of impartial juries on behalf of seriously injured plaintiffs "screwing" the insurance companies. Sounds more like the leagl system working to me."

If you consider a system that drives up everyone's health-care costs, and therefore make health-care insurance unaffordable for many people, "working", then I guess I can't really argue with you. Let's just be clear that Edward's fortune was obtained to the detriment of most Americans. (Juries may be "impartial", but they are also easily swayed by emotional appeals, even when there is little or no actual evidence of negligence. In my opinion, this is one area that should probably be ajudicated by educated judges, not juries.)

Greybeard

If there's no actual evidence of negligence, the verdict won't stand. It will be subject to a judgment N.O.V., or overturned on appeal.

In my opinion, nothing about a judge's education renders her more qualified to decide an appropriate pain and suffering award than a jury of 12 people.

Here in California, pain and suffering awards in medical malpractice cases are limited to $250,000, and medical insurance is still extremely expensive. The trial lawyer makes a convenient fall guy for the cost of health-care, but not a convincing one.

concerneddad

Susan777, with all due respect (as you will learn in practice what always comes next is a slam), you must have gulped down the kool-aid. The hard facts simply do not support your belief that lawsuits are the reason that medical costs have risen. And, since I have been invloved in such cases -- even one tried to a judge -- be careful what you wish for. Care to know what judge awarded a child who was eviscerated by a defective lawnmower? I can tell you it is not the dollar amount you would hope for if you represented Toro.

Susan777

"If there's no actual evidence of negligence, the verdict won't stand. It will be subject to a judgment N.O.V., or overturned on appeal."

As I said, "little or no". I'm sure you know enough about the actual practice of law to know why the above safeguards are generally inadequate.

"In my opinion, nothing about a judge's education renders her more qualified to decide an appropriate pain and suffering award than a jury of 12 people."

Forgive me for not being more clear. By "educated", I mean a judge that has actually been trained in medical and technical matters to the extent that they can offer truly informed judgements on issues like medical negligence.

"Here in California, pain and suffering awards in medical malpractice cases are limited to $250,000, and medical insurance is still extremely expensive. The trial lawyer makes a convenient fall guy for the cost of health-care, but not a convincing one."

First off, those limits don't eliminate those compensatory costs that shouldn't have been awarded in the first place. Secondly, and more importantly, insurance isn't a state-specific system. Large damage awards in other states will generally impact insurance rates in California as well as everywhere else.

I don't think our broken tort system is the only reason for high health costs, but it's certainly a major one, and one that should be remedied. (At least as long as we're pretending to care about the high cost of health care.)

Susan777

"Susan777, with all due respect (as you will learn in practice what always comes next is a slam), you must have gulped down the kool-aid. The hard facts simply do not support your belief that lawsuits are the reason that medical costs have risen. And, since I have been invloved in such cases -- even one tried to a judge -- be careful what you wish for. Care to know what judge awarded a child who was eviscerated by a defective lawnmower? I can tell you it is not the dollar amount you would hope for if you represented Toro."

See above.

P.S.: I've gotta think the kool-aid in law school generally relates to NOT blaming lawyers for any of society's problems! ;^)

sakky

"The issue was never dollars-in-pocket, Sakky -- it was simply whether any lawyers "make" a billion dollars. While we're on the subject, I'm sure most investment bankers also have to share many of their proceeds with partners, employees, overhead, etc. "

I think you're reaching. If you follow the context of the thread, it has always been about earnings, not raw revenue. After all, what does it mean to 'make' money, in the context of earnings, if what we're really talking about is straight raw revenue?

But fine, if you insist on defining the word "make" in terms of raw revenue, then I would say that almost every investment banker "makes" at least millions, if not hundreds of millions of dollars, perhaps even billions, in the sense that almost every investment banker, even the low-level ones, are involved in deals that, when you sum them up by revenue, total in the many millions, if not billions.

So whatever definition of the word 'make' you want to use, the average I-banker will easily come out on top over the average lawyer.

"So now someone who opens his own firm is not really a "pure" lawyer, but rather a "hybrid lawyer/entrepreneur"? News to me. "

Well, yeah. You can be the greatest lawyer in the world, but that doesn't mean that you're going to be successful at running your own law firm. Running your own successful law firm takes more than just being good at law, it takes business savvy, it takes good marketing, it takes the ability to manage employees. None of these traits are necessarily held by most lawyers, even very good ones. Law skills and business skills are not equivalent.

"The truth is, legal knowledge and experience can help people make tons of money in various different fields, including real estate and other investments. I'm not sure why we'd arbitrarily remove these earnings from consideration of how much someone makes in his career as an attorney. "

And by the same token, I could argue that knowledge of finance and investments REALLY helps people make money - so if you want to engage in a broadly-defined use of the term 'legal knowledge', then I can broadly define what banking and finance is. In other words, hello Warren Buffett.

"The one point I contested was the idea that "[e]ven the highest paid lawyer can be outearned by even a mid-level investment banker." I think we can agree this is an exaggeration. The most successful attorneys do in fact earn more than most mid-level investment bankers"

Fine, fair enough, I was using hyperbole to prove a point. What I should have said is even highly successful attorneys (not the most successful, but highly successful ones) can be outearned by most mid-level I-bankers. Again, case in point, according to the WSJ, the equity partners at Wachtell Lipton Rosen & Katz each made $2.5 million in 2004. A $2.5 million pay-year really isn't all that spectacular on Wall Street. Once you've reached the Director level of I-banking, which is what I and many others generally consider to be mid-level, you can reasonably expect to make ~$2.5 million in a year. And when you've really started to hit the big-leagues, which means that you've gotten to Managing Director (but you still haven't gotten to partner, which means you still haven't made it to The Show), you are looking at a 8-figure pay-year.

Susan777

Hey, Sakky.

I think we agree on the basics, and I feel like you're arguing now just to argue. But whatever. I simply noted that your statement was, in fact, exaggeration/hyperbole, because there may in fact be other readers here who don't realize that. (Again, I agree with your general thesis.) As others have stated, even an fairly lowbrow intellect like Edwards can make more in one case than the $2.5 million a year of a mid-level I-banker. But yes, most I-bankers make more than most lawyers, and someone purely concerned with money would be better served going into that field (or, to be honest, many basic sales positions. I know someone without a high-school degree who made more than most attorneys peddling copy sales.)

The one point where I feel you're really stretching is is your further discussion of lawyer vs. entrepreneur. You now proceed to argue that since business skills are necessary to run your own solo firm, then it doesn't really qualify as being a attorney. This is, as I think pretty much every objective person will agree, simply silly. The truth is, you do need to be a successful businessman, generally, to be a successful attorney, especially if you start your own practice. This is hardly surprising. Sometimes, you need to be a successful salesman. If you're a trial lawyer, you may need to be a successful actor at times. Does this mean that you're not really being an attorney at those times? No, it simply means that being a successful attorney requires all kinds of different market skills. (The same could be said of a doctor or advertising executive who opens up his own practice/firm.) In any profession, people who go out on their own will tend to make more money if they're successful, and being successful generally requires various business and people skills.

(Investors, of course, also need to be sales people, if they want to convince people to invest in certain ways. And they also probably need to know certain legal rules as they proceed. Doesn't mean they're not investors or bankers.)

In terms of the other issue, I, personally was simply talking about "making" that much money. Whether you go by gross earnings or net profits, the bottom line is that the people getting huge verdicts and settlements are clearly making more than most I-bankers, mid-level or otherwise.

On the other hand, if we're going to use the "involved with deals" logic that you apply, then every cent of the tobacco settlement, etc., must be considered money money "made" by the attorney. (Neither analogy makes much sense, of course.)

Will the average I-banker come out on top of the average lawyer? Quite likely. This was never at issue.

In terms of the "related-knowledge" issue -- I'll happily agree that Buffet is a member of the subset of investors, generally speaking, just as lawyers that use their knowledge making billions in other areas (beyond strict litigation and counseling) are a subset of attorneys, generally speaking. Investors/financial types generally make more than almost anyone else in society, with attorneys (on average) further down the line, but ahead of most folks.

I think your main point is that attorneys who are employed by firms, whether partners or otherwise, really aren't all that loaded in comparison with people in other areas. I completely agree. Anyone who's a true financial whore and makes "Biglaw Partner" their ideal is probably misguided. Most partners, even at the largest firms, probably make under a million a year. My only point is that there are some areas where attorneys can in fact make "real" money, and one nice thing about those areas is that they're not school or grade specific.

sakky

First off, I find it rather interesting and ironic that you are accusing me of arguing for the sake of arguing.

I would also say that I think I'm on perfectly safe ground when I maintain that there is a significant difference between being a competent lawyer and being a competent owner of a law firm, and furthermore that there is no reasonable parallel that can be drawn in the investment banking world.

You might say that a successful investment banker requires sales skills that have nothing to do with banking and whatnot, and I fundamentally disagree. The fact is, your job as a banker is to make money. If you're not making money, then you're not a successful banker. It's really as simple and as complicated as that. Hence, the ability to attract clients is fundamentally integral to a banker. The ability to find profitable arbitrage opportunities and to wheel and deal is fundamental integral to a banker. If you can't do enough of those things such that you can't make money, then nobody is going to think you're a successful banker. The same is true of entrepreneurship - you are either creating economic value, or you're not. If you're not, then you're not a successful entrepreneur. Money is therefore the simple yet ruthless measuring stick by which banking and entrepreneurship will always be measured against. The whole reason for the banking industry to exist in the first place is to make money. Similarly, one of the most important reasons, if not the most important reason, to start any company, is to make money. That's not to say that bankers and entrepreneurs don't have other goals, but I think we can all agree that among their list of goals, money/economic value has to rank very highly.

Law's not like that. Making the most money you can is not integral to success in law. It might be the goal of some individual lawyers out there, but it certainly can't be said about lawyers in general. For example, all those prosecutors trying to put criminals in jail are certainly not doing it for the money. I think we would all agree that you can earn recognition as one of the finest lawyers in the world as a star prosecutor despite the fact that you'd make relatively little money and certainly won't be fattening the wallets of anybody. Similarly, one could make an entire career out of being a public defender.

The point is that law is not congruent with economic value, nor should it be. You can be recognized as a widely respected lawyer even if you don't make much money or economic value. Generating economic value is not integral to being a good lawyer. On the other hand, generating economic value is integral to being a good banker or a good entrepreneur. If you're not generating a lot of value, then you're not a good banker or a good entrepreneur, it's that simple. Hence, I believe I am on entirely safe ground when I draw the distinction between being a good lawyer and being a good entrepreneur.

concerneddad

I just want to comment on how much I like the civility of these posts, even if there is disagreement on the substance of the post. Of all of the "issue" surrounding being a layer these days, it is the lack of civility that bothers me the most. The tenor of these posts, as well as other threads in the Law School section, is heartening to me.

Gatsby

Typo on my part; I'm averse not to theoretical econ (I actually like it a lot) but to overly quantitative econ; I'm basically worried about majoring in econ because, in high school, i've only taken one year of calculus, whereas most students in college who major in econ have taken two years, if not more.

I was browsing Princeton Review's website; according to them, many lawyers switch over to i-banking; this perplexes me a bit. If an I-banker needs a strong foundation in finance and accounting (according to princeton review), then how would a lawyer, who likely majored in something humanities-related as an undergrad and likely didn't do much finance-related in law school, be prepared? Would simply practicing law prepare you adequately for the job?

Perplexed but curious,

Gatsby

sakky

That's because PR misled you. Not when they said that lots of lawyers go into IB. That is absolutely true. PR misled you when it said that you need a strong foundation in finance and accounting. Don't get me wrong. Such a foundation would be useful. But the word 'need' is too strong.

Let me give you some examples. What majors do IB's tend to hire the most of for their analyst positions? Finance, accounting, and bus-ad majors, obviously. To some extent, econ majors. But what else? Would you be surprised to discover that IB's hire lots and lots of people who majored in engineering, CS, physics, and math? I recall that out of the MIT School of Engineering (not the Sloan School of Management, but specifically the School of Engineering), IB was and is one of the most popular employers of MIT engineers. The same can be said for other elite engineering programs. But why? Think about it. How many engineers have ever studied finance or accounting?

Now you might be thinking, well, maybe the engineers didn't study finance/accounting specifically, but engineers are very quantitative anyway, so it wouldn't take them much time to pick that stuff up. Ok, let me give you another example. Other than Wharton, what are the 4 most popular undergraduate programsthat IB's recruit at? I think it's safe to say that it's probably HYPS. But why? Specifically, if you need to have done finance/accounting to get into IB, then why are the IB's recruiting so heavily at HYPS? How many HYPS students have ever studied finance or accounting? I think it's safe to say not many. I don't even think HYPS even has an undergraduate accounting class. And as far as finance is concerned, the best you might get as an undergrad at HYPS is some hybrid version of finance that comes with certain economics undergrad classes. But certainly not any truly formal finance curriculum.

The point is that IB's are going around recruiting lots of people without backgrounds in accounting, or finance, or both. And the reason they can do that is simple. IB's are simply going to take whoever they hire and train them anyway. Is it useful for a candidate to already know some accounting and some finance so that he can get a running start? Of course. Might that candidate's background in accounting/finance then be a boost to getting that person hired by the IB? Sure. But do you absolutely need to know accounting/finance to get in? No you do not. IB's are more interested in a very strong work ethic. That's why they hire lots of MIT engineers, because if anybody has proved that they have the self-discipline and drive to work long and grueling hours, it's the MIT engineers. They also hire pure raw talent, which is why they recruit at the very very top schools, where you obviously have to be highly talented to have even gotten admitted in the first place (in this sense, they are outsourcing part of their HR department to the school's adcom). They are also hiring a 'network'. Banking is really about making deals, and so the people that you know from school can become very important. Graduating from a big-name school gives you access to a tremendously strong alumni network which can and often does come in extremely handy when you're trying to complete a deal. And of course, banks are hiring 'prestige'. Banking is in many ways a sales job, and it's important for banks to present themselves well to clients. A bank will obviously look better when it can say "The guys we're assigning to your account are all Harvard graduates."

Hence, I think you can now understand why IB's hire law-school graduates. First off, it's obviously not all law-school graduates, but predominantly those who graduate from name-brand law schools like HYS. Secondly, it's much of the same reason that IB's hire engineers - they want to bring in guys who work hard and have raw talent, and if you can get through law school, then you probably worked hard and have raw talent.

Gatsby

Wow, thanks a lot Sakky--that was a truly helpful post. It makes me hopeful: I can major in something easy, humanities-related, go to a top law school (I hope) and have the latitude to choose between law and finance.

I'm a bit unclear about something though: are you suggesting that the law-school graduates who enter IB do so immediately upon graduation? (With the IB's actually going to the top law schools, the same way they go to the top undergrad colleges, and recruiting grads?) Or do the law-school grads typically practice for a few years and then enter IB?