To some extent, lawyers (or, more accurately, law firms) are Veblen goods -- meaning that their services are perceived as being better if they're more highly priced and exclusive. There's a general perception that a high-priced lawyer is a top-notch lawyer, and that skimping on such lawyers carries a huge deal of legal risk.
This dynamic plays out particularly in the BigCorp world, and especially if there's ever a perceived threat of litigation. (The idea that a competitor would hire "the best of the best," or "an army of lawyers," or "top guns," drives your own desire to pay for same).
My girlfriend (a lawyer) tells me that if I ever need a lawyer I should get the most expensive one I can afford, because price does roughly reflect quality.
And, I'd note that we have little else to go on. After all, we can't discern the quality of a given lawyer by the outcome of our particular case. Say your lawyer lost. Were they a bad lawyer, or was it simply that your case was poor? As a non-lawyer, you don't have the expertise to judge. Furthermore, lawyers won't discuss the qualifications of other lawyers for various reasons, so it's difficult to get any sort of objective ranking.
It seems to me that lawyers have a captive market - I mean, you're not going to not hire a lawyer when you need one, yes? And with the truckload of new laws that enter the books every year, there will likely be no shortage of need anytime soon.
It seems to me this 'salary matching' is basically price-fixing, even if unintentional. If my only option is a $650 / hour lawyer or a more prestigious $750 / hour lawyer, why not pay the higher price? I mean, legal matters can be scary to those not well versed in the intricacies of the law.
my point exactly (and the author seems to have missed it). there's such a thing as adverse selection in the market (of lawyers) which means that information asymmetry prevents the formation of a correct market price. in this case people just won't hire a cheap lawyer with discount rates, because they have no insight in the capabilities of a lawyer (or in the field of law) appart from a few if any references and the price.
This dynamic plays out particularly in the BigCorp world, and especially if there's ever a perceived threat of litigation. (The idea that a competitor would hire "the best of the best," or "an army of lawyers," or "top guns," drives your own desire to pay for same).