Nullary Sources

Long, exhaustive Quora answer by Antone Johnson about why lawyers seem to fail to obey the laws of supply and demand. Really great stuff; even includes some charts. A tiny sampler:

At large law firms, salaries and billing rates are the same across departments. As a matter of morale, prestige and camaraderie, this makes sense. As a matter of economics, it’s nuts. Again, thinking of efficient markets, when demand for something (e.g., securitization of sub-prime mortgages) dries up, the price charged for that work should drop. When demand for something soars (e.g., corporate bankruptcy), rates for that work should rise. Nope. For the most part, a 4th-year associate in every practice area bills out at the 4th-year associate rate, and so forth. Again, why does this matter? Go back to the points about sticky billing rates and sticky salaries. Both are likely to go only one direction — up — as long as any major area of the firm is doing well and can afford to raise rates along with demand. This works out pretty well for the firm, because different practice areas are cyclical or counter-cyclical and that helps stabilize their finances, but it’s not so great for the clients.