Paying for "Influence"

The Wall Street Journal reports on a recent investigation by the Department of Justice on attorneys' fees in bankruptcy, and publishes a schedule of rates charged by Gibson, Dunn & Crutcher.  Antonin Scalia's son Eugene bills $980.  Ted Olson, former Solicitor General, bills a mind-blowing $1,800.


But believe it or not, the numbers themselves aren't the most disturbing parts of this article.  First, there's the fact that I've seen very good attorneys get ripped by DOJ and bankruptcy courts for billing one-third these rates.  The only discernible difference was that their clients were mortals, not Olympians.

Second, there's Justice Scalia's remark about paying extra for those who are "just a little bit brighter."  If that's all the better understanding he has of paying a premium at the margin, then he needs to stop pretending he has any understanding whatsoever of economics and leave that sort of thing to Posner.

Third, Some Perspective's comment shows me he/she should just go sing "Kumbaya" around a campfire.  OK, sometimes these kids have to work all night.  Earth to No Perspective: So do I (Ask my wife.).  So does any litigator.  That doesn't mean I expect to be billing out at $500 any time soon.

Finally, the most disturbing part: NALFA's statement that Olson's rate is simply free market economics.  What do you buy for a rate like Olson's or Scalia's?  Are their legal skills so inordinate?  No.  You're buying their influence.  You're buying their phone lists, and country club memberships, whom they lunch and dine and golf with, whom they share board memberships and alumni committees with.  And they work those contacts for you to bring pressure on decision-makers.  If a normal joe like a restaurant owner pays another normal joe like a beat cop fifty bucks a week to make sure he passes the health and safety inspections, that's a felony on both sides.  If a 1%er pays another 1%er to make sure a regulation isn't passed or is only "selectively" enforced, that's just the old boy network in action.

And that stinks like last week's diapers.

I Can't Let This Slide By

Just about all my clients have the same problem Senator Lee is facing.  There are a few differences, though.  First, I doubt Senator Lee is going to lose his job over this, and I also doubt he won't be able to get a loan for the next several years.  Second, rank has its privileges; Chase was more than happy to play nice and not pursue him for the deficiency.  Third, my clients aren't constantly preaching about personal responsibility and living within your means.  Things happen, even to a US Senator.

So, Is Utah a Developing Nation?

Not an idle question.  The latest McKinsey Quarterly links to one of their old papers on the "informal" economy, i.e. business that's run under the table.  They note that the proliferation of an informal economy can be detrimental to the economy as a whole for a variety of reasons, lost tax revenues, disrespect for laws, irregular wage payments, avoidance of licensing and regulatory compliance, illegal employment practices, worker safety, product defects, and undercutting legitimate businesses being among them.


They also note a number of indications of an "informal" business: underreporting of employment, avoidance of taxes, ignoring product quality and safety regulations, IP infringement, failing to register as a legal entity, etc.  How many of these are an every-day occurrence here?  All of them.  How many people do I get in my office who are "behind on their taxes" because their bosses list them as "1099 employees?"  There's no such thing.  Either you're actually an independent contractor, or your boss is a cheap sleaze who's shifting his tax burdens to you.  And then there are the businesses that send me brochures, and when I ask them where they got the photos and text, they tell me they just pulled them off the Internet.  Oh yes, that's a plan, commercially using other peoples' property without their permission.  And when I ask for a license, they hand me something in some other business's name.  So what's your relationship to this business?  "Oh, he just lets me use his license."  Uh, wrong answer, and it's a crime.  Not surprising, though, given that they typically haven't met any of the requirements for doing business, right down to registering the DBA they're operating under.

Every time I take the bench in small claims court, I end up having to admonish at least one small business owner that he/she is in fact in business and needs to get the paperwork straight, including licenses and contracts.  Happened again last night.  Folks, if you're in business, you're self-employed, and being self-employed is fundamentally different from being employed.  It means you're ultimately responsible for the paperwork, and if you don't keep it straight, sooner or later you'll wake up wondering what fell on you.  And when that happens, and you come to me to straighten it all out, don't start whining about how unfair everything is.  My kids know better than that.