Lawyers

["David S. Shemano" <dshemano@xxxxxxxxxxx>]

One more thought on the value of lawyers.  The following is from the Reason magazine interview of Coase:


Reason: People are very excited that transactions are taking place much more efficiently than ever before through new electronic means and better communication systems. Are you excited about these trends?

Coase: Yes, because I don't understand them. People talk about increases in improvements in technology, but just as important are improvements in the way in which people make contracts and deals. If you can lower the costs there, you can have more specialization and greater production. So that's what I'm interested in now. By improving the way the market works, you can produce immense benefits, not because it invents new technologies, but because it enables new technologies to be used. Without the ability to make efficient contracts, you can't use these new means. And a lot of effort is going, at the moment, into devising new ways of handling the problems, mainly by the lawyers.

Reason: Some people would say that it's just paper transactions, that all the efforts of the lawyers are a waste, a mess, a scourge on society. You have a slightly different view.

Coase: Lawyers do a lot of harm, but they also do an immense amount of good. And the good is that they are expert negotiators, and they know what is necessary in the law to enable deals to be made. Their activities are designed, in fact, to lower transaction costs. Some of them, we know, raise transaction costs. But by and large, they are engaged in lowering transaction costs. People talk about the information age and how large numbers of people are engaged in information activities. Well, gathering information is one of the difficulties when you're in a market. What is being produced, what are the prices of what is being offered? You've got to learn all these things. You can learn them now a good deal more easily than you could have done before; you don't have to search. If you've ever tried to buy anything, you know how much time goes into finding out what's available and all the alternatives.

David Shemano