The law firm DLA Piper is being sued for overbilling, which has led to increased discussion of the intersection between legal ethics and the economics of law practice. Many people are taking this oppportunity to decry lawyers' lack of ethics. It will come as a shock to many people that lawyers are not any less ethical than the rest of the population. However, it will come as a shock to many lawyers that the rules governing lawyer ethics do not make them any more ethical than the rest of the population.
This case is illustrative of the problems with the system of self-regulation governing the legal profession. Consumers have little recourse against lawyers who have ripped them off. In many states, lawyers are exempt from generally applicable consumer fraud laws, whether by statute or by court ruling. These exemptions are based on the theory that the legal profession will enforce its own rules against lawyers who engage in misconduct. However, the bar's record of enforcing its own rules is abysmal. According to American Bar Association surveys, fewer than 5% of formal complaints to state disciplinary authorities result in public sanctions against a lawyer. (Some complaints lead to private reprimands, which is analogous to a judge whispering in a gulity defendant's ear that he has been very naughty and shouldn't commit any more crimes.)
Overbilling by lawyers also rips a hole in the profession's most common argument against allowing outside investment in law practices. As we've noted many times, outside investment could spur desperately-needed innovation in the delivery of legal services that would increase access and lower prices. The bar has countered that outside investors would pressure lawyers to put profits ahead of their obligations to their clients. Overbilling like that alleged in the DLA Piper suit makes it clear that lawyers already face pressure to increase profits from inside their practice. Allowing outside investment would not create an incentive to put money ahead of clients, since that incentive already exists.
The legal profession often envisions itself as somehow above the reach of ordinary laws due to its adherence to its own codes of ethical conduct. However, this self-regulation is often equivalent to having no regulation at all. The profession needs to remove its blinders and recognize that its members are subject to the same human frailties and temptations as everyone else. If they're not subject to the same laws as everyone else, then it should come as no surprise when lawyers take advantage of a system that shields them from accountability.