Capitalism gonna make that happen. Have a rare skill? Guess you get paid a ton for it.
I don't understand why this is surprising enough to warrant an NYT article. (Except that the NYT seems to regularly post things that are aimed at disrupting solidarity. Wealthy workers are still workers. We should be looking for ways to get them to have solidarity with us, not villainizing them. )
Brand image and advertising. If you're that lawyer who solved that one famous case you can charge to the moon for stuff any other law grad can handle because some well off customers will only want "the best" no matter how basic the task.
Law can be less about the raw skills and more about who X has partnered with, clerked for, vacationed with, etc.
A good lawyer with the right position to achieve a desired result can sometimes cost as much as a top of the line RV bus and an all expenses paid for two private yacht cruise.
Better judgement, soft skills, intelligence, training, experience, network, connections etc. it’s neither one specific thing nor anything particular tangible thing you can point at.
Bit like someone who is a good leader…very hard to pin down but a very real differentiator anyway
experience litigating these issues, often in the same courts, and at the same level -- big cases are a different game.
being able to say with high confidence that "this contract works, and it's withstood scrutiny" and then be able to back that up with court cases showing how it works is a big deal.
if you're signing million and multi-million dollar contracts, or looking at huge risks, tax liabilities, etc., then paying someone 900/hr to make sure you're not going to lose $55MM is nothing.
The issues these lawyers get pulled into don’t use boilerplate (at least not generic) anymore than you’d get random cut-n-paste from stackoverflow from a good software engineer.
Additionally, a high end lawyer has made a name for themselves avoiding problems, and successfully navigating cases, in some very difficult corner of the field.
That means they have their pick of junior associates and legal help, which also helps them be the best in the area, and a reputation which means opponents are much less likely to do stupid BS which wastes your time and money.
The difference is easily 10x in likelihood you’ll prevail (or never need to litigate at all) vs a random other attorney.
Just like your chances your end product will actually work is easily 10x if you hire a good software engineer vs a random ‘cut-n-paste from stack overflow with no clue what they’re doing’ software engineer.
Avoiding problems as in resolving existing ones in a way without having to do as much as typically feared, not avoiding problems as in doing nothing useful. For the same problem a positive outcome without having to go to trial is worth more than a positive outcome that took 3 years to resolve. This is true both in how many billable hours you pay but also value to the person hiring the lawyer in general.
David Boies/Lanny Davis/Roy Black-caliber boldface name lawyers can ask for — and get — million dollar retainers because of a long track record of making cases/serious charges go away, even if it takes years.
one possible explanation is that the truly top lawyers could be a lot more creative in their interpretation of the law, and are capable of convincing a judge or jury that his/her unconventional argument is right in the eyes of the law, so they can achieve their desired outcome even when the odds are against their favor.
of course, the other factors that others have mentioned are probably also true regarding stuff like your network, your connections, etc.
The article is primarily about Wall Street, but I can answer in the tax space. Law firms pay big money for lawyers with experience inside government tax offices. The ability to make a single call or knowing who to negotiate with can easily be worth seven figures to the client.
Keep in mind that billable hours is what the law firm cares about. The good lawyer brings in more billable hours, even if the client isn't paying a premium on an hourly basis (which is also happening).
To me, "graft" is too negative - there may be some of that, but inside knowledge and connections need not involve anything unethical or dishonest. When I hired a CPA to do my taxes, the reduction in tax liability exceeded the cost, just because they had knowledge of the tax system I didn't.
Except taxes are the thing that funds civil society. Letting people work around that by paying $x results in a more regressive tax structure. Overall I would say there are many losers in the above scenario.
"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Sure, even judges can be wrong. That doesn't make the decision in question wrong, though.
At the moment, it's a judge, with a written opinion that contains detailed argument, versus a random commenter on the internet who's saying "nah, he's wrong" with absolutely no argument or evidence. If you want us to believe you rather than the judge, you're going to have to do better than that.
There's no "detailed argument" in that quote, just the same assertion repeated three times. It's pure argument from authority.
It may even be accurate legally (depending as always on which judge(s) issue the ruling), but it has no value morally or rationally.
> a judge...versus a random commenter
Just argument from authority again.
> If you want us to believe you rather than the judge, you're going to have to do better than that.
I'm not trying to convince you of anything except that Dracophoenix's argument from authority is unconvincing.
Would anyone disagree that the status quo in America is that the law favors the rich? People arguing that this is wrong/immoral/graft aren't disputing whether it is currently legal, but whether it should be.
I didn't say that the quote contained detailed argument. I said that the judge's decision did. It's not just that a judge said it. It's that a judge said it, and gave detailed reasoning to support it, in a multi-page written decision that has stood the test of time (that is, not overturned in the intervening years).
Yes, I know that Dracophoenix didn't quote the entire decision in his comment. He did cite the reference, though, so that anyone could go back and look at the reasoning behind it.
So it's a bit more than an appeal to authority. It's an appeal to authority, and to the reasoning behind it - reasoning that supports a decision that is still, to this day, valid law.
I did "go back and look [for] the reasoning behind it." There was none. This is the entire relevant quote from Judge Hand's ruling:
> We agree with the Board and the taxpayer that a transaction, otherwise within an exception of the tax law, does not lose its immunity, because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes. U. S. v. Isham, 17 Wall. 496, 506, 21 L. Ed. 728; Bullen v. Wisconsin, 240 U.S. 625, 630, 36 S. Ct. 473, 60 L. Ed. 830. Therefore, if what was done here, was what was intended by section 112 (i) (1) (B), it is of no consequence that it was all an elaborate scheme to get rid of income taxes, as it certainly was. [From this point the ruling switches to arguing why "To dodge the shareholders' taxes is not one of the transactions contemplated" as tax exempt.]
I see precedents, which only support the legality, not the morality, of the position. The legality is not in dispute. I do not see "detailed reasoning to support it".
Perhaps I missed something. Can you point out where Judge Hand explained why his claim was morally correct, and not merely a statement of the legal status quo (comparable to pro slavery rulings before the 13th)?
Well, I must admit that I had not gone back and read Judge Hand's decision in detail. I had (incorrectly) assumed that it was a Supreme Court decision, not merely an Appellate Court one, and therefore that it would have the level of argumentation and support that are typical of SC cases.
So the only support that this gives is citing US v. Isham and Bullen v. Wisconsin. So, perhaps to avoid being guilty of presuming twice in one thread, I went looking for Isham. I found it at https://supreme.justia.com/cases/federal/us/84/496/
It is a Supreme Court decision, and contains the following text:
"It is said that the transaction proved upon the trial in this case is a device to avoid the payment of a stamp duty, and that its operation is that of a fraud upon the revenue. This may by true, and if not true in fact in this case, it may well be true in other instances. To this objection there are two answers:
"1st. That if the device is carried out by the means of legal forms, it is subject to no legal censure. To illustrate. The Stamp Act of 1862 imposed a duty of two cents upon a bank-check, when drawn for an amount not less than twenty dollars. A careful individual, having the amount of twenty dollars to pay, pays the same by handing to his creditor two checks of ten dollars each. He thus draws checks in payment of his debt to the amount of twenty dollars, and yet pays no stamp duty. This practice and this system he pursues habitually and persistently. While his operations deprive the government of the duties it might reasonably expect to receive, it is not perceived that the practice is open to the charge of fraud. He resorts to devices to avoid the payment of duties, but they are not illegal. He has the legal right to split up his evidences of payment and thus to avoid the tax. The device we are considering is of the same nature.
"Another answer may be given to the objection more comprehensive in its character. It is this: that the adoption of a rule that the form of the instrument can be disregarded, and its real character be investigated for the purpose of determining the stamp duty, would produce difficulties and inconveniences vastly more injurious than that complained of. Such a rule would destroy the circulating capacity of bills, or drafts, or orders. The present act imposes the same stamp duty upon inland bills of exchange and promissory notes, but this is an accidental circumstance only. Suppose that the draft is made subject to a tax of five cents on the hundred dollars, and the note to a tax of ten cents on the hundred dollars. The defendant contends that a draft or bill drawn by one officer of a company upon another officer of the same company is, in legal effect, a promissory note. Upon the supposition thus made, its real character would require a tax of twice the amount of that indicated upon its face, and if the stamp be too small, the instrument is absolutely void from its inception. [Footnote 11] In the language of the statute, it shall be "deemed invalid and of no effect."
"Is every man to whom a paper in the form of a bill of exchange is presented bound to inquire whether there are not outside circumstances that may affect its nature? Having ascertained this, is he bound to delay all proceedings until he can take legal advice upon its nature and character? This he must do upon the theory contended for, and he must be certain also that his advice is correct; otherwise he will lose the money he advances upon the bill. The same rule, it is contended, will apply where the drawee does not appear upon the face of the bill to be an officer of the company. Such is the case before us, where Mr. Canda, the drawee, does not appear upon the bill itself to be connected with the company, and yet the prosecution contends that it may be proved that he is its treasurer, and that thereupo...
Despite the quote, in the case the quote is taken from (Helvering v. Gregory), the tactics actually failed. Both Judge Hand's appeals court and the SC ruled that the tactics in question were consistent with the letter but not the intent of the law, the tactics were therefore invalid, and Gregory had understated her tax liability.
Game theory, they benefit from defecting no matter what impact this has on others, nor does their decision depend on what others choose to do at the same time independently of themselves.
Society also would be better if you spend your free time sweeping the streets, but you don't have to - we don't require people to do things that are not required by law.
Using legal tax avoidance strategies is not tax evasion.
Also, requiring people (whether legally or morally) to use interpretation of law that's not the most favorable to them is a giant, bad slippery slope.
Techdmn is right that there are many losers because Congress made a regressive tax structure legal. The lawyers win. The rich clients win. Society loses.
Edit: I'm "posting too fast" so I'll have to respond here.
> The ethical/moral argument is IMO lost when talking about people using the structure.
Why? An immoral act doesn't become moral simply because it is legal. (Consider slavery, bribery disguised as lobbying, or murder in The Purge).
And even many rich people admit that paying a lower tax rate than their employees is immoral.
Good lawyers actually represent their clients, boilerplate lawyers spit out the boilerplate and are happy that it probably covers their client enough for them to defend their work to their professional body.
The legal system is akin to an api with a codebase centuries long in many different languages. Good lawyers know which function calls are effective in this web of chaos.
Law firms are the right-arm of the shadow government. Non-profit super-pacs are probably the left arm. The legs would def be the internet.
K&L Gates for example builds sophisticated social networks graphs of people in and outside of it's immediate community. Purchase as much data as you'd imagine an org like palantir would. They do their own "market research". Equal access to software based tools doesn't exist here or anywhere.
Some people are just really good at negotiating things. You get paid well if you are superior in getting things out of the other side, be it for example insurance company. Those situations can net lot of money. And on other side, if you are effective in brining in, that is selling your firm, to less price sensitive customers that is also a huge thing.
I have family that are lawyers, some that are 'high up' in their respective areas.
The answer is 'networking'. Very well paid lawyers are very good at being lawyers. Meaning that yes, they placed well in their law schools and that they really truly do know their stuff. In the US, common law systems are not an easy thing to master [0]. If they go to trial, they know how to run one and how not to run one, depending on circumstances.
But the real thing that makes a very well paid lawyer as such is the 'networking' element. They know which judges will rule what way, what other lawyers in the local system are like, who the right secretaries to talk to are. And they know how to determine such things with little information. Most importantly, they know who not to talk to and get information from. And they know how to 'work the refs' to their advantage and how to ditch clients too.
Is this scummy? Oh, absolutely, no questions. But the law in our system is not about the truth, it's about winning. That's why we pay lawyers to begin with: to win. If we want to change that, sure, fine, most lawyers do too. But you have to play the cards you're dealt.
[0] Life tip: If you ever meet a Louisiana lawyer, you've met a very very smart person. Having to master two different law systems interacting at once is blindingly difficult. Louisiana's legal system is based on Napoleonic era civil law and the rest of the US's common law.
I would guess that are paying for connections. Which when you are dealing with your freedom in criminal cases or in business. That can be worth a lot to you.
I wish there was a study done on lawyers to determine if there's some truth to it being beneficial but I imagine it would be hard to conduct.
Much of the article is about private equity firms in particular — their need for good lawyers, their ability to pay them, and the focus of law firms on attracting them. It seems as much about private equity as it does law practice, and makes me wonder how much of the article applies to other areas of law.
Because it results in revenue from broadcasting deals, apparel sales, and other transactions.
Better question is why do people pay so much to watch someone run back and forth with a ball in a medium packed to the gills with annoying advertising.
Yeah I think your question gets much closer to the point. And the answer probably also applies to lawyers. Their work is valuable enough that people pay for it, even if it does look really stupid.
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[ 4.8 ms ] story [ 127 ms ] threadI don't understand why this is surprising enough to warrant an NYT article. (Except that the NYT seems to regularly post things that are aimed at disrupting solidarity. Wealthy workers are still workers. We should be looking for ways to get them to have solidarity with us, not villainizing them. )
What's a lawyer's goal? To make partner. That's not the kind of goal that moves you toward solidarity with the masses.
Like, versus another qualified lawyer with equal access to boilerplates and command of the English language, what distinguishes them?
It's like what is the difference between your average doctor and the best doctors in their field.
Or the average developer vs a very skilled one (why pay 500k for a top developer when you can get a cheap average one for 10% of the cost).
Law can be less about the raw skills and more about who X has partnered with, clerked for, vacationed with, etc.
A good lawyer with the right position to achieve a desired result can sometimes cost as much as a top of the line RV bus and an all expenses paid for two private yacht cruise.
Bit like someone who is a good leader…very hard to pin down but a very real differentiator anyway
being able to say with high confidence that "this contract works, and it's withstood scrutiny" and then be able to back that up with court cases showing how it works is a big deal.
if you're signing million and multi-million dollar contracts, or looking at huge risks, tax liabilities, etc., then paying someone 900/hr to make sure you're not going to lose $55MM is nothing.
Additionally, a high end lawyer has made a name for themselves avoiding problems, and successfully navigating cases, in some very difficult corner of the field.
That means they have their pick of junior associates and legal help, which also helps them be the best in the area, and a reputation which means opponents are much less likely to do stupid BS which wastes your time and money.
The difference is easily 10x in likelihood you’ll prevail (or never need to litigate at all) vs a random other attorney.
Just like your chances your end product will actually work is easily 10x if you hire a good software engineer vs a random ‘cut-n-paste from stack overflow with no clue what they’re doing’ software engineer.
If the lawyers make even more problems on top of that, the clients tend to not like them very much.
That does happen, but if a firm does that a lot, they get a pretty bad reputation.
of course, the other factors that others have mentioned are probably also true regarding stuff like your network, your connections, etc.
Keep in mind that billable hours is what the law firm cares about. The good lawyer brings in more billable hours, even if the client isn't paying a premium on an hourly basis (which is also happening).
If you pay someone $20,000 to legally reduce your tax liability by $100,000, it’s a win-win.
- Judge Learned Hand, Helvering v. Gregory
At the moment, it's a judge, with a written opinion that contains detailed argument, versus a random commenter on the internet who's saying "nah, he's wrong" with absolutely no argument or evidence. If you want us to believe you rather than the judge, you're going to have to do better than that.
It may even be accurate legally (depending as always on which judge(s) issue the ruling), but it has no value morally or rationally.
> a judge...versus a random commenter
Just argument from authority again.
> If you want us to believe you rather than the judge, you're going to have to do better than that.
I'm not trying to convince you of anything except that Dracophoenix's argument from authority is unconvincing.
Would anyone disagree that the status quo in America is that the law favors the rich? People arguing that this is wrong/immoral/graft aren't disputing whether it is currently legal, but whether it should be.
Yes, I know that Dracophoenix didn't quote the entire decision in his comment. He did cite the reference, though, so that anyone could go back and look at the reasoning behind it.
So it's a bit more than an appeal to authority. It's an appeal to authority, and to the reasoning behind it - reasoning that supports a decision that is still, to this day, valid law.
> We agree with the Board and the taxpayer that a transaction, otherwise within an exception of the tax law, does not lose its immunity, because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes. U. S. v. Isham, 17 Wall. 496, 506, 21 L. Ed. 728; Bullen v. Wisconsin, 240 U.S. 625, 630, 36 S. Ct. 473, 60 L. Ed. 830. Therefore, if what was done here, was what was intended by section 112 (i) (1) (B), it is of no consequence that it was all an elaborate scheme to get rid of income taxes, as it certainly was. [From this point the ruling switches to arguing why "To dodge the shareholders' taxes is not one of the transactions contemplated" as tax exempt.]
https://law.justia.com/cases/federal/appellate-courts/F2/69/...
I see precedents, which only support the legality, not the morality, of the position. The legality is not in dispute. I do not see "detailed reasoning to support it".
Perhaps I missed something. Can you point out where Judge Hand explained why his claim was morally correct, and not merely a statement of the legal status quo (comparable to pro slavery rulings before the 13th)?
So the only support that this gives is citing US v. Isham and Bullen v. Wisconsin. So, perhaps to avoid being guilty of presuming twice in one thread, I went looking for Isham. I found it at https://supreme.justia.com/cases/federal/us/84/496/
It is a Supreme Court decision, and contains the following text:
"It is said that the transaction proved upon the trial in this case is a device to avoid the payment of a stamp duty, and that its operation is that of a fraud upon the revenue. This may by true, and if not true in fact in this case, it may well be true in other instances. To this objection there are two answers:
"1st. That if the device is carried out by the means of legal forms, it is subject to no legal censure. To illustrate. The Stamp Act of 1862 imposed a duty of two cents upon a bank-check, when drawn for an amount not less than twenty dollars. A careful individual, having the amount of twenty dollars to pay, pays the same by handing to his creditor two checks of ten dollars each. He thus draws checks in payment of his debt to the amount of twenty dollars, and yet pays no stamp duty. This practice and this system he pursues habitually and persistently. While his operations deprive the government of the duties it might reasonably expect to receive, it is not perceived that the practice is open to the charge of fraud. He resorts to devices to avoid the payment of duties, but they are not illegal. He has the legal right to split up his evidences of payment and thus to avoid the tax. The device we are considering is of the same nature.
"Another answer may be given to the objection more comprehensive in its character. It is this: that the adoption of a rule that the form of the instrument can be disregarded, and its real character be investigated for the purpose of determining the stamp duty, would produce difficulties and inconveniences vastly more injurious than that complained of. Such a rule would destroy the circulating capacity of bills, or drafts, or orders. The present act imposes the same stamp duty upon inland bills of exchange and promissory notes, but this is an accidental circumstance only. Suppose that the draft is made subject to a tax of five cents on the hundred dollars, and the note to a tax of ten cents on the hundred dollars. The defendant contends that a draft or bill drawn by one officer of a company upon another officer of the same company is, in legal effect, a promissory note. Upon the supposition thus made, its real character would require a tax of twice the amount of that indicated upon its face, and if the stamp be too small, the instrument is absolutely void from its inception. [Footnote 11] In the language of the statute, it shall be "deemed invalid and of no effect."
"Is every man to whom a paper in the form of a bill of exchange is presented bound to inquire whether there are not outside circumstances that may affect its nature? Having ascertained this, is he bound to delay all proceedings until he can take legal advice upon its nature and character? This he must do upon the theory contended for, and he must be certain also that his advice is correct; otherwise he will lose the money he advances upon the bill. The same rule, it is contended, will apply where the drawee does not appear upon the face of the bill to be an officer of the company. Such is the case before us, where Mr. Canda, the drawee, does not appear upon the bill itself to be connected with the company, and yet the prosecution contends that it may be proved that he is its treasurer, and that thereupo...
https://en.wikipedia.org/wiki/Gregory_v._Helvering
Using legal tax avoidance strategies is not tax evasion.
Also, requiring people (whether legally or morally) to use interpretation of law that's not the most favorable to them is a giant, bad slippery slope.
Techdmn is right that there are many losers because Congress made a regressive tax structure legal. The lawyers win. The rich clients win. Society loses.
Edit: I'm "posting too fast" so I'll have to respond here.
> The ethical/moral argument is IMO lost when talking about people using the structure.
Why? An immoral act doesn't become moral simply because it is legal. (Consider slavery, bribery disguised as lobbying, or murder in The Purge).
And even many rich people admit that paying a lower tax rate than their employees is immoral.
You can use it against people enacting those laws, lobbying for them or arguing for them in public.
Paying a lobbyist or legislator (who very likely might be a lawyer) to lobby or legislate for loopholes would be getting around taxes.
K&L Gates for example builds sophisticated social networks graphs of people in and outside of it's immediate community. Purchase as much data as you'd imagine an org like palantir would. They do their own "market research". Equal access to software based tools doesn't exist here or anywhere.
The answer is 'networking'. Very well paid lawyers are very good at being lawyers. Meaning that yes, they placed well in their law schools and that they really truly do know their stuff. In the US, common law systems are not an easy thing to master [0]. If they go to trial, they know how to run one and how not to run one, depending on circumstances.
But the real thing that makes a very well paid lawyer as such is the 'networking' element. They know which judges will rule what way, what other lawyers in the local system are like, who the right secretaries to talk to are. And they know how to determine such things with little information. Most importantly, they know who not to talk to and get information from. And they know how to 'work the refs' to their advantage and how to ditch clients too.
Is this scummy? Oh, absolutely, no questions. But the law in our system is not about the truth, it's about winning. That's why we pay lawyers to begin with: to win. If we want to change that, sure, fine, most lawyers do too. But you have to play the cards you're dealt.
[0] Life tip: If you ever meet a Louisiana lawyer, you've met a very very smart person. Having to master two different law systems interacting at once is blindingly difficult. Louisiana's legal system is based on Napoleonic era civil law and the rest of the US's common law.
I wish there was a study done on lawyers to determine if there's some truth to it being beneficial but I imagine it would be hard to conduct.
https://en.wikipedia.org/wiki/List_of_highest-paid_NBA_playe...
Better question is why do people pay so much to watch someone run back and forth with a ball in a medium packed to the gills with annoying advertising.