IN THE NEXT THREE CHAPTERS, I EXPLAIN HOW TORT LAWYERS have been able to increase their inflation-adjusted effective hourly rates by considerably more than 1,000 percent in the past forty-five years. The simple and most direct reason is that lawyers engage in anticompetitive behavior to restrain price competition. In the next chapter, I explain why the market has failed to correct the absence of price competition, and in Chapter 6, I discuss the ethical rules adopted by the bar that are designed to enforce restraints on competition. In subsequent chapters, I discuss other ways tort lawyers have increased their profits, including vastly enlarging the scope of liability of the tort system and increasing the amounts of damages awarded.

How Competitive Is the Contingency Fee Market?

It is an article of faith among proponents of tort system expansion that tort lawyers compete with one another on the basis of price and thus are not overcharging consumers. For example, when contingency fee rates in New York dropped from 50 to 33⅓ percent in the early 1960s, Marc Galanter, a torts scholar at the University of Wisconsin Law School whose writings in support of tort system expansion are widely cited, concluded that this drop was a result of “the increase in supply of lawyers serving individual clients, the increased competition ushered in by the demise of fee schedules, the advent of lawyer advertising, and a gradual increase in the sophistication of clients.”