Quality-adjusted and inflation-adjusted legal fees may have remained fairly stable over recent years
Chris Anderson, Free: The Future of a Radical Price (Hyperion 2009) at 80-83 explains the concept that what we pay for something usually includes more and more over time; the quality of what you buy today is greater than the same purchase several years ago. A quality-adjusted measurement of legal services over time would likely show a similar correlation between fees and additional depth of services covered. Today’s billion-dollar IPO probably deals with more legal issues than the equivalent sized offering 15 years ago.
Moreover, if we had historical data on the typical cost of common legal services in 1989, 1999, and today, I would not be surprised that the inflation-adjusted fees have stayed fairly stable. In other words, in constant 2009 dollars, the fees charged by law firms one and two decades ago for the equivalent of a $2 billion (in today’s dollars) acquisition, a moderately complex patent application, a 10-K report, or the lease of 50,000 square feet of manufacturing plant would be roughly in line. Learning curves support that hypothesis (See my post of March 11, 2009: experience curve with 9 references.).
A combination of the two ideas – enhanced quality and adjustment for inflation – might challenge the notion of ever-increasing legal costs. That said, total legal costs also climb because new laws pass that create more legal obligations and rights.