Information asymmetry about the quality of work to come from a law firm is not such a big deal

An unpublished paper by Michele DeStafano Beardslee and three co-authors at the Georgetown Conference on the Future of Law Firms at 4, emphasizes the baleful effects of information asymmetry regarding the quality of service provided by law firms. She takes the perspective of an economist and stresses that “credence goods” like legal services pose problems because “quality is not verifiable ex post.” (I think she means “ex ante,” or before the service is obtained.) (See my post of Sept. 7, 2008: information asymmetry with 7 references.).

While it is true that an in-house lawyer who hires a partner to accomplish something cannot touch and feel the service to be gotten, that lawyer can talk with the partner from the beginning of the matter, get budgets, look at work product, review bills, and direct the service. It is a credence good but it gets shaped and evaluated every day, or can be test every day if the in-house supervising attorney is so inclined.

Moreover, the partner does not know and understand 100 percent what the in-house lawyer wants and needs. The asymmetry exists to some degree on both sides. But both lawyers share in the creation of the legal service.

We welcome comments

Your email address will not be published. Required fields are marked *