My last post provided an overview of my draft article The Cost of Justice at the Dawn of AI and explained the basic logic of Baumol's cost disease for the practice of law. Just as in any other market, if the productivity of lawyers increases at a slower rate than the rest of the economy, legal services will become more expensive. And if a technology like artificial intelligence leads legal productivity to increase at a faster rate than the rest of the economy, then legal services will become cheaper.
In this post, I address the question whether law has stagnated – that is, whether legal services have become relatively more expensive as a result of low productivity increases. Legal actors and the law review literature usually ignore the cost disease. More broadly, legislators and other actors have almost entirely ignored my primary inquiry—how changes in legal productivity and thus costs over time might make the legal system more or less efficient and thus have implications for a wide range of legal doctrines and practices. But a few commentators have considered whether the law suffers from the cost disease, and all unanimously have concluded that it does. I tend to agree, but that the case may be more difficult to prove than they allow.
Bill Henderson, for example, carefully documents that indices of the costs of legal services have risen faster than the consumer price index. Similarly, Emery Lee and John Brooks have argued that Bureau of Labor Statistics data support the conclusion that the legal sector has stagnated. Eric Helland and Alex Tabarrok have argued that the cost disease has afflicted law, as well as "other labor-intensive, high-skill services." Various bloggers have concluded that law suffers cost disease without detailed evidence. With all this agreement, any believer in the Condorcet Jury Theorem would need to assign a fairly high probability to the proposition that law has stagnated.
