Lawyers are above the law of decency

Last week we bought control of a business. As is the way, the transaction involved not two but four sets of lawyers, who collected hundreds of thousands of pounds in fees. But at least most of these estimates were agreed in advance. One law firm, however, which had quoted £35,000, announced two days before completion that they intended to charge £110,000.

It baffles me how they can have the impertinence to call themselves professionals. Such behaviour makes cowboy builders look like choirboys. No other supplier of any other service would even dare to behave in such an egregious and cavalier manner. But somehow lawyers have risen to such exalted status that many of them appear to believe they are a breed apart, not subject to the same standards of decency and fair dealing to which the rest of us in commerce attempt to adhere.

Unfortunately the complications of modern society entirely suit lawyers. The blame culture and a pervasive sense of entitlement have encouraged increasing numbers of citizens to take legal action over accidents and disputes of every kind. The rise of "no win - no fee" lawyers has encouraged frivolous and vexatious litigants. Divorce, libel, medical negligence, patent trolls, employment claims, personal injury, product liability, antitrust - in so many areas of life, the system appears to have evolved to suit the legal profession and no one else. In previous eras, ethical standards were such that lawyers would rarely act in suspect cases. Is that still the case in the 21st century, when competition and materialism among the thousands of practising lawyers is so rampant?

Commercial transactions involve extraordinary amounts of legal rigmarole - all implicitly stimulated by our learned friends. Regulation and risk aversion play into the hands of lawyers. Fear of litigation grips schools, businesses, charities, councils, insurers - you name it, law-abiding institutions everywhere are petrified of being sued. Too often defendants settle rather than fight, simply because of legal costs.

Institutions such as the European Commission are giant machines manufacturing lucrative work for lawyers. In the US, big law firms are key donors to political parties that promote their interests. And in spite of the clear progress of technology that should have benefited law firms - and, hence, their clients - productivity of lawyers has fallen, while their billings and fee rates have massively outstripped inflation in recent years. On what planet is a senior partner worth more than 100 times the minimum wage?

Research shows that lawyers are a huge drain on wealth creation. A 2007 study suggested the annual economic cost of the US's tort system was $865bn (€647bn, £570bn). Yet more of them are qualifying than ever before. In Britain, the number of practising solicitors has increased by an average of 4 per cent a year since 1979. I used to work next to a law school - I despaired every time I passed by, wondering how so many of its bright graduates would end up destroying value for our communities, inhibiting innovation, placing a burden on enterprise and killing jobs.

The idea that lawyers are amoral guns for hire is hardly new. It was Shakespeare who penned the memorable line in Henry VI : "The first thing we do, let's kill all the lawyers." Of course, legal actions do not exist in a vacuum: they require litigants. I loathe serial litigants far more than lawyers. All too often such compulsive plaintiffs have dark secrets to hide. One of the worst was Robert Maxwell, the monstrous pension fund robber, who sued newspapers, bankers, unions - almost anything that moved.

The west is overlawyered. We need to rediscover personal responsibility, and employ methods such as arbitration to settle conflicts - and avoid lawyers altogether. I work with many admirable ones who do valuable work: but their profession is suffering from a chronic case of Gresham's law. All those manipulative lawyers should do something more creative, like start a manufacturing business, instead of trying to destroy one of the world's finest manufacturers, poor old Toyota, now facing an avalanche of lawsuits because of an exaggerated scare over unintended acceleration.

lukej@riskcapitalpartners.co.uk The writer runs Risk Capital Partners, a private equity firm, and is chairman of the Royal Society of Arts