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Why Lawyers Get Rich

February 6, 2006

Filed under: legal,life,money — Terry Wohlers @ 14:46

This is the title of a short article published in the December 2005 issue of Manufacturing Engineering magazine. Let me begin by saying that I have lawyer friends, including one that I count as among my best. I support our legal system in the U.S. and thank God we have it. Also, in no way do I oppose enterprising individuals and companies that create wealth in a legal and ethical fashion. Now, for the facts, according to the article.

Eight-seven percent of U.S. corporations are engaged in some type of litigation. An average company is juggling 37 lawsuits, while corporations with revenues of $1 billion or more are dealing with 147 at any given time. The article goes on to say that these organizations are spending staggering amounts of money and other company resources on business disputes. Many of them are unable to predict the cost of managing them, so spending soars.

I’m not a legal expert, but I do know that litigation is necessary in some cases. One needs to protect investments in intellectual property, the rights written into agreements, and so on. However, people in business are often quick—too quick, in my opinion—to file lawsuits when alternative methods may be effective and far less expensive. For example, I know of an instance where a simple phone call from one CEO to another solved a problem—one that would have otherwise turned into expensive litigation. Lawsuits often result in years of pouring money down a legal drain and the lawyers are grinning from ear to ear all the way to the bank.

Design and manufacturing organizations in the U.S. need good lawyers, but they also need good engineering and manufacturing professionals. A lot has been published recently on the impressive number of engineers that are graduating in China and India, compared to U.S. schools. Many of the best students in these countries are concentrating on engineering, while ours are pursuing careers in law and other areas. Law, medicine, banking, and advertising, as well as many other professions, are all incredibly important to a community, but they do not contribute to the wealth of a nation. Manufacturing creates wealth. Litigation does not, and it can drain the resources of an otherwise prosperous company.