Benjamin Bestgen: Just prices

Benjamin Bestgen: Just prices

Benjamin Bestgen

Benjamin Bestgen asks us this week to consider just prices. See last week’s jurisprudential primer here.

Caricatures of fatcat lawyers and greedy shysters lining their pockets through frivolous claims and overcharging clients have linked the legal profession unflatteringly with money for centuries.

Indeed, lawyers talk about money constantly. Whether you work in civil litigation, criminal law or on the transactional side of things, money will always somewhere, somehow play a role in the client’s case. We routinely handle client funds and talk about “added value” and “commercial awareness” – poorly defined buzzwords but, regardless, the pursuit of money is a cornerstone of acting commercially and offering value.

Lawyers’ billings matter too: clients’ thank-you emails don’t put food on the table.

Unlike lawyers, philosophers are often portrayed as being poor or disinterested in money. But economics’ origins are in philosophy: Aristotle, Thomas Aquinas, John Locke, Adam Smith, Karl Marx, Robert Nozick, James Buchanan, Max Weber, John Rawls, Martha Nussbaum, Amartya Sen and many others wrote influential works on economic questions.

Thales of Miletus was a savvy investor in olive oil futures. Arthur Schopenhauer forced the recovery of his complete funds when his bankers went bust, unlike other creditors who had to accept significant losses. Benjamin Franklin gained financial independence through profitable investments. Plato, Cicero or Marcus Aurelius knew a few things about managing their country estates or the Roman Empire.

Not valuing money above most other things or making the pursuit of it a core purpose in one’s professional endeavours does not equal indifference or lack of comprehension.

Fair and reasonable prices

Lawyers are generally required to charge fees which are fair and reasonable. There is additional guidance about factors lawyers take into account to meet that standard but the idea is that charging excessive fees for legal services is unethical and detrimental to the reputation of the legal profession.

Agreeing on a fair price for goods or services is important for any transaction, no matter what your business is. As a seller, overcharging customers breeds resentment and they may take their business elsewhere. As a buyer, pressuring a seller into a deal at undervalue likewise leads to resentment and probably poor service.

Also, in order to freely agree a price that seems fair, you need roughly equal bargaining power between buyer and seller. But due to factors like social status and power, timing, knowledge, circumstances, supply, demand or choice, either the seller or the buyer may be able to force the other party to pay in excess of actual value or accept a payment far below it. Therefore, an analysis of the fairness and reasonableness of prices also needs to consider an element of social and economic justice.

Just prices

In the Middle Ages, philosopher Thomas Aquinas pondered what would make a price “just” and used Christian ethics and the Greek philosophers (notably Aristotle, whom he called “THE Philosopher”) to provide ideas:

  • A seller should not charge in excess of actual value only because the buyer has urgent need for the goods or services or limited choice.
  • Just gains in a trade should be judged by reference to the seller’s labour and production costs. This should prevent sellers from overcharging for their work but also hinder powerful buyers from paying less than what the goods or services are worth.
  • Profiteering from natural disasters or force majeure events is unjust. If the cost of the goods or services for the seller are the same, whether the buyer is in distress or not, the price should remain stable.

In later centuries, “just price” thinking gave way to Anglo-Saxon ideas of “supply and demand” and prices being determined by what the relevant market participants are willing to pay or able to demand. However, some jurisdictions like Austria or Louisiana still accept forms of the principle of laesio enormis, under which a contract can be unwound if it is so fundamentally unfair as to cause “abnormal harm” to a party. Common law jurisdictions tend to emphasise freedom of contract, but also came to agree that an enforceable measure of fairness and protection must be mandatory as a matter of public policy and ethics in areas like consumer rights, employment or landlord-tenant relations.

Equal pay

The idea of “just price” is revived in our current debates around living wages and equal pay. Relying mainly on “market forces” and “freedom of contract” enables exploitation of the power asymmetries between employers and employees: for example, many industries, all qualifications and responsibilities being equal, still pay white men higher salaries for the same work than women or non-white personnel, with non-white women being generally in the worst position.

Immigrant labour in farming or construction is often given worse wages than local staff. When working in remote locations, some employers provide local labour with meals and accommodation free of charge, while deducting such provisions from the already lower wages of immigrant workers.

Cultural taboos and contractual provisions discouraging discussing remuneration openly also only serve to strengthen this power imbalance to the detriment of wage-earners.

To that end, philosophers Daryl Koehn and Barry Wilbratte argue that Aquinas’ concept of a just price means more than simply fair market and production costs and not exploiting the needy: it is best understood as the price that just persons would agree on, taking into account each other’s wellbeing and the common good of the communities affected by the transaction.

As questions of justice are inherent in lawyers’ job descriptions, considering just prices in our dealings with clients, staff and the general public alike shouldn’t be too exotic of an idea to ponder.

Benjamin Bestgen is a solicitor and notary public (qualified in Scotland). He also holds a Master of Arts degree in philosophy and tutored in practical philosophy and jurisprudence at the Goethe Universität Frankfurt am Main and the University of Edinburgh.

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