What Are Legal Expenses?

Legal costs are the total costs of operating the legal system. It specifically includes the human, material, financial and time resources consumed by the parties to realize their rights, perform their obligations and assume responsibilities in all aspects of the rule of law in legislation, justice, law enforcement, and law compliance. The level of legal cost is the main basis for people to make legal supply (especially the amendment and abolition of the law) decisions, and it is a "barometer" for legal subjects to choose to observe or circumvent the law or even violate the law.

Legal cost

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Legal costs are the total costs of operating the legal system. It specifically includes

Legal activities and production activities are both different and related. The specific performance is as follows:

(1) The cost of production and the cost of law fall into two categories: person-self (natural world) relationship and person-person relationship. The two are essentially different.

(2) In the field of economics, people have long found defects in the concept of production costs proposed by classical economics. They believe that it lacks a generalization of living labor and materialized labor, and it is difficult to cover the operating costs of economic institutions and economic organizations. In the 1960s, Marx proposed the concept of "pure circulation costs" to summarize those resources that would not create value and were consumed solely by the need for exchange, that is, "non-productive costs" or "will not increase the value of transformation Cost of circulation. "

(3) The law aims at reducing social transaction costs as its direct purpose, and at the same time indirectly reduces production costs. The former cost constitutes a major part of social transaction costs in practice and is often more important than direct production technology costs.

Legal cost is the total cost of legal operation, including "the human, material, financial and time resources consumed by the parties to realize their rights, exercise their rights, perform their obligations and bear their responsibilities in all aspects of the rule of law in the legislative, judicial, law enforcement and law-abiding areas." They are transaction costs in nature and are generated by different entities in interactive activities. The legal system is constructed to a large extent in order to maintain people's interactive activities, reduce non-transactional factors in activities, and save transaction costs.

Coase, the founder of the economic analysis law school, used the transaction cost theory to analyze the impact of the legal system on the allocation of resources, that is, the "Coase Theorem." The first law of Coase's theorem is: under the condition of zero transaction costs, legal provisions are irrelevant, because the result can always increase the output value. This means that when the transaction is free of cost, any distribution of legal rights is resistant to achieving a profitable result. But transactions in real life have costs. So, in the presence of transaction costs, what kind of rights distribution can produce the most effective results? Coase proposed a way to solve this problem, which is the second law of Coase's theorem: if there are real transaction costs, As a result, it cannot happen under every legal rule. In these cases, reasonable legal rules are rules that minimize the effects of transaction costs.

1.The opportunity cost of law

There are many ways to adjust social relations, such as laws, policies, religions, and moral adjustments. This requires choices in many ways. The choice of whether to use the law, what kind of law to choose, the difference in benefits between different choices, and the gains and losses constitute the opportunity cost of the law. In the process of consuming the law, the greater the consumption of the law, the more frequently the law is applied, and the lower the average cost of the law. The marginal cost of law is approaching zero infinitely. Therefore, in a country with relatively sufficient legal supply, the more adequate legal consumption is, the lower its legal cost will be. The costs and benefits of litigation relief and extra-litigation relief are not balanced. Therefore, the more perfect the litigation relief system, the lower the opportunity cost of litigation relief.

2.Marginal cost

"Margin" reflects a small trend in the development and change of something. With the increase in the generation and implementation of laws, the changes in the marginal cost of law signify the fundamental changes in legal costs and benefits. According to the law of diminishing marginal cost, before the supply of law reaches the state of social demand saturation, each time a new law is generated and implemented, due to the mutual support of legal norms, its marginal cost is decreasing. On the contrary, if it exceeds the saturation state, with the increase of legal supply, mutual support between laws will continue to weaken, and its marginal cost will increase. Therefore, the improvement of the relief system and the coordination of various relief methods are conducive to reducing marginal costs.

Social relations are constantly changing, and legal costs are constantly increasing. In addition to legislative costs, when rights conflict and appeals to judicial requests, it means an increase in the cost of law; when judicial authorities accept, investigate, obtain evidence, judge, and impute, the cost of law also increases; The law enforcement by law enforcement agencies also means that the cost of the law is increased; the parties concerned will also increase the cost of the law if they refuse to appeal again.