Judge Striking The Gavel On Banknote

Back in November 2013, Sam Glover told Lawyerist readers that we could close the access-to-justice gap, but you’re not going to like it. Sam suggested (and I agree) that opening the market to providers outside the legal profession would substantially enhance access to justice, probably at a (short-term) cost in the range of quality in legal services.

As access-to-justice advocates turn more of their attention towards lawyer alternatives, the legal profession will start to face some difficult choices about its continued participation in the consumer legal market.

Lawyers Mostly Work for Businesses, not People

Let’s begin with an under-recognized fact identified by Professor William Henderson at the University of Indiana Maurer School of Law: “The work of lawyers is increasingly the work of businesses rather than people.” In a post last fall, Prof. Henderson recapped the results of the groundbreaking Chicago Lawyers I and II studies from the late 20th century:

Chicago Lawyer I showed that roughly half of lawyers in Chicago in 1975 were working for people and half were working for corporations. […] When the study was replicated in 1995 (Chicago Lawyers II), the data showed twice as many organizational lawyers versus people lawyers[.]

Henderson also provided this chart with more recent data:

Over a five-year period (which overlapped with the financial crisis and its aftermath), US consumer spending on lawyers dropped about 10 percent while the consumer population grew by about 5 percent. Taken as a whole, this data suggests that between 1975 and 2012, consumers’ share of lawyers’ business fell from about 50% to less than 25%, a decline that seems to be accelerating.

Now, you could frame this as lawyers migrating away from simpler and less lucrative legal work for individuals and towards more complex and profitable legal work for businesses. You could equally frame it as some consumers simply giving up on hiring lawyers as lawyers’ fees became less affordable, while others successfully pushed the lawyers they did hire to reduce their prices.

However you look at it, the bottom line is that the volume and quantum of legal service transactions between lawyers and individual clients are diminishing.

Alternative Legal Services Are on the Rise

That’s the reality of the shrinking consumer use of lawyers in the US. Here’s the corresponding reality: the growing interest by consumers in lawyer alternatives, at least in other countries. In the UK, American consumer law giant LegalZoom has launched a “digital will”:

Called Legacy, the app enables users to make their will on their phone, and build a “digital scrapbook” of memories and messages to pass on along too. Backed by advice from Beaumont Legal—the law firm LegalZoom bought a year ago—users pay £4.99 a month and can update the will at any time at no further cost.

The will has smart features such as auto-updating, for example, when a child turns 18 and no longer requires a guardian. … Upgrades already being worked on include capacity to handle more complex wills, building in a lasting power of attorney … and a virtual reality element to allow users to view their passed-on memories in a fully immersive environment.

Also from the UK, there is a divorce app that seeks to replace solicitors with “divorce coaches” who may or may not have legal training. The divorce coaches can reach out to a law firm for advice on how to handle the legal issues of the couple they are coaching, but the coaches—not the husband or wife—are the clients of the firm.

The US, of course, leads the world in legal technology and software and hosts deep pools of venture capital funding for consumer-facing applications that use this technology. Some of these websites and services have made serious headway into the consumer market, as solo and small-firm lawyers especially know. But so far, state regulations that strictly prohibit the provision of legal services by anyone and anything other than a lawyer have held back the spread of such applications.

In that light, therefore, consider this post by Richard Zorza in November 2016, which drew attention to a staff letter submitted by the federal Department of Justice and Federal Trade Commission about a North Carolina UPL law. Here are some key excerpts from that letter:

Interactive software programs for generating legal documents appear to be responsive to consumer demands for more cost-effective and efficient ways to address their legal issues. These software products may expand consumer access to legal services, facilitate the unbundling of legal services, promote a more efficient allocation of resources … reduce transaction costs, increase convenience, and help some consumers more effectively to address their legal situations[.]

The Agencies believe that consumers generally benefit from competition between lawyers and non-lawyers in the provision of legal-related services.

Based on these and other data points, I think we can draw at least this conclusion: from now on, access to justice is going to be less about lawyers and more about alternatives to lawyers. Specifically, the access-to-justice movement is going to focus less on making lawyers’ services more affordable, and more on making people aware that they have choices other than lawyers for their legal needs.

I’ve heard more than enough speeches (and I expect you have too) by judges, politicians, and other interested onlookers about “access to justice.” These speeches invariably blame lawyers’ high fees for the access to justice problem and exhort lawyers to make their services more affordable.

The price of lawyers’ services is a significant contributing factor to the access problem, although by no stretch of the imagination is it the sole cause. But the more important takeaway, to my mind, is that decades’ worth of such speeches and exhortations have had just about zero impact on lawyers’ fees. If these efforts were meant to encourage lawyers to charge less for their services, they failed.

Advocates for more affordable and convenient legal services are going to pursue and promote “non-lawyer” alternatives instead. They will shift their energy away from haranguing lawyers and towards advancing the authorization and popularization of people and products that deliver basic legal services with “good enough” accuracy and reliability. As that joint letter from the DOJ and FTC indicates, federal justice and competition authorities are thinking along the same lines. The arc of history is in the process of bending, and it’s not bending towards a lawyer-only legal market.

What Does This Mean for Your Practice?

If you’re a lawyer who serves or would like to serve individual consumers, you need to make a couple of choices.

The first is whether you really want to serve this segment of the market. Individuals still really, truly need lawyers—as the heroic turnout of immigration lawyers and other attorneys at American airports vividly demonstrated. But you need to make that call with your eyes open. This is a tough segment of the market in which to compete, and the coming flood of lawyer alternatives is going to make it exponentially tougher.

And that leads us to your other choice: are you going to adjust your practice to be competitive in this market, and if so, how? Operating a 20th-century law practice in the 21st-century legal market is not going to be successful.

Lawyer alternatives and lawyer substitutes are going to change consumers’ expectations around legal services. Will your law firm’s products and services be priced predictably and competitively with other providers? Will they be available 24/7? Will they be customizable and downloadable online? The more of these kinds of questions you can answer in the affirmative, the stronger will be your case for participating in this market segment.

The good news is that you don’t need to invent all these capacities yourself. You can partner with some of these incoming providers or adopt some of this developing technology to achieve these goals. You can re-engineer your practice through automation, outsourcing, and process improvement to reduce your cost of business and improve your profit margins. The resources are on the market and available to you. The only real question is whether and when you’ll explore them.

The whole issue of access to justice is leaving the cozy confines of the legal profession and entering mainstream business and society. Access to justice advocates have grown tired of encouraging lawyers to change their ways and are now turning to other providers in hopes of creating viable options for consumers who need legal services. Technological advancements, regulatory changes, and growing public awareness of the justice gap are all putting wind in their sails. It’s not hard to see where this is going to wind up.

If you’re pinning your competitive hopes in the consumer legal market on a continued reliance upon lawyer-only service provision, think again. Instead, decide whether this is a market in which you wish to compete. If so, start retooling your law practice so that you can compete on both the high quality of your lawyer expertise and the affordable accessibility of your legal business.

4 responses to “How Access-to-Justice Efforts Are Changing the Consumer Legal Market”

  1. Richard Moorhead says:

    Sensible post as ever Jordan. I’d like to see the consumer size of the market analysed in absolute terms rather than proportionate terms. This will give us a sense as to whether the consumer size of the market is actually shrinking.

  2. Chris Carr says:

    Good post. However, I am doubtful the turn to technology and other legal service providers is going to have quite as dramatic an effect. Take a look at the real estate brokerage market. Ten years ago, people were saying firms like Zillow were going to put real estate brokers out of business. Today? Not much of an impact at all. Turns out, people want the human interaction, and are willing to pay a premium for the voice of experience and reason to guide them through a challenging transaction. And that’s exactly what good lawyers do. They are more than just an algorithm spitting out docs. However, lawyers need to make a huge effort to educate on what the value of a good attorney is. Whether or not we as a profession will be able to do that remains to be seen.

    • Robin Haynes says:

      I agree that many clients want the human experience, but in the access to justice community for those that qualify for legal aid (0-200% of the poverty line) and those that don’t, but really can’t afford an attorney (200-400%), it’s not about educating the client about the value of a good attorney. It’s about attorneys rethinking our work and letting in other providers who can help with things like, filling out family law firms. I don’t think many of the folks in 0-400% want to be doing this alone.

  3. Ken Chasse says:

    Legal services are unaffordable because of the method of producing them is obsolete. Where there has been the pressure that forces innovation, the manufacturing of services as well as goods has moved to a “support services” method. For example, the whole of the medical services infrastructure is made up of highly specialized, mutually interdependent support services. That infrastructure is like a honeycomb of support services; all highly specialized and capable of the high volume production that maximizes cost-efficiency and competence. There are no generalist. And the “parts industry” is a massive and highly sophisticated support service for the automobile manufacturers. The support services produce those parts or services of the making of a total product or service that cannot be made profitable in itself unless produced by a highly specialized, high volume support service. The high revenue produced by servicing hundreds or thousands of manufacturers enables every major factor of production to be highly specialized so as to produce the greatest cost-efficiency and the highest degree of competence.
    “Nothing is as effective at cutting costs as scaling-up the volume of production.” Bigger is better.
    The assumption that legal services are now produced by lawyers in the only possible way has no basis in fact. There has been no study of the cause of the problem by the appropriate experts. It is not a legal problem. It requires expertise that lawyers don’t have. As a result, law societies have no program to solve the problem of unaffordable legal services, and their “access to justice” committees have made no progress towards a solution while their victims continue to grow in number–the population; the courts; and the legal profession itself.
    For example legal research services could be more competently and cost-efficiently provided at cost by a highly specialized, high volume legal research support service. The support services strategy is to cut costs by increasing competence by means of a high degree of specialization. Giving legal research work to law students, paralegals, and junior lawyers, is cutting costs by cutting competence. In comparison with support services methods, using junior people produces very small cost-savings, and increases the probability of errors. And they don’t build specialized databases of materials and methods of production, and use experienced professionals as do specialized support services. “Clerking” for judges should be considered obsolete.
    There are many other parts of attorneys’ work that could be supplied by such support services. And those services that are compatible with flat-fee billing (instead of hourly billing) are also the services that are most easily automated. But the creation of such support services and bringing about that automation for law offices requires law societies that are not managed by part-time amateurs.
    Law societies are like elected governments without a civil service. Therefore they lack the ability to govern, i.e., they don’t have the competence to cope with such major law society problems because such problems are not legal problems. And law societies don’t retain the necessary expertise with which to produce the innovations that would keep legal services affordable. Law societies are a 19th century creation carried into the 21st century. They have been under no pressure to innovate as have the providers of medical services. Law society management structure has not changed. Therefore they don’t try to solve the unaffordable legal services problem by sponsoring the innovations that would enable law firms to produce affordable legal services.
    Therefore lawyers are major victims of their own law societies. That is why the legal profession is diminishing in several ways. The self-regulation of the legal profession has proved itself to be incompetent. But it didn’t have to be that way if lawyers had applied the necessary pressure to their law societies that forces innovation. And it wouldn’t be that way if governments had held law societies accountable to the political-democratic process.
    See: “Access to Justice—Unaffordable Legal Services’ Concepts and Solutions” (pdf.);
    at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2811627.

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