Where’s the Proof?

July 20, 2020

By Bob Glaves | CBF Executive Director

This is a common refrain from the naysayer crowd when the subject of regulatory reform and access to justice is raised. And we can be sure we will hear it when the CBA and CBF Task Force on the Sustainable Practice of Law & Innovation releases its report and recommendations for public comment this week.

From the beginning of time, this has been the anthem of all who fear change and resist progress. It is a misguided question because, after all, how can you prove something that has not happened yet? When the question is properly framed in this context, however, it turns out there actually is lots of proof that underscores the urgent need for regulatory reform.

Asking the right question

If we had to prove that change would work before it happened, innovation would stop dead in its tracks.

As Henry Ford famously said, “If I had asked the people what they want, they would have told me a faster horse.” And we can be sure someone back then opposed his idea by asking how we know that hunk of metal will be better than the horse and buggy?

The way innovation works in the real world is by someone identifying a problem or gap in the market, trying new things, and adapting from what they learn from the experience of actually doing it. I recommend the book Adapt by Tim Harford as a good read on some of these innovation basics. And while it may appear that entrepreneurs and innovators are throwing caution to the wind, the successful ones are taking calculated risks and building in safeguards where they can.

The real question we should be asking is how well is the market for consumer legal services working today? And on that score, we have abundant proof of a major market failure.

The underlying failure in the consumer legal market

At a time when we have more lawyers actively practicing in Illinois than ever before, and more than half in solo or small firm settings, the great majority of people with “bread and butter” legal issues are not getting help from lawyers. More people than ever before are going to court on their own even though most would prefer to be represented, and many could afford to pay something for it. Yet lawyers trying to serve this consumer legal market are not connecting with these potential clients and increasingly are facing financial challenges.

This is the classic definition of a market failure, and no one wins—not the legal profession, not the courts, and most of all, not the public. While there are examples of innovation in serving the moderate income market, such as the firms in the CBF Justice Entrepreneurs Project network, we do not see this in the legal profession at the scale necessary to address the huge gap in access today.

The regulatory aspect of the problem

We should start by making clear that improving the sorry state of access to justice for the public is a multi-tiered problem and that regulatory reform is just one part of the solution. It is not a replacement for pro bono and proper funding for legal aid services, which has been chronically underfunded for decades. Nor is it a replacement for the major court reform necessary to modernize and streamline access to the court process.

However, for moderate-income people (between 40% and 60% of the market) who fall in the gap between those who qualify for already overstretched free legal aid resources and those who can afford firms serving the high end of the market, there is a fundamental access to justice problem that regulatory reform is necessary to fix.

In the rest of the business and professional world, the market would respond with innovative solutions and sophisticated marketing and advertising campaigns to attract and serve an untapped market of this scale. However, we do not see this happening in the legal profession at the scale necessary to close the gap.

This is where we need to look at the regulatory structure for the business of law, which artificially restricts the business models lawyers can use to better serve this market and discourages collaboration with the other professionals and entities necessary to succeed in the modern world.

When we ask the question the right way, there IS lots of proof more flexible regulation makes a difference

The right follow-up question to ask is what proof there is of improvements in access to justice for the broken middle market when regulations have allowed it? And the answer is: plenty.

First, when laypeople and other professionals have been given defined, vetted, and approved roles to assist, research shows they make a real difference. Just two of many examples are trained laypeople serving as court navigators (including Illinois JusticeCorps) to help unrepresented people in the courts, and accredited representatives in immigration, who play an integral, regulated role in the delivery system for immigration legal services.

Similarly, when technology-based solutions are permitted, they can materially improve access, and consumers clearly are responding. For example, the IRS explicitly permits and promotes a variety of free and paid self-help tools like TurboTax for filing taxes, and millions use these services to prepare their taxes each year. While not explicitly permitted or promoted in the same way, millions of people and small businesses have turned to LegalZoom, which offers a combination of online self-help tools and legal insurance plans and was valued at more than $2 billion in 2018. Even successful large law firms have created similar technology-based self-help resources for their corporate clients to complement their traditional firm services (e.g, Littler Edge, Norton Rose CASL Advisor).

Lastly, where other business models have been allowed, there is proof that more innovation in serving the consumer and small business markets has followed. In the United Kingdom, despite an overly complicated and restrictive regime for opening up their legal market, research shows that firms that adopted alternative business structures (ABS) are more innovative and have launched new models to better serve the middle class legal market. Co-op Legal Services is just one example of an ABS doing quite well there and better serving the public. 

To sum it up, these solutions are expanding access where they are permitted and are striking a chord with both consumers and businesses, who are voting with their feet. However, the lack of clarity in the rules on when these approaches cross the line into the unauthorized practice of law hinders the ability of solo and small firm lawyers to deliver these solutions, dissuades other professionals and laypeople from getting involved, and discourages other entities from entering the market.

The one critical issue where there is no proof

There is one important issue about regulatory reform where no proof has been found. Many oppose regulatory reform in the guise of protecting the public, but there is no proof that the public has suffered any harm in jurisdictions that have moved forward. Nor is there proof the legal profession has suffered from it. None.

So here’s the proof

To summarize, first we have proof of a major market failure in the consumer market for legal services today, a crisis for our profession, our justice system, and the public.

Second, in jurisdictions that have allowed more regulatory latitude here in the U.S. and beyond, there is ample proof that it has improved the market for legal services for the middle class and increased the range of options for lower income people even when it has been overly complicated to do so.

Finally, we know that in those jurisdictions that have liberalized their regulatory regimes, there is no proof that either the profession or the public has been harmed.

As we consider regulatory reform here in Illinois and around the country, we need to keep the focus where it belongs: on the people who are so ill served by the status quo. Regulatory reform cannot fix all the problems that afflict the legal market today, but it is critical to closing the huge gap in the middle of the market.

Let’s get on with it.*

* On that note, the CBA/CBF Task Force this week will release a comprehensive series of recommendations for regulatory reform we believe will make for a better and more sustainable legal profession, a better and more accessible justice system, and improved access to legal help for the public. You can view the full report and give your feedback here.