By Bob Glaves | CBF Executive Director
My New Year’s Resolution for our legal profession this year was to make law better by looking to what we can learn from other professions and industries, and as I explored further over the past few months, there is no shortage of material on that front.
As we look at ways we can better and more sustainably serve the public, there also are a number of lessons we can learn from the areas of the legal services market that are functioning reasonably well for lawyers and clients today.
While not perfect, the corporate legal services market, the market for personal injury cases, and legal aid (when it is funded properly) work reasonably well both for lawyers and clients. There are other pockets of our profession that are making services affordable and accessible to everyday people as well, and it is no coincidence that we see more innovation and a broader range of service options in these better functioning areas.
However, for the vast majority of moderate-income people today and the lawyers struggling to sustainably serve them, the market is failing for all concerned, and the problem has only grown worse. We need to take a closer look at what we can learn from within.
The Corporate Legal Market
The corporate legal market is characterized by sophisticated buyers of services who have a highly competitive market of large law firms and specialty boutique firms to choose from when they need legal services. Corporate clients also have access to an increasing array of other legal service providers like e-discovery that complement and work with law firms to make their services more efficient and affordable.
The large firms serving this market have the size and scale to hire the other business and technology professionals they need, who now play an integral role in the success of these firms. They also have the resources to invest in the technology necessary to efficiently and effectively deliver their services.
While smaller boutique firms serving this market may not have the size to hire these other key professionals full-time, they typically can invest in the necessary technology and hire other needed expertise as contractors or consultants because they serve a more lucrative part of the market.
An increasing number of larger firms now also offer their corporate clients sophisticated, technology-based self-help options to augment their traditional services.
Personal Injury Cases
The personal injury segment of the legal market is another area that functions well today. Clients who have a viable case have a wide range of law firm options available, and the referral system generally functions efficiently and effectively to route clients to the best lawyer for their case.
Law firms in this segment, similar to the boutique firms serving the corporate and higher income individual markets, generally have the means to invest in the professionals and technology resources needed to succeed in their practices. With their services focused on the consumer market, personal injury firms have the means to meaningfully invest in the marketing and advertising necessary to educate and attract clients.
For clients, the contingent fee model gives them price transparency and certainty, aligns risks and rewards well, and gives them access to many lawyers who can serve them when they have good cases regardless of their income or circumstances.
Legal aid for low-income and disadvantaged people functions efficiently to serve people in need, with the help of scores of dedicated pro bono lawyers and other professionals. Because they serve clients who are not in a position to pay for their services and they face far more demand than they can meet, legal aid has every incentive to do whatever they can to serve the most clients as efficiently as possible, and that leads them to offer a continuum of service options that features several different limited scope legal assistance options.
We also see impressive innovation in legal aid, particularly in the use of technology. Funders like the Lawyers Trust Fund of Illinois and the Legal Services Corporation provide special funding to create and expand innovative technology-based service options so that legal aid can reach more people in need. In addition, many pro bono lawyers and other professionals bring a range of expertise to legal aid programs (such as marketing, technology, and finance) that otherwise would be out of reach, enabling legal aid to serve more clients more efficiently and effectively. Court and community partners also raise awareness of legal aid and how people in need can access these services.
The Rest of the Legal Market
These are just the three most prominent examples of the areas that are working reasonably well in the legal services market today, but there is a huge donut hole in the middle of the market where most Illinoisans reside. According to the Pew Research Center, more than 50% of Illinoisans are middle class. They make too much to qualify for already overstretched pro bono and legal aid services, yet not enough in most instances to afford services in the higher end market.
Perhaps the most stark result of this problem is that we are seeing record numbers of people coming into the courts on their own (roughly three of every four cases on the civil side) at the same time that case filings are dropping significantly and lawyers trying to serve this part of the market are increasingly struggling.
There are other pockets of success for better serving this market that tend to feature set pricing and flexible service options—the lawyers in the CBF Justice Entrepreneurs Project network being a prime example—but success in those models increasingly requires business and entrepreneurial skills that only a fraction of our profession possess. These successful models currently do not even come close to developing the scale necessary to meet the need.
In economics, this is a classic definition of a market failure, but why is it happening?
What Can We Adapt to Close the Gap?
To answer that question, we should first summarize the characteristics of why these parts of the legal market are working better and how that compares to what is happening for the everyday legal consumer.
The client perspective: We see sophisticated buyers of services (corporate) or transparent and set pricing (for the other well-functioning areas of market) so that individual or business clients can reasonably judge the value they are getting and make an informed decision based on a cost-benefit analysis. We also see that successful providers have a variety of channels to effectively market their services and offer a range of service options or connection points, empowering legal consumers to decide what is best for their needs and circumstances.
Consumers in the middle market today do not see these same options unless they have a personal injury case or other legal matter where there are accessible, fixed cost options available (e.g., real estate closings). Instead, consumers usually encounter the opaque and uncertain world of the billable hour where value is difficult to assess, which is a losing proposition for anyone living on a fixed budget. It is no wonder that more people today are trying to handle things on their own or avoiding the legal system altogether.
The lawyer side: Lawyers in these better functioning areas of the market have access to technology and other business and marketing professionals to enable them to effectively reach and serve their clients (and legal aid tends to regularly have more clients than they can handle and therefore does not need to market their services in the same way).
The solo and small firm lawyers trying to serve the middle market, however, rarely have access to these professional and technological resources that are necessary for success in today’s world. Instead, they are expected to not just be good lawyers, but good business, finance, marketing, and technology professionals as well. Few lawyers can do that, and it is no surprise that so many lawyers are struggling to try to serve this market at the same time so many potential clients are going without legal services.
Bringing These Successful Models to the Middle Market
To adapt these lessons for the underserved middle market, solo and small firms need access to business models beyond the traditional law firm model to be able to effectively market their services and realistically connect with the other professional and technology resources that larger firms and lawyers serving more lucrative areas of the market now take for granted. The problem today is that our outdated Rules of Professional Conduct artificially restrain solo and small firm lawyers from doing so, to no one’s benefit.
That is why the CBA/CBF Task Force on the Sustainable Practice of Law & Innovation is working to modernize these Rules so that solo and small firm lawyers trying to serve the underserved middle market can successfully and sustainably do so. A market failure of this magnitude requires a market-based solution, and by rethinking these Rules in the context of the 21st Century, we can enable all lawyers to take advantage of the lessons of what is already working well in our profession and legal market to better serve our communities. I encourage you to check out the Task Force’s comprehensive set of recommendations for regulatory reform on the CBF website, and you can provide feedback there through August 21st.