Encouraging the Development of ‘Low Bono’ Law Practices

For decades, the discussion about access to justice has primarily focused on the ability of low–income individuals to obtain free representation by lawyers. Lawyer representation is the “gold star” of the legal profession and advocates of legal services for the poor have fought difficult battles to ensure the most disadvantaged in our country have access to these professionals. As a result, legal aid programs and pro bono services that assist the most economically disadvantaged in our country are now common in our legal service delivery system.

Despite those important efforts, only 50% of those eligible for free legal services actually receive them. Traditional access to justice platforms, while critical for offering legal assistance to a segment of the poor, have not been funded at levels that allow them to serve all those who need and qualify for their services. In lieu of lawyers, members of the legal profession have created self–help tools and substitutes for attorneys in the form of general advice hotlines, online document automation programs, and self–help law centers. If the profession correlates justice with lawyer representation, then the majority of average income Americans and a significant segment of the poor, are without it. In 2011 the United States ranked 50th out of 66 developed nations in providing accessibility to its civil justice system to its citizens.

In order to address the unmet legal needs of individuals in our country, the legal profession must advance an affordable legal services agenda that includes lawyers who provide competent legal services at reduced or “low bono” rates. Increased funding to help the poor and efforts to provide greater accessibility through the use of technology are efforts that can help bridge our justice gap. However, such efforts are limited in their scope. To make additional gains into providing more access to law, we need to devote attention to a segment of our society that currently receives no support and can potentially also benefit the near poor who go in and out of poverty. According to the research of an expert on U.S. poverty, “nearly 40 percent of Americans between the ages of 25 and 60 will experience at least one year below the official poverty line during that period and 54 percent will spend a year in poverty or near poverty (below 150 percent of the poverty line).” These figures reveal that a larger segment of the population requires a legal system that understands the fluidity of poverty and their financial instability. A lower–cost legal service delivery system must exist for those priced out of free services who need lawyers to get them back into a more stable financial reality.

Law practices that offer services at low bono rates offer a lawyer alternative to the more than 81.4 million households that earned less than the median income of $51,017 in 2012. Many of these individuals make less than $25 per hour but make too much to qualify for free legal services. Like the poor, Americans of average means need lawyers to advise them about legal issues that arise in their everyday lives but many of them cannot afford lawyers who charge hourly rates that exceed $300 per hour. This chapter explores the need to build the framework that encourages the development of low bono law practices.

Part I helps us understand low bono and why it is a necessary component of a broader legal service delivery system. Part II discusses the challenges that lawyers face in building and maintaining low bono practices. It addresses the financial challenges of running low bono practices and identifies the necessary components for developing viable low bono business plans. Part III outlines the framework the legal profession can and should build to support low bono law practices. It addresses the assumption that an affordable legal fee necessitates a lower quality service. It calls law schools, bar associations and courts to devote resources to build the necessary infrastructure for the delivery of legal services to average means Americans. The chapter concludes with a brief reflection of why lawyers may choose to build a career as a low bono lawyer.

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Citation: Herrera, Luz E., Encouraging the Development of ‘Low Bono’ Law Practices (May 2014). University of Maryland Law Journal of Race, Religion, Gender & Class, Vol. 14, No. 1, pp. 1-49, 2014.

The Legal Problems of Everyday Life: The Nature, Extent and Consequences of Justiciable Problems Experienced by Canadians

The purpose of this study is to inform policy makers about the incidence of civil justice problems and the extent of unmet need for assistance that justiciable problems in civil matters might represent. The study assumes a broad view of civil justice problems and unmet need. The broad view looks at the problem of civil justice and access to justice in terms of the prevalence of civil justice problems in the population. This involves identifying, by means of a sample survey, civil justice problems people have experienced that meet some reasonable threshold of seriousness. The broad view contrasts with the narrow view of civil justice and access to the justice system. The narrow view takes as a starting point the problems that come to the attention of the courts or other formal dispute resolution mechanisms.

Chapter II discusses the methodology and how it reflects the assumptions underlying the broad approach to civil justice needs that forms the paradigm of this research. Chapter III reports the basic data on the incidence of civil justice problems and considers the seriousness threshold that is fundamental to this type of research. Chapter IV examines the occurrence of multiple problems and the extent to which multiple problems reflect unmet need. Chapter V identifies the varied responses to civil justice problems and Chapter VI examines the outcomes of justiciable problems. The non-legal consequences of justiciable problems; in particular, the physical and mental health impacts are the subject of Chapter VII. Chapter VIII looks at the connection between the experience of civil justice problems and attitudes toward the law and the justice system.

Link to full report: Canadian Study

Measuring Legal Service Value

This article proposes a theoretical foundation for measuring legal service value. It aims to support efforts to compare the value of offerings from different law firms, as well as alternative legal service providers.

The value of any legal service depends on (i) its effectiveness, (ii) its affordability, (iii) the experience it creates for its clients, and (iv) third party effects (the impact the service-provider has on people other than the client).

These four elements of value can be quantified through various metrics applied to firms or entities that provide a given service. Output metrics evaluate either the actual real-world impact of a legal service service, or the written and oral work products of the firm. Internal metrics check for processes or structures within a firm that demonstrably support high value outputs. Input metrics focus on the attributes and credentials of the individuals who provide the service.

This article concludes that measuring legal service value is challenging, and may be dangerous if done poorly. Nevertheless, the rewards justify the challenge. Higher quality legal professionalism, more effective and less burdensome regulation, and consumer empowerment are among the payoffs if we can find better ways to measure legal service value.

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Citation:  Semple, Noel, Measuring Legal Service Value (March 20, 2018). University of Windsor Faculty of Law, Canada

The legal needs of small businesses 2013-2017

The Legal Services Board (LSB) has published its third research report focusing on the legal needs of small businesses and looking at how their views have changed – and the legal services market has responded – since similar research was conducted in 2013 and in 2015. It is the largest ever survey of small firms’ interactions with the legal sector drawing on over 10,000 responses.

This research tracks how an individual or business responds when faced with a problem that can be resolved using legal processes.

Commenting on the report, Dr Helen Phillips, Chair of the LSB, said:

While our research suggests the impact of legal problems on small businesses has decreased the estimated annual cost to the UK economy of their legal problems is still very substantial, at roughly £40bn. More worryingly 20% of businesses reported health impacts for staff from these legal problems, which could affect more than 1m individuals.

There still remains a perception of legal services as expensive – whether or not that perception is accurate – resulting in many businesses either ignoring legal issues or trying to handle them alone. It is hoped that work by regulators and others to implement the CMA recommendations on improving transparency should help address these issues over time.

There are so many opportunities for legal service providers to expand their business if they can tailor their services to what this group of consumers need, raise awareness of their services and overcome perceptions of high cost.

Key findings from the research include:

Business problems have declined in incidence

  • Around a third of small businesses had a legal problem in the preceding 12 months. This represents a fall from 36 percent in 2013 to 31%
  • The most frequent issues across the three waves of the survey are:
    • late or non-payment for goods or services provided
    • goods and services not as described, and
    • liability for tax owed.
  • Around half of small businesses reporting a legal issue said it had a negative impact
  • Total annual losses to small businesses due to legal problems is estimated at £40bn, and over 1 million individuals in small businesses suffered ill health.

Engagement with legal service providers remains limited

  • There has been a significant increase in the proportion of small businesses doing nothing when experiencing a problem (10%)
  • proportions adopting strategies including handling alone (50%) or using an advisor (24%) have changed little between 2013 and 2017
  • Less than one in 10 employed in-house lawyers or had a retainer. When advice was sought, accountants were consulted more often than lawyers
  • For those that did use a lawyer, 22% shopped around to find a provider. 50% of those who shopped around found it easy to compare different providers.

Views on cost effectiveness of lawyers have not improved

  • Just 11% of small businesses agreed that lawyers provide a cost effective means to resolve legal issues – this is down from 14% in 2015
  • Satisfaction that law and regulation provide a fair trading environment increased from 30% in 2013 to 44% in 2017.

See the full report

Access to Justice: Looking Back, Thinking Ahead

This Article seeks to assess our progress and reassess our goals concerning access to justice. It begins in Part I by summarizing the nature of the challenge. Although there is much we do not know about the scope of the problem, the data available suggest a shameful inadequacy of services for the poor and a declining commitment of federal funds to address it. The remainder of the Article explores the most plausible responses. Part II reviews the role of technology, self-help, and nonlawyer services. Part III analyzes the extent of pro bono contributions and what can be done to increase them. Part IV surveys the evolution and contributions of public interest law, and how best to support it. Part V concludes with an agenda for reducing the justice gap. It argues for greater involvement of legal educators and practitioners in expanding understanding of the problem and supporting the most cost-effective solutions.

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Citation: Rhode, Deborah and Cummings, Scott L., Access to Justice: Looking Back, Thinking Ahead (September 29, 2017). 30 Georgetown Journal of Legal Ethics 485 (2017); UCLA School of Law, Public Law Research Paper No. 17-31. Available at SSRN: https://ssrn.com/abstract=3045369

Focus on…ABS investment activity

A major aim of the introduction of alternative business structures (ABS) in England and Wales was to allow new forms of capital into regulated law firms to improve market efficiency.  Enabling external investment in law firms was designed to allow less reliance on short term sources of financing such as personal debt and overdrafts.  The expectation was that the admission of new capital would increase competition and reduce the cost of legal services, to the benefit of the regulatory objective of access to justice.  In turn reduced cost should improve access to legal services translated through lower prices, as cost –perceived and actual – is a key barrier to accessing legal services for individuals and small businesses.

However, investment in law firms remains an under-explored area of research.  To address this knowledge gap, the Legal Services Board (LSB) commissioned a piece of research to identify current sources of capital and establish how the investor community views the market and any barriers to investment.

Key findings of the report

The research showed:

  • The majority of ABS firms (66%) either have already invested (in themselves) or are planning to do so, since they gained their ABS licence. These investments have mainly been made to hire more staff, increase marketing activity or to purchase IT.
  • Overall, 52% of ABS had made an investment in their business since obtaining their licence, and 14% are planning to do so. Although only limited data is available about investment by non-ABS entities, where it exists it suggests that a greater proportion of ABS make investments than non-ABS entities.
  • ABS firms access a wide range of sources of finance, and only a small proportion of ABS indicate difficulties in accessing finance. The most frequent source of funding for investments was business profits or cash reserves, which were used by 49% of those who had invested in their business. Just over a quarter of investments were solely funded using a loan from a bank, and a quarter were solely funded using the business’ overdraft facility.
  • External sources of equity finance accounted for only a minority of investment funding sources either as the sole or joint source of investment funds, and only 12% of ABS had used any form of external finance.
  • According to investors, the legal sector is seen as a ‘sleepy’ market with opportunities for investors to grow their investment capital by improving efficiency within the business itself. Investors appear to have concerns about the ability to exit the legal sector once their investment has matured.
  • Except perhaps in the personal injury sector, it would appear that bank lending is a substitute for external capital. For the firm this means they do not have to cede ownership control of part of their business. In addition, there is a view that many firms do not present financial information in the ways investors expect and/or have a weak grasp of the value of their businesses.
  • Only 6% of ABS identified some aspect of legal services regulation that prevented them accessing finance. Nor does the cost of legal services regulation appear to be a barrier.
  • The low level of external investment seen to date may be a symptom of weak competition in the market overall, as found by the Competition and Markets Authority market study, LSB’s Market Evaluation and the joint SRA/LSB research revealing that levels of innovation are only increasing slowly.  In the absence of strong competition, there is little impetus for law firms to take the greater risks (and rewards) involved with using external capital. Until these incentives change we may not see significant growth in the use of external capital by ABS firms.

You can read the full report on the LSB’s website.

 

 

 

 

Vulnerable consumers

A qualitative study of how consumers with mental health problems and dementia experience legal services published by the Legal Services Board (LSB), England and Wales.

Why is this research important?

The LSB has a strategic objective to reduce the existing high levels of unmet legal need. Ensuring the needs of vulnerable consumers are understood and addressed is key to delivering legal services that everyone can access and trust. This research opens a window on the experiences of two specific groups of vulnerable consumers.

Why undertake this research?

Large and increasing numbers of people have mental health problems or dementia. It is estimated that one in four people is likely to experience a mental health problem during their lifetime. There are around 850,000 people in the UK with dementia, which is expected to reach 1 million by 2025. We also focused on vulnerabilities linked to mental health problems and dementia as these were areas identified during the scoping phase of our project as having less of an existing evidence base.  The LSB commissioned 60 in-depth interviews across England and Wales with individuals with either mental health problems or dementia (or their carers). All the participants had used, or tried but failed to use, legal services in the preceding 18 months.

All of the relevant outputs of this research and further background to the project can be found here.

Opportunities for law firms to tackle unmet legal need

The opportunities for law firms to reach out to potential clients are outlined in a new paper published by the SRA.

Improving access – tackling unmet legal needs outlines some of the barriers faced by the public and small businesses when they need legal services. It also details ways in which law firms can develop their businesses to address this gap in provision.

Research has shown that only one in ten people or small businesses ask solicitors or barristers for help. Among the barriers people said stops them seeking help from professionals are a lack of information on what is available and perceptions of high costs – with 83 percent of small businesses believing services will be unaffordable.

Many law firms are however already finding ways to bridge the gap, and the SRA is changing the way it works to help more solicitors provide new services in new ways. They have published proposals for the next stage of their Looking to the future programme, which should give firms more flexibility in the way they work.  And they are also working on proposals endorsed by the Competition and Markets Authority (CMA) to find suitable ways for firms to publish more information about their work and prices, if appropriate.  Read the SRA’s response to the CMA’s report and recommendations here.

Crispin Passmore, SRA Executive Director, Policy, said: “We regulate in the public interest, so it makes sense that we do what we can to help the public access the legal services they need. We have already made changes that make it easier for firms to offer accessible and affordable services such as unbundling services, firms reorganising their structures, helping clients that are more vulnerable and taking on more pro bono cases.

“This report looks at some of those examples in more depth, and looks at the ways in which we can play a further role in helping the profession connect with potential clients. That includes freeing up solicitors to work wherever they want, including in businesses outside LSA regulation, and exploring the options on publishing more detailed information about our firms.”

Improving access – tackling unmet legal needs is a supporting paper for the SRA’s Risk Outlook.