Is legal a luxury good?

I recently listened to episode 165 of Law Technology Now. This episode focused on discussing the larger themes that make up the legal profession and what some states, particularly Utah, are doing to reshape how law might be practiced. This podcast got me thinking about how poorly the legal industry actually does at supplying legal services to the those that have a need for them. ‌

Legal services are an over 100 billion dollar industry in the US. However, a 2017 study by the Legal Services Corporation concluded that 86% of all low-income people that experienced a civil legal issue received either inadequate help or none at all. While I have heard that this statistic’s accuracy be questioned, even if that number was closer to 50% it is still be a mind blowing data point. We have a legal system that a large number of people navigate on their own. Why do most people choose to go it alone? Because legal expertise is really expensive—prohibitively so.

Does this mean legal services are luxury goods?

A luxury good is one that demand increases as income rises. This is juxtaposed to necessity goods where demand decreases proportionally as income rises. There are plenty types of law that immediately come to mind as fitting into the luxury goods category (tax, estate planning, corporate law). These generally make sense because they seem to scale with wealth and with organizational complexity. However, the legal issues experienced by low income people may be more like necessity goods with issues like rental housing, health care, and income maintenance being the most frequent issues they face. ‌

The legal market is a diverse mix of issues with a delivery method that is relatively uniform. For the most part, in order to get legal help you have to engage with an attorney. Only certain people can become attorneys after extensive education, testing, training, and paying fees to maintain their right to practice law. All this is done with the aim of protecting consumers from the potential significant negative impacts of bad legal advice. But what if by doing so, we have effectively created a system where the majority of people are actually priced out of the market entirely? ‌

In the legal profession we are encouraged to provide pro bono support to low income people seeking legal services. Many attorneys and organizations do great work and have positively impacted the lives of many people. I applaud and encourage all the efforts to increase pro bono participation in the legal industry. However, my concern is that even if we can greatly increase pro bono attorney participation, can we really put a sizable dent in the number of people that navigate our legal system on their own? ‌

We need a new paradigm for what we consider services that legally can only be performed by a licensed attorney. We already have a developed industry where technology adoption is well suited to create sustaining innovations to better improve our current legal service model for the people that already can afford legal advice. However, we need a wholesale reimagining of how we can deliver legal services to that huge amount of people that are currently priced out of the market. ‌

Utah, California, and Arizona have already started this process. Utah is the furthest along and has already begun to accept proposals for new non-lawyer delivery models in their regulatory sandbox. We need more state regulators to take the same steps at reimagining the legal industry. Hopefully, this is the earliest stages of better solving our access to justice issues and opening up new markets for innovative technologies and business models.

‌To answer my own question then, legal services may both be luxury goods and necessity goods, we just have priced out most people from obtaining the necessity goods.

Let’s transform the legal industry from just the yacht business into a canoe business so less people are stuck up the creek.