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The World Justice Project recently published their annual Rule of Law Index, a comprehensive study of the rule of law in 99 countries. The fourth annual index compares countries in areas such as the absence of corruption, openness of government, and protection of fundamental human rights. Intended for policy makers, academics, and anyone going through post-Olympics international-competition withdrawal, the index provides a comprehensive empirical data set driven by surveys of over 100,000 households and legal professionals. The verdict: America's failure to provide access to justice seriously harms the rule of law here.

The results are in—so how did team USA perform? The index found that, overall, the United States successfully provides its citizens the myriad facets of the rule of law. The index praises our “well-functioning system of checks and balances,” and strong protection of fundamental rights. Compared to the other 99 countries surveyed, the US ranked a respectable 19th overall, putting us on par with France and Uruguay. The performance of America’s civil justice system as a whole was merely adequate: the US is slightly above the global average, ranking 27th out of 99. That puts us in the same neighborhood as Botswana, Slovenia, Chile and Greece. While not awful, this is hardly the sort of quality Americans expect and deserve from their legal system.

But the US underperforms—spectacularly so—in providing affordable and accessible civil justice. In that sub-category, we were ranked 65th out of 99 globally. For reference, that puts us in a four-way tie with Mongolia, Kyrgyzstan, and Uganda. The index notes that, “Civil legal assistance is frequently expensive or unavailable, and the gap between rich and poor individuals in terms of both actual use of and satisfaction with the court system is significant.” Among our regional group (covering North America and the Eurozone), the US was ranked last. That’s behind Bulgaria, for those of you keeping score. (Though we did perform better than Mexico, which was placed in the Latin American regional group.) And among other high-income countries, we're 29th out of 30, ahead of only the United Arab Emirates. Readers of this blog know that the lack of access to civil justice is an ongoing crisis for low and middle income Americans, but still the comparison is shocking. Most Americans would hardly consider these countries our peer group, but the fact is that when faced with a civil dispute, any non-wealthy American might as well live in Kyrgyzstan. But hey, it’s not all bad: our civil legal system is (barely) more accessible and affordable than Egypt’s is!

The take-away from all this is that the high cost (or plain unavailability) of civil legal assistance in the USA has created a crisis in access to justice whose depth would surprise most Americans. The US Olympic team could hardly be expected to succeed using wooden skis in this era of Kevlar and carbon fiber, and the US justice system is failing because it is stuck in the last century. There are many changes needed to bring civil justice within reach of all Americans, but they share a common thread: We need to enable innovation in the legal services industry.  We should allow outside investment, allow multistate lawyers, and allow à la carte legal services—allow some alternative to the archaic guild structure. Innovation could revolutionize the supply of legal services, and pass the savings to consumers. Other countries have embraced (or at least avoided preventing) these innovations, and they are better for it. There’s no medal for access to justice, but it’s something we all deserve.

 

Danny Foster is a Responsive Law intern.

Tuesday, 25 February 2014 10:21

A Model Law Firm Customer Experience Down Under

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A recent article in National magazine by Mitch Kowalski, How to Make a Law Firm Float, provides an in-depth look at the Australian law firm Slater & Gordon Limited. This firm has paved the way for other flourishing law firms around the world by showing them how to run a law firm that provides excellent customer service as well as excellent legal services.

The article emphasizes the focus the firm places on bringing satisfaction to its clients. Potential clients start off their experience at Slaters by calling the firm, where specially trained call center staff will triage their legal problems and decide which of the lawyers in the firm’s 30 practice areas the client should be directed to. This alone is a major improvement over the process for finding legal help in the US. Most firms that handle legal matters for individuals and small businesses consist of a fewer than a dozen lawyers and specialize in only a handful of areas of law. For most Americans, finding a lawyer involves phone calls or in-person visits to multiple law firms. And in each of those calls or visits, the customer has to get in touch with the lawyer who might handle her case to decide whether the lawyer is the right one for her.

When it comes to fees, Kowalski praises the firm on its fixed prices that are laid out based off of the influence of the demography of their clients. Because of the large scale on which Slaters practices—70,000-80,000 inquiries a year—the firm is able to collect enough data about the cost of providing its services to determine flat fees which are low enough to be attractive to consumers while still allowing the firm to turn a profit.

Kowalski emphasizes that “at Slaters the focus is on making the business of law run better. There’s an implicit understanding that quality legal service is a given—and expected.”

How does Slater’s manage to provide quality legal services and quality customer service simultaneously? There are two factors that help it to do so. First, the firm uses non-lawyer expertise for the business side of its operations. Lawyers don’t know how to run a call center, or how to examine customer data to set appropriate fees, but business experts do. Second, the economies of scale from running a large enterprise—Slater’s employs about 1600 people—allow it to provide lower fees than the typical consumer law firm that’s about one percent of its size.

Both of these factors are enabled by Australia’s policy of allowing outside investment in law firms, which the US prohibits. American restrictions on outside investment not only make it harder for lawyers to implement innovative business models, and thus remove the benefits that American clients could see from a firm modeled after Slaters. In a previous blog post, we wrote at length about how outside investment can improve client access. Without outside investment, however, it’s impossible for US lawyers or businesspeople to raise the capital to create a mass-market law firm.

Slater is leading the way for other law firms in the future by implementing the fundamental changes necessary to provide appropriate, helpful services for their clients. By running the law firm as if it’s providing a service (which, after all, it is!), it’s able to better fit those services to the needs of its clients. If American law firms were able to adopted this business model, then the entire legal sector would be brought to a whole new level.  The ABA and state policy makers need to reconsider their long-standing ban on outside investment, for the benefit of all Americans seeking legal help.

 

Saron Berhe is a Responsive Law intern.

Monday, 17 February 2014 19:00

Guest Post on Legal Innovation for UpCounsel

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Recently, we wrote a guest post for our friends over at UpCounsel on Fee Sharing, Innovation, and the Consumer Interest.  You’ll have to click through to read the whole thing, but (briefly) the argument runs as follows:

American Bar Association Model Rule 5.4 prohibits lawyers and law firms from sharing legal fees with non-lawyers, and while this might sound innocuous, in reality Rule 5.4 is hurting everyone who doesn’t have a law degree.  The two justifications often given for the ban on fee sharing (the pernicious influence of non-lawyers and fear about the commercialization of the practice of law) simply don’t stand up to scrutiny.  The most salient impact of Rule 5.4 is that it stifles innovation in the legal services industry – innovation that could provide consumers with more value for their dollar when faced with a legal situation.  Despite successful liberalization of similar rules in other common-law countries like Australia and the UK, here in the US the American Bar Association has refused to even consider relaxing Rule 5.4.  The ray of hope?  An underreported Jacoby & Meyers lawsuit against the states of New York, Connecticut, and New Jersey is still working its way through the court system.  If successful, these cases could overturn the prohibitions on fee sharing and outside investment, giving the American legal services industry a much-needed breath of fresh air - and consumers’ wallets a much-needed break.

 

Danny Foster is a Responsive Law intern.

Richard Zorza has an excellent blog post this week on a new program announced in New York Chief Judge Lippman’s 2014 State of the Judiciary Speech. The Court Navigator pilot program will provide “trained volunteer non-lawyers” to help unrepresented New Yorkers in Brooklyn and the Bronx navigate Housing Court and consumer debt cases. Here at Responsive Law, we have long argued that providing consumers with non-lawyer options for legal assistance is a core issue for providing real access to justice throughout society. We applaud Chief Judge Lippman’s continued efforts to address the legal needs of the most vulnerable New Yorkers.

But even as we cheer, we must also exhort Chief Judge Lippman, and New York as a whole, to push onward. Programs like the Court Navigators should be embraced and expanded, and policymakers should seek other ways to increase consumer choice and access to legal services. In England, for example, litigants are entitled to the assistance of a “McKenzie friend”—someone who may provide support and advice in navigating the case, and crucially, need not be a licensed attorney.  Likewise, New York Senate Bill 427, which Responsive Law has endorsed, would allow New Yorkers to choose non-lawyer representation in housing court cases.  Both of these would provide much-needed legal assistance to those who, unable to afford the price of a full attorney, today must to stand in court alone.  The Court Navigator program is certainly good news, but if it is truly a “milestone in the development of access to justice,” as Mr. Zorza claims, then we have miles further to go.

There's an excellent blog post by Ron Friedmann at Prism Legal arguing for abolishing the prohibition on outside investment in law practices, a position that Responsive Law strongly supports. In a responding blog post, Brian Focht at The Cyber Advocate claims that only bankers would benefit from lifting this restriction, and that those who want to do so are only interested in making more money. It's a common objection, so we'd like to address it here.

Focht writes:

"Most of the people asking for non-lawyer ownership in law firms have a vested interest in the deregulation of the practice of law. Whether they want to be the law’s version of Turbo Tax, or whether they simply want to earn profitable returns out of a law firm’s revenue, how many of them really and truly want to create a better, cheaper, and more accessible law firm? How many of them really want to improve access to justice? How many of them just want more ways to make more money?"

Since Responsive Law's purpose is to speak on behalf of users of the legal system, we are most certainly taking this position as a way to improve access to justice and not as a way to make more money. We've testified numerous times to the ABA and state policymakers about the benefits of non-lawyer ownership. And we're a nonprofit organization, so we certainly don't have a financial stake in the improvement of the system.

The greatest benefit of outside investment won't come from a change in the practice of existing firms. Instead, it will come as other companies, both new and existing, are able to offer law as a consumer service on a scale that solos and small firms—the predominant deliverer of services that the average person needs, such as wills, family law, housing, and employment issues—are unable to offer. For example, a national company could develop training and supervision protocols for lawyers, teaching them how to provide legal services to their clients and providing not only the legal expertise they need, but also letting those lawyers focus on their core competency of practicing law, while letting a corporate office handle the business side of practice.

There is a clear disconnect between the 80 to 90 percent of Americans who cannot afford basic legal services and the growing number of recent law school graduates who currently have no employment prospects. Corporately-provided legal services would bridge this gap and allow the true democratization of law. Consumers would be able to take advantage of economies of scale that do not exist for small firms and newly-minted lawyers would be able to receive training and employment providing legal services at an affordable price.

Concerns that lawyers would shirk their ethical duties under pressure from corporate owners and investors are misplaced. Lawyers in every setting face financial pressures to act against their clients' interests. For example, associates at large firms face pressure to pad hours to meet billable hour goals. However, this financial pressure does not relieve an attorney of the obligation to follow the rules of professional conduct, and neither would financial pressure from shareholders. As an additional safeguard, the US could adopt a version of Australia's requirement that each firm with outside investment designate an officer to be responsible and liable for ethics violations.

Both the UK and Australia have permitted non-lawyer ownership for several years, and have shown that consumers benefit from the innovation it fosters, while predictions of diminished lawyer professionalism have been proven wrong. It is past time for the US to join its international brethren in adopting this reform.