Last year was one of the best ever for the world’s richest law firms. Deals surged. Hiring boomed. Salaries ballooned. First-year associates now make $215,000, and that’s pre-bonus. The median BigLaw partner earns well over $1 million a year.
For most Americans, however, the pandemic has been a legal disaster. The need for legal help swelled alongside rising household debt, unemployment claims, and domestic violence incidents. Even pre-pandemic, most Americans did not hire a lawyer when facing legal problems, even serious ones. The majority of legal problems are met with inaction—a person doesn’t write the will, doesn’t contest the eviction, doesn’t challenge the debt, or doesn’t seek the restraining order.
Then, even when Americans do take action, it’s typically without legal assistance. In a stunning three-quarters of the 20 million civil cases filed in court each year, at least one party lacks a lawyer. When Americans think of the legal system, they imagine “A Few Good Men,” “Perry Mason,” or even “My Cousin Vinny”—lawyer clashing with lawyer in open court. The reality is starkly different.
Like any complex problem, this “justice gap” has many causes. Backlogged courts, dwindling legal aid funding, and growing income insecurity, often due to health care shocks, are all likely factors. But there’s also mounting evidence of another culprit: restrictive rules governing the provision of legal services.
Sweeping rules in almost every state give lawyers a powerful monopoly by mandating that only lawyers can do legal work or own law firms. These rules ostensibly protect consumers by ensuring a lawyer exercises independent judgment, untainted by commercial considerations. But like other restraints on trade, they also predictably constrain the supply of legal help, limit outside investment in law firms, shut out non-lawyer expertise, and drive up the cost of services. Innovative, lower-cost delivery models, whether via nurse-practitioner-like “paraprofessionals” or software, are literally forbidden. With full-price lawyers as their only option, and even inexperienced lawyers charging more than $300 per hour, most Americans are priced out of the market for legal help.
Amidst growing public concern about access to justice, some states have begun to take action to relax the rules and welcome new providers into the system. Who’s leading the charge?
Not “progressive” states like California. Though the Golden State is famous for its history of tech disruption and progressive politics, the California legislature recently passed a bill that shuttered a high-profile State Bar working group tasked with proposing ways to rethink the state’s approach to the regulation of legal services. Fierce criticism from lawyers’ groups was simply too great a political threat to risk even a proposal seeing the light of day. Around the same time, the American Bar Association’s governing body doubled down on the idea that only lawyers can responsibly provide legal services, a protectionist shot across the bow of states considering deregulation.
While other states continue to weigh reforms, the only two states that have actually implemented these justice-enhancing measures are an unlikely red-and-purple-state duo: Utah and Arizona. In mid-2020, the Utah Supreme Court launched a pilot “sandbox” program to allow pre-approved entities to innovate with new business models and services. At the same time, Arizona became the first state to scrap Rule 5.4, a restriction on who can own law firms and profit from legal referrals, and it authorized certain nonlawyers to take legal action, including representing clients in court.
When first announced, these bold reforms drew criticism from both knee-jerk protectionists and good-faith skeptics worried about consumer harm. But the returns, so far, are quite promising.
As of this summer, 57 entities had been authorized in the two states to try out new approaches. Of those entities, about 20 are traditional firms seeking to improve services, with new investment in software or nonlawyer skillsets. Many others are “one-stop-shops” that combine law and non-law expertise. Still others are using a previously prohibited mix of lawyers, nonlawyers, and software to provide services, from low-cost divorces to criminal expungement. And several entities are newly empowered nonprofits using previously-forbidden approaches to help low-income Americans address medical debt or seek protection orders against abusers.
Perhaps most important of all, the reforms do not appear to pose a risk of consumer harm. Data reported by Utah and Arizona indicate that newly authorized entities do not draw a higher number of consumer complaints as compared to regular lawyers.
To be sure, much remains to be tested, interrogated, tweaked, and re-tested. The point is not that these models have succeeded. What’s important for now is that they are being tried at all. Experiments require trials, and trials yield information—which policymakers can then use to refine models and improve results.
Moreover, it is important when evaluating outcomes to recognize that the choice for many Americans is not between a “real” lawyer and some kind of lawyer lite. It is between some measure of professional assistance and no help at all. As it stands, the current system—and the monopoly it confers—fails millions of Americans, consigning them to navigate a complex system, designed by and for lawyers, entirely alone.