Demand and Supply of Justice
“Justice is open to all; like the Ritz hotel“
It’s hard for folks to find a lawyer at a budget price, even when many lawyers are sitting jobless. In other words, the marketplaces for lawyers are not working well. This is bad for everyone and makes all of us poorer in terms of access to justice.
Not everyone who needs a lawyer is hiring one. Or state differently, the demand for legal services is smaller than what it should be. As per the Legal Transformation Institute: “50% of US consumers have at least one legal event per year but only 20% of them use a lawyer”. According to one estimate from the same organization, the untapped value of this market is north of $45 Billion. It states that “There are 23 million small businesses in the US. Roughly 7 million did not seek the help of a lawyer when presented with a significant legal event. Those that did get legal help, report that they spend on average $7600 per year. This creates an untapped market (the 7 million who avoid lawyers) equal to roughly $45 Billion.
In the supply side, there is excess of legal services. There are about 1.3 million lawyers in the USA (American Bar Association, 2015). Many lawyers are jobless. The joblessens has been growing for the sixth year to 1 in every 6 lawyers (National Association for Law Placement, 2015).
So why is there a disconnect?
First, getting legal help is pricey for many consumers or small businesses. People do not seek legal help to avoid a large bill. Consider the case of a software startup seeking to sign an office space lease contract or bringing on-board a computer science graduate who requires work visa in the USA. In Seattle area, an immigration attorney can cost any where between $300 to $450 per hour and visa packages are around $5000 to $10,000 per case. Any follow up work will cost extra. Long term costs add up quickly. So pursuing legal help is an expensive decision which leads companies to perform suboptimally.
Secondly its difficult and takes a lot of time to get legal help. One of the key aspects is finding a lawyer one can trust. The process begins by searching on Google or asking from your social circle. It’s difficult to find trusted reviews and ratings for an attorney.
Setting an appointment is another lengthy process. There is back and forth in explaining the problem to the attorney’s staff to see if the case matches attorney’s practice areas. New clients hesitate to discuss sensitive case details. The are not sure if the conversations over the first phone call enjoy the attorney client privilege. Setting an appointment is done during office hours. This can be tricky for people working full time. Legal offices lack are not tech-savvy. Email responses are delayed. Online appoints are usually missing.
Why are lawyers so expensive?
A recent law review article states: “The typical legal services consumer in the U.S. makes approximately $25 per hour, and is priced out of the services lawyers provide even at low attorney rates of $125-$150 an hour.” The “2013 Laffey Matrix” from the U.S. Department of Justice states that attorneys can be charging as much as $245 per hour. The market reality is that attorneys can charge up to $500 per hour.
Accordingly to LawCrossing.com, law offices have operating expenses eat up half of the incomes. These are things like the lease for office space, marketing costs, maintaining a staff, the internet and telephone connections, courier fees, and the cost of office equipment like fax and copier machines
The question is: if the expenses can be cut, can the price come down? And more people can get justice?