Higher demand, lower supply? A comparative assessment of the legal resource landscape for ordinary Americans.

• Author: Hadfield, Gillian K.
• Position: 2008 ABA Section of Litigation Access to Justice Symposium

Introduction I. The Micro View: Comparative Civil Legal Needs Surveys II. The Macro View: Comparative Legal Resources Conclusion INTRODUCTION

Lawyers don't like numbers--as I often joke with my students, that's why they choose to go to law school. Kidding aside, however, the relative discomfort with numbers among lawyers individually adds up professionally to a slim empirical base on which to assess how well American lawyers are doing what they promise the public they will do: deliver legal services with competence and in the public interest. Even for the well-heeled client--the corporation that enjoys the services of our largest and most sophisticated firms, the ones to which the best and the brightest from our law schools flock--hard numbers on what legal services cost and what fraction of that cost is for real value are few and far between. For example, we have little systematic data on legal costs, and essentially none showing the relationship between expenditures and results.

Assessing the legal landscape for the ordinary citizen who has sporadic contact with the legal profession is a game played mostly in the dark. What little data there is tends to be focused on the corporate legal services market which has money to spend on such information: hourly rates for the largest corporate law firms, for example, are now surveyed annually and published in the American Lawyer Magazine and National Law Journal. The American Intellectual Property Lawyers Association publishes data on the total cost of I.P. litigation. Proprietary studies by legal consultants such as Altman-Weil (recently absorbed by American Lawyer Media) and Hildebrandt International provide data that law firm managers and general counsel can use to assess their own management practices, billing rates and profitability. Even when these studies purport to investigate the cost of legal services for non-corporate clients--individuals in need of family law or employment representation for example--the data quality is significantly inferior. For example, the Altman-Weil survey for 2005 reports average hourly rates for partners in General Business based on responses from 567 lawyers; for Family partners the average is based on responses from 34 lawyers. (1) Labor-Management partner averages are based on 224 respondents; Labor-Union on 25. (2) That implies the margin of error on the averages reported for family lawyers or union-side labor lawyers is much bigger than that reported for lawyers providing general business advice or advising management.

Systematic efforts to assess how well the legal markets and institutions that American lawyers (together with the judiciary) claim they have exclusive authority to structure, serve, and regulate are few and far between. In 1994, the American Bar Association ("ABA") released a study of the extent to which poor and moderate-income households experienced a legal need--defined as a problem that could be addressed by the legal system--and how often those with a legal need sought the assistance of a private practitioner or legal aid lawyer. (3) A proposal to update this study in 2005 was rejected as unnecessary and too expensive. (4) As a substitute, the Legal Services Corporation ("LSC") reviewed nine state studies of legal needs of the poor, documented the extent to which LSC-funded providers had to turn away requests for assistance, and calculated the number of legal aid attorneys in the country. (5) Also in 2005, the ABA published a study on pro bono work, which concluded that American lawyers on average provide thirty-nine hours a year of pro bono services to the poor. (6) That is a little over 2% of all legal effort.

Not only are there few studies of the performance of the legal system for non-corporate clients (the distinction Mare Galanter draws between "natural" and "artificial" persons (7)), those that exist are almost uniformly focused on the delivery of legal services to the poor as a form of charity or welfare assistance. While obviously of high significance, assessing only this segment of legal markets is a bit like assessing the performance of the U.S. health care system by asking only how well Medicaid and free clinics work. It treats the issues of access and cost for citizens as if they were entirely questions of the appropriate levels of charity (pro bono) and welfare spending. But the vitality of a market democracy premised on the rule of law depends on more than minimal provision for those in desperate need at poverty levels of income. And it depends on more than the quality and cost of services available to corporate and other large entities. (8) It depends on the success with which law manages to serve in fact--not merely on the books--as the fundamental organizing principle of the institutions and relationships of the ordinary citizen. Is law routinely available, for example, to consult before deciding how to choose between market options, or to evaluate how one has been treated in a relationship governed by legal principles? Or is law merely alive in moments of crisis? We know that even in those moments of crisis--the impending loss of a relationship with one's child, the loss of one's home to foreclosure, bankruptcy in the face of impossible medical bills, or grievous injury in an accident--our legal system is not committed (as it is somewhat half-heartedly committed in the case of a felony charge) to ensuring that an individual is fully able to participate in the systems that will manage this crisis. But what of the everyday life that falls short of crisis, that sets the path on which a crisis may occur or may be averted? We live in an everyday world that is, in fact, flooded with law--how our children are supposed to be treated in school, what lenders are supposed to tell us when they sell us a mortgage, when our employers can and cannot change our conditions of work or pay, what is fair play in consumer markets, and so on. Every time we sign a document, click a box that says "I Agree," enter a retail shop, or get on a local bus we navigate a world that is defined by legal obligations and rights and, importantly, one that assumes that the ordinary citizen who moves in this world is doing so as a functioning, choosing, legal agent. Should that citizen end up in a crisis that requires more active use or response to the legal system--filing or responding to a lawsuit or enforcement action--she will inevitably be treated as if she functioned with this kind of legal agency on the path that brought her to this point: bound by the contracts she "agreed" to or the risks she was given "notice" of or the legal consequences of the actions she took in caring for her children.

We know that in the corporate client world, this is how the relationship with the legal system operates. Most corporate work is before-the-fact, everyday advice on what contracts to sign, which regulations apply, how conduct is likely to be interpreted by enforcement authorities or, in the event of litigation, what the options are for modifying the extent of legal liability, how to manage a dispute before it becomes a lawsuit, and so on. But for ordinary citizens in the U.S. there is almost no functioning legal system in this ex ante sphere. This has implications not only for the probability of a crisis down the road that the legal system will have to address--with or without legal services made available to the individual in crisis--but, fundamentally, for the extent to which it is realistic to look at our elaborate legal and regulatory structures as effective organizing principles for everyday relationships. That can have implications far beyond the consequences for a single individual, reaching into the efficacy of our legal systems and the rule of law as a whole.

Consider the recent economic crisis. Among the many interacting factors that led to the collapse of the sub-prime mortgage markets--and the banking system that was heavily invested in securities collateralized by sub-prime mortgages--were the sub-prime mortgage agreements entered into by millions of ordinary Americans. In 2006, Lauren Wills presciently documented the complexity of these mortgages, particularly refinancing agreements and the utter failure of these markets to do what competitive markets are supposed to do, namely to match buyers' demands with sellers' offers. (9) As she noted, it is almost impossible to determine the true cost of these complex contracts and equally difficult for an ordinary homeowner with sub-prime credit to either evaluate what they are taking on or to compare across competitive providers. As a result, markets failed: people took on risk and obligations they could not afford and competition was ineffective in weeding out excessive or even abusive contract terms. (10) This is market failure on a massive scale with enormous consequences for the entire economy, and is traceable to legal failure. That failure arose from reliance on complex legal rules which purportedly govern the relationship between lender and borrower on paper, but which in fact are largely ineffective on the ground, because of the complete absence in the individual consumer market of the kind of upfront contract review and advice that is routinely obtained in legal markets for corporate clients. Systemic failure of our ex ante legal advice markets for ordinary citizens has now precipitated millions of crises for individual homeowners and borrowers, with huge demands for back-end legal assistance in renegotiation of mortgages and management of foreclosure and bankruptcy processes. We can expect that few of those individual crises for ordinary people will be managed with legal assistance. As a result, the foundation on which our complex financial institutions and systems are built--globally--may well rest on a fundamentally lawless and unpredictable footing.

But concretely, we can say little about just how lawless this footing might be. Empirically, we...