The incidental lawyer

The South Carolina Supreme Court ruled this week that LegalZoom’s services do not constitute the unauthorized practice of law. As reported by Greg Lambert at 3 Geeks, LegalZoom’s press release celebrates the news, while also taking pains to note that the company’s documents have been reviewed by the state Supreme Court and that it frequently refers its customers to licensed lawyers for more complex work.

What interests me more than the outcome of the case, however, is that a lawyer (and he’s not the only one) felt compelled to spend time and money challenging LegalZoom in the first place. Think about the practical results that would have followed had this lawsuit succeeded.

A source of legal materials that, by most accounts, is at least adequate for the needs of its customers would disappear from the state, leaving those customers once again with the prospect of hiring a lawyer they know they can’t afford or seeking a lesser alternative (along with a chilling effect on any other business inclined to try the same thing). Would lawyers have reduced their fees in response, to become more affordable to the low-income market segment that LegalZoom serves? If so, it would have been history’s first recorded instance of a supplier lowering, not raising, its prices in response to reduced competition. If there’s a net social benefit here, I’m not seeing it.

What, exactly, are efforts like this designed to achieve? “The protection of the public interest” is the standard justification — even though the public has an equal if not overriding interest in having tools and processes with which to exercise its legal rights, is already protected by the right to sue an incompetent or fraudulent provider in court, and is comprised of adults who presumably can make informed decisions about their own lives with their own money. There’s a subtle but importance difference between “protecting the public interest” and “serving the public interest,” and we’re supposed to be pursuing the latter more than the former.

The likelier explanation, of course, is that these efforts are really trying to protect the interests of lawyers. But I think they’re actually achieving the opposite. Whenever we reflexively oppose “non-lawyer” legal service providers, we’re saying: “There is no place for anyone in this market except lawyers.” But that sentiment is not based in reality. If you believe it, then you ought to take a step back and consider just how incidental lawyers already are in in this market — how far we’ve drifted from the centre of the legal system and towards its periphery. And every time we try asserting our indispensability in the face of reality, we just accelerate that drift.

The American Bar Association, the Canadian Bar Association, the UK’s Legal Services Board, the World Justice ProjectStanford Law School, the Canadian Department of Justice, and the Canadian Action Committee on Access to Justice in Civil and Family Matters are among the groups that have released studies over the past several years demonstrating what a small and shrinking segment of the legal market is actually served by lawyers. A good example is the Department of Justice study from 2007, which asked thousands of Canadians if they’d had a “justiciable problem” over the past three years, and if so, what they did about it:

  • Slightly less than half dealt with it themselves.
  • About a fifth did nothing.
  • About another fifth got non-legal help (e.g., unions, government, friends or family).
  • Less than 12% got legal help.

Given that this survey was published a year before the financial crisis, I don’t see how that 12% figure has improved since then. And it’s not an outlier: the UK survey found a similar result, as only about 16% of small businesses with legal issues turned to a lawyer to help them. According to the ABA, courts across the United States report between 60% and 90% of family law matters involve at least one self-represented litigant. The legal market, viewed in its entirety, is like an iceberg, 85% hidden below the surface. Lawyers have concerned themselves only with the small fraction above water. Everyone else is down there on their own, holding their breath.

We normally use facts like these to illustrate the “access to justice” crisis, and we convene panels in which we sternly lecture the profession and the courts about our moral failure: “Your access to justice is bad and you should feel bad.” And that’s fine. But what these facts should also illustrate is something that we ought to take just as seriously: the “lawyer irrelevance” crisis.

With a few exceptions (principally criminal defence work), lawyers are simply not relevant to 80% to 85% of all individuals and businesses with legal issues. We’re off the table: we’re briefly considered and quickly dismissed. We need to recognize and absorb the fact that a huge amount of legal activity already takes place entirely without our involvement.

And that was the situation before the market began bringing forth new options for legal solutions. We were already peripheral before barriers to non-lawyer entry began falling, before legal technology began making such impressive strides, before LegalZoom was bringing in $200 million a year, before the legal startup sector received $458 million in outside funding last year. One startup I spoke with last month was just the latest to tell me that that its product was designed to “take lawyers out of the equation.” When you consider how few equations we’re already in, this ought to bring us to immediate attention.

Consider what’s going on in the market right now:

  • Australia approved “non-lawyer” law firm ownership a decade ago, England & Wales has issued 300 Alternative Business Structures licences since 2012, and Ontario will soon become the first North American jurisdiction to grapple with this option (aside from Washington State, which has already approved limited-license legal technicians).
  • Computers can now do the following things: draft commercial contracts, review contract provisions, assess electronic evidence for relevance, answer legal and regulatory questions interactively, predict the outcome of negotiations, and partition marital assets in a divorce. What will they be able to do in another five years, or ten?
  • Self-represented litigants are receiving growing levels of institutional support: courthouse kiosks provide them with guidance, lawyers unbundle services to support them through limited-scope retainers, and startups create systems and programs that maximize their ability to get the results they want. Self-representation is becoming normalized.

So let’s say that lawyers serve about 15% of the total potential market, and make a decent living doing so. As a lawyer, you might be satisfied with that: let the other 85% take care of itself, or use one of these alternatives. You’ll continue to serve the highest-level, most lucrative market segment, the small chunk of the iceberg above the water. So what if lawyers are peripheral to the entire market? We’re central to the richest part of the market, the one you care about, right?

Right. But what happens when all these “non-lawyers,” all this technology, all these self-represented litigants and their supporters, get better at what they do? What happens when, in addition to being cheaper than lawyers and faster than lawyers, they start to become almost as good as lawyers? Do you really think they’re not going to look up through the water at the tip of the iceberg and think, “I’d like a piece of that?”

This is what I mean when I talk about lawyers becoming increasingly incidental. A huge amount of legal activity already takes place without us — and what the foregoing should make clear is that that amount is growing. The ability of the legal market to function adequately and competently without the involvement of lawyers is increasing. Deprived of access to the best and most valuable asset available to assist them — lawyers — people have started to look for substitute assets, and where they can’t find such assets, to create them. Those substitutes are now here, and filing UPL lawsuits against them isn’t going to stop the process that spawned their development.

Because too often, that’s how we’ve been responding to what the market is telling us: with hostility, or with arrogance. I’ve lost count of the number of lawyers who’ve chuckled at warnings about “non-lawyer” providers, saying (sometimes literally), “Ka-ching! Every time a client tries to use one of these companies, it just means more business for me when they come looking for help to straighten out the mess they made.” What a selfish, unprofessional attitude we’ve developed: comfortably serving our 15% of the market, blocking the other 85% from accessing whatever help they can get, and smugly feasting off the problems of those for whom even these efforts went wrong. And we wonder why people are looking for alternatives?

But here’s the thing: I don’t believe that lawyers are doomed to the periphery of the market — after all, we used to be central to it. There was a time when we were intrinsic to the enforcement of legal rights and the execution of legal procedures, essential to a functioning market in legal services. But over time, we allowed ourselves to become optional, to become something close to a luxury good — content to serve the most well-heeled clients with the most interesting cases in the most convenient manner. We’re meant to be stewards of the entire legal system, but we’ve confined ourselves to our small gated grounds and let the rest of the property manage itself.

But that is not irreversible. I’ve met too many concerned, creative and compassionate lawyers, and I’ve seen too many praiseworthy change efforts already within the legal profession, for me to give up on lawyers as a universal legal solution. I believe that lawyers can and should serve more than 15% of the market. I believe we can because the tools and the procedures are now available to enable us to offer high-quality legal services more efficiently, effectively, and affordably. And I believe we should because we are still (for the moment) the most valuable and effective resource available for the resolution of legal problems, and it’s wrong for those resources to benefit only a select few.

Maybe not everyone needs the skills and expertise of a lawyer. But everyone deserves the opportunity to find out if they do. Let’s stop fighting the needs of the 85% and start figuring out how we can serve them instead.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.  

And the walls came down

Last week, I had the pleasure of delivering a speech to the Institute for the Advancement of the American Legal System (IAALS), an innovative program headquartered at the University of Denver that addresses reforms to legal education, access to justice, and judicial selection. They had asked me for a presentation that would explain the challenges facing the legal profession today and outline the contours of the legal market of tomorrow.

I thought you might like to read a condensed version of my remarks, which touched upon many issues that I’ve canvassed here at Law21 over the past few years. Considering that this is also my 400th post here, it seemed appropriate to share what amounts to a summary of my views on the legal profession, the legal market, and the legal system.


We face enormous change in the legal marketplace: primarily, the emergence of new competitive and disruptive forces that are mounting increasingly formidable challenges to our traditional assumptions and understandings about legal work. At the same time, we are grappling with a legal and justice system that is not giving anyone much satisfaction, and is in fact giving many people a great deal of heartache. There are numerous disconnects among how things used to be in the law, what they’re like today, and what we wish they would be.

So what can we do? Perhaps not surprisingly, I say we adapt. We need to see the legal world as it is and as it surely will become, and then we imagine what it might be and do everything we can to make that vision real. Our memories, our narratives, our assumptions and expectations about the law — both individual and collective — these are the walls we’ve built around the legal market and around ourselves, and they are limiting our vision. It’s time to lower the walls and let illumination come in.

Let’s begin by seeing the legal world as it is. What are we up against? What are we dealing with? Here are five points to get us started.

  1. Growth in lawyers’ business has stalled. With a few exceptions, law firms of all sizes have seen business slow down, revenues flatline or decrease, and new business become increasingly difficult to find.
  2. Lawyers’ pricing is under tremendous pressure from clients. I mean “pricing” in both a dollar amount sense — rate discounts are multiplying — and as a methodology — flat fees are proliferating.
  3. Low-cost alternatives to lawyers are picking up business. Large firms have seen the rise of law department insourcing and legal business outsourcing. Smaller firms have seen Legal Zoom, Rocket Lawyer and the like target their markets.
  4. A huge glut of unemployed new lawyers is building up. Employment rates for new lawyers in the United States have fallen sharply in the wake of the financial crisis. At large law firms, they’ve fallen off a cliff — down 40% in the last five years.
  5. And finally, although you may not have felt it, an earthquake struck the legal profession earlier this year. Its epicenter was London: it was the issuance of the first licenses to operate what’s called Alternative Business Structures, law firms owned by non-lawyers.

These, at least, are not predictions or suppositions. This is really happening, right now. And it’s happening because of a series of changes to the legal marketplace, both here in the US and worldwide. Once again, I’ll give you five to consider.

  1. A lengthy period of strong economic growth powered by heavy borrowing, interspersed with occasional hyper-growth bubbles and busts, has come to an end. We are not in a “recession,” in the usual sense of the word. We are in a lengthy period of slow deleveraging and weak, fitful growth. It should last at least another five years, and maybe longer, give or take a fiscal cliff, a Euro collapse, or a hard landing for China’s housing boom.
  2. Clients have acquired a potent combination of knowledge, power and urgency. Basic legal information is more widely available today than ever before. Basic legal tools are easily accessible at low cost or no cost across the internet. And clients cannot and will not spend a dollar more than they absolutely must on anything, and most especially on lawyers.
  3. New providers and new technology are starting to enter the market. I mentioned companies like LegalZoom and legal process outsourcers a moment ago, companies in their infancy that have already generated a surprising amount of business. But there’s also new, disruptive technology that can replicate basic lawyer functions and, in some cases, more complex lawyer functions.
  4. Generational change continues. We tend to forget about this — partly, I think, because everyone was talking about the rise of the millennials and the retirement of the boomers, right up until the financial crisis. And then suddenly, we didn’t hear much about work-life balance anymore. But generational turnover continues, and it affects legal organizations of every kind. And let’s not forget: it also affects clients. The cultural values of both legal buyers and legal sellers are slowly transforming.
  5. Finally, the regulatory environment for legal services is changing. Lawyer self-regulation is gone in Australia and it’s gone in England and Wales. In my home province of Ontario, paralegals are members in full standing of the Law Society of Upper Canada, lawyers’ governing body. The United States will hold out against this trend longer than anyone else — except possibly India — but its arrival here is still only a matter of time. Lawyers will be sharing the market with non-lawyers, and I cannot overstate how important that will prove to be.

So where will this lead us? What does the “future of the legal profession” look like? Here are some of the key features I think we can expect in the legal marketplace of the future.

1. Systems and technology will make substantial inroads into the legal market.

Today, if someone asks me, “Can machines replace lawyers?” I’m inclined to say, “Well, only if the lawyer in question isn’t very good.” Now, that’s a little harsh, and it’s not entirely fair — to either the lawyer or the machine. If you were to ask me instead, “Can a machine replace aspects of what lawyers currently do?” —  well, that’s a different question, and the answer in many cases is yes.

Automated contract creation, data-crunching analysis systems, expert applications that answer regulatory and compliance questions, online dispute systems powered by game theory — all these programs are available right now. They are solidly built, they are attracting investor interest, and they are only going to get better as they grow. They do their jobs in minutes, not in billable hours, and they are more reliable and sophisticated than many lawyers would be prepared to credit.

We’re at least 10 years away, probably more, from machines that can completely replace lawyers. But we’re already in the era when machines can displace lawyers — take on some aspects of their work, some percentage of their tasks, bump them aside, jostle into their seats, force them to go do something else. And that percentage is going to grow. I can’t tell you at what rate, or how quickly. It will be different for different markets and different types of work.

But the fact is that a great deal of what most lawyers do is not that complicated. At least some of it can be done by non-lawyers — and in some firms, it already is, by secretaries, paralegals and clerks; in future, it will be done by machines, processes and systems. But in many law firms today, it’s being done by lawyers. It’s what many of the hours billed in the legal profession today consist of — and that is not sustainable. That’s a hard truth. But we need to hear it said.

2. Non-lawyers will have proliferated throughout the market.

I dislike that term intensely, by the way: “non-lawyers.” We are the only profession I know that divides the world into “us” and “not us.” We use that term all the time, and we rarely appreciate how insulting it is to the people thus described.

But non-lawyers are coming. We are going to share this market with them. The sooner we accept that and start working to accommodate its impact, the better. They’re coming because they are proving their abilities and reliability every day. They’re coming because lawyers have claimed too much territory under the all-powerful description “the practice of law,” too many activities that do not require a lawyer’s rare and valuable skill and judgment.

And they are coming because we have done a lousy job of serving the entire legal market. Clients, both individual and corporate, are spending more and more and waiting longer and longer for outcomes that leave them less and less satisfied. And that’s just the people who can afford lawyers and the legal system in the first place. Many people are not even in the game at all.

And that is on us. These problems developed on our watch, under our administration and stewardship of the legal system. They are our responsibility. We have had ample opportunity to rectify them, and as everyone here knows, we have not moved fast enough or far enough. So governments and citizens are going to start saying, “Time to let someone else try.” Time to start putting the “Unauthorized Practice of Law” in the history books. Look at what’s happening in England and Wales, and recognize that eventually, inevitably, it will happen here.

3. The legal profession will be smaller, but also more specialized and successful, than it is today.

I don’t really see a way around a smaller bar. Gradually, year by year, innovations will continue to disrupt the legal profession. The capabilities of providers outside our profession will expand, from lawyers in India to para-professionals in North America to software packages in the cloud. Lawyers simply will not be necessary to accomplish things that required our services in the past.

It’s possible that we may still need more than 1.1 million lawyers in the United States ten years from now. But I don’t see it as probable. What I see as probable is an endgame for a legal education system that is already producing more law graduates than the market can employ and far more than it will need in future. And I don’t see any likelier outcome than that dozens of law schools will find themselves superfluous to the new legal market.

I do think we will need fewer lawyers. But I also think that the tasks those lawyers end up doing will, on average, be more valuable, more sophisticated, more demanding, and more remunerative than they are today. I think that a market will emerge for more sophisticated legal needs, a robust market that needs lawyers to provide counsel, wisdom, advocacy and preventive law services — the fence at the top of the cliff, as Richard Susskind says, rather than the ambulance at the bottom.

This is where I think the modern law firm has made its greatest mistake. It keeps trying to force more and more low-value, hourly-billed work out of a resource — real, live, human lawyers — that is intrinsically intended to provide high-value work. We’re not meant to spend our days filling out documents and conducting basic transactions and providing “commodity” services. That’s not why we went to law school. We’re supposed to be put to a higher, better use. Call me a cockeyed optimist — not many people do — but I believe that in the future legal market, that’s what will emerge.

It’s not just our clients that would benefit from this, nor just the latent legal market that would finally be tapped by a wider, deeper range of fully accessible legal service providers at affordable prices. We would benefit from this. We are professionals, and if you trace that word back to its Latin roots, you’ll find that it comes from the Latin profiteri, “to serve.”

We are a serving profession. We are fiduciaries to our clients, ambassadors of the rule of law, foundation stones for a civil society. Or at least, we’re meant to be, although I think we’ve lost our way a little over the past few decades. But I believe, in future, that’s what we can become again. And we should be a happier, more fulfilled profession as a result, because we’ll be better aligned with our best use and our best purpose.

In the words of IAALS’s mission statement, we need “continuous improvement” in the legal system — constant development, ongoing innovation, relentless efforts to make tomorrow’s reality better than today’s. We need to challenge assumptions, break down walls, illuminate the landscape.

My advice to you, in this ongoing effort, is to look beyond the walls of the legal profession, beyond the boundaries of what we have always taken for granted, always assumed is the normal state of affairs in legal services. It’s not normal; it never really was. As a profession, we need to be prepared to let go of our defenses and preconceptions, to lower the walls we’ve built around ourselves and our clients.

We need to recognize that we’re not the only ones who can help. There are other people, other solutions out there that want to help improve the legal system too. Yes, they’re a little unsteady on their feet. Yes, they’re still getting the hang of it. But they want to help, and they can help — and whether we like it or not, eventually, they will help. If and when they displace us, then it’s up to us to find a new, better place and a new, better purpose.

The only real question is whether we’ll extend our hand, and how long it will take for us to do that, to build the future legal marketplace and reforge our profession at the same time. If we do, then I’m hopeful and confident that that future will arrive a lot sooner than we think.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

Lawyers and the red balloon

Like many parents of small children, I’ve gotten to know Thomas The Tank Engine, and the peculiar universe he inhabits, far too well. As an example, I’ve now read the story James and the Red Balloon so often that I’ve begun to draw lessons for the legal profession from it.

To summarize: among the trains that work the Sodor Island Railway is James, a generally decent but often fussy and sometimes belligerent engine. On this occasion, James is unhappy to learn that a new mode of transportation has come to the island: a big red hot-air balloon. While the other engines admire the new arrival, James is peeved. “Taking vacationers around the island is our job,” he complains. “What if the balloon takes our passengers away? What will happen to us then?” By the end of the (admittedly brief) story, James has brought his grievances to rotund railway boss Sir Topham Hatt:

“But now the passengers will ride in the hot-air balloon.”

Sir Topham Hatt laughed.

“You’re right, James,” he said. “But they will need a ride home — in a train!”

James was delighted.

Sir Topham Hatt was right. The engines were busier than ever taking vacationers to and from the airfield.

On Sodor, as the Thomas stories bear out, change is rarely welcomed — but once everyone understands the situation better, change is accommodated and in the end, usually turns out to provide a net benefit. This is a message aimed at children but that resonates in the grown-up world, where we all tend to resist change despite the fact that eventually, it usually makes things better for everyone.

Few grown-ups resist change as staunchly and successfully as lawyers, of course — we’ve always shot down red balloons as soon as they appear in our sky. That doesn’t just apply to new technology, where we were among the last professionals to adopt email and where many of us still insist that Facebook is just a fad about which 500 million people are sadly misguided. And it doesn’t just apply to new ways of doing business, where we still reflexively feel that selling our work in tenths of an hour is natural and sensible or that 1,000 lawyers in 20 law offices worldwide can call themselves “partners” with a straight face. It applies above all to our approach to the legal marketplace over which we maintain, in most jurisdictions, strict regulatory control.

Lawyers, as a matter of course, restrict the supply of legal services and enforce Unauthorized Practice of Law provisions. We rail against title insurers and do-it-yourself will kits and independent paralegals and downloadable contracts and legal process outsourcers and a host of other low-cost competitors. We say (and we often believe) that we do this to protect the interests of clients and the public — but outside the soundproof walls of the profession, we come across more as protectionists than as guardians with a selfless concern for the greater good. We come across as hostile to change simply because it’s different and threatening.

My point is not that all these new providers and approaches are inherently trustworthy and high-quality. My point is that we won’t so much as let them make their case — even if, over time, they could introduce changes and innovations that make the pie bigger and better for everyone. Take, for example, LegalZoom. Richard Granat at the E-lawyering Blog gives us one of the most arresting titles in recent law blog history: Will LegalZoom become the largest law firm in the U.S.?

LegalZoom has been beta-testing a concept which links its marketing capabilities to a network of law firms that offer legal services under the LegalZoom brand. With some state bar associations accusing LegalZoom of  the unauthorized practice of law, it might make sense for the company to seek deeper alliances with networks of attorneys who are able to offer a full and ethically compliant legal service. Solos and small law firms, leveraging off the visibility and prominence of the LegalZoom brand, could reduce their marketing costs and enable these firms to better capture consumers who are part of the “latent legal market”  on the Internet.

Richard goes on to list the challenges that this concept likely would encounter, and suggests a “safe harbour” provision that would allow experiments like this to operate on a pilot basis in a specific jurisdiction to test their application. Another approach might be to simply launch the service, await the inevitable regulatory challenge, and let the courts decide whether the legal profession’s anti-competitive rules really serve the public interest. But for me, the lesson here is that LegalZoom, a company regarded with contempt by many lawyers, could end up using its considerable brand power to work with law firms, reduce their marketing expenditure and increase their business (not to mention, as Scott Greenfield points out, doing something to improve access to justice). That looks to me an awful lot like a red balloon bringing more passengers to the railway.

Smart companies in mature industries encourage red balloons (new competition and innovative technology) because they see them as a way to enlarge the market, reach more customers and increase everyone’s bottom line. The people at Amazon could foresee the day when Kindle users began swapping their books much like music listeners once traded tracks on Napster. Rather than fighting the trend, they’re now leading it by allowing users to “lend” an e-book to a friend for two weeks. Isn’t Amazon cutting its own throat by encouraging people to read books without buying them? On the contrary, says the founder of a Facebook lending book club: it will increase sales because people will want to own the book they borrowed (e-books can only be loaned once, ever) or weren’t able to finish in the two weeks. Libraries didn’t exactly kill the publishing industry when they first opened up, either.

It’s a pretty sad comment on the legal profession to say that publishing has become a more mature and forward-thinking industry than law, but that’s where we appear to be. If we want to change that state of affairs — if we want to grow up as a market and as a profession — then we need to stop thinking like a selfish train in a children’s story, viewing new arrivals as a threat to our narrow, entrenched interests. We need to find ways to welcome and accommodate the red balloons that are now floating, in growing numbers, into the sky above our heads. Chances are, at least some of them will end up bringing more passengers our way than we think.

Jordan Furlong speaks to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

Solving the wrong problem

The New York Times caused quite a stir last week when it published an article that looked at a third-party litigation funding company focused on the family law market. Balance Point Divorce Funding covers the cost of a party’s divorce proceeding in exchange for a share of what it calls the “winnings.” The article describes the litigation financing industry as one that:

“invests in other people’s lawsuits, arming plaintiffs with money to help them win more money from defendants. Banks, hedge funds and boutique firms like Balance Point now have a total of $1 billion invested in lawsuits at any given time, industry participants estimate. Lawsuit lenders initially focused on personal injury cases, but over time they have sought new frontiers, including securities fraud cases brought by disgruntled investors, whistleblower claims against corporations and property development disputes.”

The business case for these companies is similar to that employed by contingency fee lawyers: take on risk at the outset with no upfront or ongoing financial reward, in exchange for the prospect of a substantial payout at the successful conclusion of the proceedings. The moral case for these companies also borrows from the contingency world: plaintiffs who have a legitimate case but cannot compete with the defendant’s resources have no hope of succeeding in the justice system unless someone supports them at the start in return for a payday at the end. It’s worth noting that contingency arrangements in the law emerged from the personal injury and class action spheres — a long way from property development disputes and divorces. It’s also worth noting that Balance Point doesn’t take cases where the marital assets are less than $2 million.

I’ve written about third-party litigation funding a couple of times before, and it should be clear from those entries that I’m not a big fan. But it’s difficult on its face to argue with the legitimate plight in which Balance Point’s clients, mostly women, find themselves:

Her customers fall into a pattern. They are women. They generally do not have jobs. They often are raising small children. And their husbands run their own businesses, making it tough to obtain financial information. A stay-at-home mother with three children spent 16 months trying to compel her husband to produce current financial statements for his solo law practice. She was running out of money when Balance Point agreed in August to provide financing.

You’d have to be pretty stone-hearted to say that these plaintiffs should be deprived of any form of assistance they can find, and I’m not advocating that these sorts of programs be outlawed. But I do contend two points. The first is that third-party litigation funding, especially in family law, is based on a fundamental misunderstanding of what a lawsuit actually is, a misunderstanding that has dire implications. And the second is that third-party litigation funding is the wrong solution to a very real problem, and if lawyers don’t fix that problem, someone else will fix it for us.

Third-party litigation funders refer to their clients’ lawsuits as “investments.” That is an accurate description only in the narrowest sense of the word: sending my children to school is an investment too, but it’s not one I’m counting out dollars and cents to quantify. The problem with treating lawsuits as financial investments is that it treats a lawsuit as a means to an end, not an end in itself: the lawsuit’s value is stripped of its human component and reduced to a competition, a calculated wager that one side will do better than the other. This, as Immanuel Kant and his Categorical Imperative would tell you, is actually profoundly immoral.

A lawsuit is the operational expression of a serious interpersonal conflict, usually marked (especially in family law) by great physical or emotional misery for the people involved. Ripping that lawsuit from its human moorings and treating it purely as a financial vehicle is literally a dehumanizing act, one that disregards the law’s primary function of facilitating the resolution of personal conflict by peaceful and orderly means. We’ve always been worried about the monetization of court proceedings by disinterested third parties; it’s why we came up with the rules on champerty and maintenance, and we carved out a very clear exception to those rules to make contingency fees possible. And even then, as we know, there are some lawyers whose ethical failings draw them to contingency arrangements that abuse the system and the parties. Bringing a stranger into a lawsuit is an extremely risky enterprise, and I don’t think we’ve sufficiently considered and answered those risks in the case of third-party litigation funding.

Now, you may agree or disagree with my thinking on this issue, and I’d welcome comments in the section below. But I won’t leave this topic without addressing the second point that these companies prove: access to the justice system is broken, and lawyers must accept most of the blame for that.

The fact that third-party litigation funding is flourishing, bumping up against the basic principles of the justice system, should be a grave embarrassment to the legal profession. These companies are emerging because the price of bringing a problem to and through the court system for a solution exceeds what 80% of the population can afford, and 80% of the reason those costs are so high is because of us: not just the fees we charge for our work, but also the labyrinthine, process-drenched, time-devouring system of justice we’ve created and currently oversee. The justice system works for judges and lawyers, because we made it and we run it and we work in it every day; it demonstrably does not work for anyone else.

Don’t take my word for it: ask Lance Finch, Chief Justice of the British Columbia Court of Appeal, who delivered a speech to the B.C. branch of the Canadian Bar Association in Arizona last month. I wasn’t there, but reading the transcript of his remarks, I can imagine that his audience became increasingly uncomfortable as the address went on:

About 15 percent of all appeals heard in the British Columbia Court of Appeal have no lawyer on one side or the other, sometimes both. Some of these cases are without any apparent merit. But we believe there is a significant number of appeals where there is a meritorious argument to be advanced, that cannot be made or made adequately without a lawyer. And we also believe that at least some of these litigants are unrepresented because they cannot afford the cost of a lawyer, and do not qualify for legal aid or pro bono services. In short, the high cost of legal services appears to be one of the obstacles to access to justice. …

In the access to justice debate, much is said about the cost of litigation, but little is said about reducing legal fees. No matter how much we may all wish to avoid the subject, high legal fees are an issue that must be addressed. I respectfully suggest it is time for the bar to address this question openly. It touches on the legal profession’s ability to remain independent and self-governing, and it concerns the public interest in access to justice. …

Lawyers, as a profession, specifically members of the Law Society of British Columbia, have a monopoly on the practice of law. Section 1 of the Legal Profession Act defines the practice of law and s. 15 prohibits those other than practicing lawyers from the practice of law. The apparent purpose of this prohibition is protection of the public. However, the monopoly enjoyed by the legal profession also has the effect of constricting the supply of legal services. …

I suggest the high cost of legal services is a result, at least in part, of limited supply. It is not related solely to the inherent cost or overhead of providing legal services. … [I]t must be apparent that regardless of the purpose identified for maintaining a monopoly, the effect of the monopoly itself can only be to restrict supply and increase cost. …

The restricted supply of lawyers enables individual lawyers and law firms to choose the best paying (and indeed most interesting) work. Poor paying, or uninteresting, work is left unserved. I do not criticize individual lawyers or their firms for acting in their own self-interest. I practiced law for 20 years in a private law firm. I and my partners and associates wanted to make the best living possible that we could. I am sure that remains the case today, and justifiably so. …

The restricted supply of lawyers in British Columbia is neither the fault nor the responsibility of individual lawyers or law firms. The restricted supply is a systemic failure on the part of the legal profession’s governing body to ensure that legal services are available to all who need them. That is what the public interest demands. And I suggest that is what the profession must deliver.

I commend the entire speech to you; the chief justice makes a series of excellent points. I don’t necessarily agree with everything he says, and I don’t believe that the “supply of lawyers” is the whole story. But without any hesitation, I embrace the notion that our profession restricts the provision of legal services to lawyers, to be delivered on lawyers’ terms, in a system crafted to lawyers’ preferences, and that in doing so we have effectively restricted access to justice. We are the stewards of the justice system, and at least in terms of accessibility to that system, we have not done ourselves proud. Chief Justice Finch is not being alarmist when he wonders aloud whether the day will come when society decides that someone else should be given the steward’s job.

Third-party litigation funding is, at best, a very flawed solution to the problem of access to justice. Aside from its philosophical drawbacks, it’s solving the wrong problem: it assumes that the best way to beat the system is to even the odds, to give everyone enough money to duke it out with expensive lawyers in front of expensive judges in expensive courts. That is not the way to fix the problem. The way to fix the problem is to make the system less bloody expensive in the first place. And if lawyers can’t figure out how to do that, and soon, then I submit that third-party litigation funders will be the least of our concerns.