Eighty percent of low-income Americans, and roughly half of middle-income Americans, face their legal problem without a lawyer. This "justice gap" means families face eviction, debt collection, foreclosure, and wage theft, among other problems, without something that has become a necessity today to help navigate the legal complexities of the culture: a lawyer. Despite the need, for all but the wealthiest individuals and companies, who too often use their ability to afford an attorney as a way to gain a strategic advantage over an opponent, access to a lawyer is simply an unaffordable luxury. There is thus high demand for the services lawyers render, but those services are often out of reach of the average consumer.
According to Harvard Business School's Clayton Christensen, author of "The Innovator's Dilemma," the bible of companies that believe they are cutting edge, the legal services market is primed for what he calls "disruption." In Christensen's view, the innovator's dilemma unfolds when existing companies (incumbents) sell a product that is out of reach of a large segment of the market; often, the product those companies offer contains more features than the average consumer wants, which means it is often more expensive than what that consumer is willing, or able, to pay. When that happens, new entrants into the market begin to offer cheaper versions of the product that are more in tune with actual consumer demand. New entrants will enlarge their market share as they figure out how to improve their product to the point that they displace the incumbents.
In the market for legal services, companies like LegalZoom and Nolo are harnessing new technology--mostly the internet--to provide low-cost services that look a lot like lawyering, at a fraction of the cost of what a typical lawyer would charge. But those companies, and others like them, are beginning to face challenges from consumers and lawyers who believe those companies are engaged in what is known as the "unauthorized practice of law": i.e., they are charged with offering legal services without the protections afforded consumers who engage the services of a lawyer, like the quality control function that admission to a state's bar plays, and the mechanisms for lawyer discipline that each state's courts employ. While these disruptive companies seem to be turning a profit, others before them, like We the People, have not had sustainable business models because, it turns out, it is costly to provide legal services after all.
Despite the fact that these companies are facing challenges to the legitimacy of their business models, they are having some effect on the market for legal services. To date, much of the focus of the impacts disruptive companies are having on the legal services industry is on the potential ramifications for Big Law: the large firms that serve the high end of the market for legal services.
Indeed, some lament the disruption that is taking place on that segment of the market, forcing firms to cut back and play closer attention to their bottom line. But if we are to believe Christensen's theories of disruptive innovation, true disruption of the legal services industry will happen first on the "low" end of the market: where low- and middle-income individuals and families need, but all too often cannot afford, lawyers.
It would appear that the true disruptors of the legal services industry are actually non-profits, organizations that have harnessed the internet to deliver no-cost legal assistance to people of lower income. Why these organizations, like ProBono.Net, are able to function under existing rules governing the legal profession, and not run afoul of charges of unauthorized practice of law, is that they do what the rules have always allowed: they provide critical information to individuals and families that helps them represent themselves. Other services, like LawHelp.org, help link low-income families to lawyers who can represent them free of charge.
Together with my co-authors, in a recent paper, we explore some of the key issues surrounding disruption in the legal services industry. Most importantly, we discuss how disruptive innovation in the market for legal services, as exemplified by these non-profit groups, can expand the reach of legal assistance to those millions of Americans who generally do not have access to a lawyer.
There is, no doubt, a desperate need for low- and no-cost legal services for these millions of Americans who face their legal problems without a lawyer. Perhaps, then, disruption in the market for legal services may just have some benefits. And the enterprising lawyers who figure out how to deliver affordable services through disruptive technologies (in a way that is consistent with the rules governing the legal profession) may have a massive market segment available to them, one that, at present, is largely underserved.
Disruption in the market for legal services may offer a way to close the justice gap for communities and individuals underserved by the present--and expensive--modes of delivering legal services in the United States. Perhaps it is something that should be embraced, not lamented.