What Does the Data Say? We Need to Do Things Differently!

Lawyers used to be able to wrap themselves in cloaks of thought experiments.  Their worth could be measured by the number of permutations of ancient principles of law they could apply to complex hypothetical situations.  Their stock in trade was words, not numbers or data. Not anymore.

The world is so complex now, and data is so prevalent, that numbers are a lawyer’s best friend.  We would be well-served to garner and analyze data to understand what’s going on in the legal profession and fashion solutions to better serve our clients and potential customers.

The Data Says: Court Filings are Down

A big data point we need to understand is why lawyers aren’t filing cases in court as often as they once did.  The “Landscape of Civil Litigation in State Courts,” a 2015 study published by the National Center for State Courts (NCSC) compiled data from over 925,000 cases disposed of in state courts in ten large counties that encompass major U.S. cities, including Chicago. The NCSC researchers identified 228,000 cases disposed of between July 2012 and June 2013 that resulted in a non-zero monetary judgment.  The median judgment amount was only $2,441.  Unsurprisingly, given that judgment amount, only 24 percent of cases had attorneys representing parties on both sides of the dispute.  In other words, three quarters of the cases involved a self-represented litigant.

Here in Illinois, as reflected in the Illinois Supreme Court Annual Reports, civil filings have declined 32% over the last 20 years, from 634,000 to 430,000. (Since 2009, the number of civil filings has dropped almost 46%, from 791,000 to 430,000.)

data cost of filings

 

Yet, there are not fewer people or potential customers of legal services.  Over the past two decades, the Illinois state population grew from 11.9 to 12.8 million people.

And self-represented litigants are rising in Illinois as elsewhere.  According to the Illinois Supreme Court Commission on Access to Justice, in 2015, 93 of Illinois’ 102 counties reported that more than 50% of civil cases involved a self-represented litigant on at least one side. In some case types, that number rose as high as 80%.

Much of this is discussed by Prof. Bill Henderson of Indiana University, an expert on the legal markets, in a recent Legal Evolution blog.  Henderson predicts that the volume of state court filings is on significant downward trajectory. “The reason is simple — lawyers won’t file cases where they know, upfront, that they can’t recoup the value of their time.  Further, going to court without a lawyer is a daunting prospect most citizens would prefer to avoid.  Thus, the lower the case values, the fewer the case filings and the higher the volume of default judgments.”

This poses a problem for a system predicated on efficient and fair resolution of problems and disputes for our citizens.  It poses a problem for a profession predicated on delivering legal representation to citizens while also providing an opportunity for smart and dedicated individuals to have a rewarding career.

The Data Says: Citizens Think that Lawyers Cost too Much

We don’t have to draw inferences based on the declining number of court filings and the low judgment amounts. There is other data that shows individuals (as opposed to corporate clients) are not seeking legal services as they once were.  They are turning away from us.

Every five years, the U.S. Census Bureau compiles statistics measuring businesses and their economic impact called the Economic Census.  Comparing the receipts of U.S. law firms in 2007 and 2012 based on “class of customer” data, we can see that law firms’ service to individuals is plummeting.  See this graphic originally posted on Prof. Henderson’s blog:

 

data on dollars spend on legal services

 

Total law firm receipts increased from $225 billion to $246 billion from 2012 to 2017.  But over those five years, receipts from individuals declined by almost $7 billion.

In addition, the Bureau of Labor Statistics compiles data that shows how consumers adjust their spending as the relative prices of goods and services change.  The adjustments consumers make are monitored through the BLS semi-annual Consumer Expenditure Surveys.  Comparing consumers’ spending on legal services to spending on other big items that affect life and future, such as medical care and college tuition, is instructive.

First, the cost of legal services has been generally on a par with medical care from 1987 through 2016. However, the cost of college tuition increased at a significantly greater pace during that time period.

In 1987, legal services made up 0.435% of the CPI-U. (CPI-U refers to the Consumer Price Index for Urban settings; 89% of the US population qualifies as urban.)  By December 2016, the proportion had dropped to 0.245%.

Meanwhile, medical care went from a CPI-U of 4.8% in 1987 to 8.5% in 2016. College tuition skyrocketed from a CPI-U value of .84% in 1987 to 1.81% in 2016.

The change in the CPI-U index for legal services was negative 44% whereas the change for medical care was positive 77% and for college tuition a whopping positive 120%.  Prof. Henderson prepared a graph that drives this all home:

As anyone who has had to pay college tuition knows, the cost of sending our children to college is gut-wrenching.  Yet the research shows that consumers find a way to pay more for college tuition (and medical care) despite rising prices.  For legal services? Not so much.

As Henderson states, “if legal services cannot be delivered more efficiently, ordinary citizens will forego legal services. This is not a prediction; it is a statement of what is happening today. State courts are glutted with self-represented litigants.  At the same time, lawyers struggle to find clients who can support their practice.”

We need to fix this.  Our profession exists to deliver legal services to clients. We need new and efficient ways to deliver legal work. Others who are not necessarily JDs increasingly operate in this space.  Alternatives exist. Technology should be leveraged. Lawyers need to be engaged, to drive the change.

 

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Jayne Reardon
As a prior trial lawyer, Jayne leads lawyers to embrace the transformative possibilities of future law practice. As a prior disciplinary counsel, Jayne is passionate about promoting the core values of the legal profession. She is a graduate of the University of Michigan Law School and the University of Notre Dame. Jayne lives in Park Ridge, Illinois with her husband and those of her four children who are not otherwise living in college towns and beyond.
Jayne Reardon

One thought on “What Does the Data Say? We Need to Do Things Differently!

  1. I agree with most of this. The profession is going to see rapid consolidation, which is already underway, in which fewer providers offer services to the masses at lower costs. Many attorneys will leave the profession as a result. Just my 2.5 cents.

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