CBA Record November-December 2022

Chicago Bar Foundation Report

How Did Legal Services Get So Unaffordable, and What Are We Going to Do About It? By Bob Glaves, CBF Executive Director O ver the past 50 years, our country has gradually gone from a time when the average middle-class Some suggest that the huge jump is a major factor in causing legal services to become less affordable. There is no ques tion it has some impact (not least the psychological effect on lawyers as they consider career options). However, the

that fundamentally changes the afford ability equation. To be clear, the high cost of law school and the resulting debt burden on most new graduates have many negative conse quences for the legal profession, the legal market, and our society more broadly. Addressing this issue is a priority, but its direct impact on the affordability of legal services is relatively small. In the 50-year span that the affordability problem developed, the size of the middle class in our country has shrunk, from an estimated 61% of the population in 1971 to closer to 50% today (with a relatively even mix of some moving into the upper class and others falling into the lower income group). And people in the middle class, particularly on the lower end of the middle-class spectrum, increasingly are feeling squeezed, with the recent spike in inflation only adding to that dynamic. These trends suggest a need to invest in more subsidized models to affordably serve people on the lower end of that middle-class spectrum. However, that still leaves a huge market in Illinois and else where that, with notable exceptions, is not well-served by the legal profession today. According to a study from Pew, the mid dle-class group in the Chicago area ranges 2. Squeeze on the Middle Class Rating: $$

person or small business generally could find affordable legal services, to today, where everyday people struggle to afford legal help and lawyers often joke that they could not afford their own services if the need arose. I have written about this issue before but in this article will take a closer look at the main causes of this problem. I’ll review five overarching factors and rate each on an admittedly qualitative scale of one-to-three-dollar signs to signify the degree to which it drives the unaffordabil ity trend. These factors include the spike in the cost of law school; the squeeze on the middle class; the billable hour; often antiquated and overcomplicated court systems; and a broken market for regulat ing legal services. It is hardly news that the cost of law school—and the cost of higher educa tion generally—has exploded since the early 1980s, to where it is now about three to five times the cost in real dollars today. That translates into an average debt burden for new law school graduates of about $160,000 today, with many owing much more. 1. High Cost of Law School Rating: $

actual impact on the cost of legal services is not what many initially believe. If we assume, reasonably, that graduates today are saddled with $100,000 more in debt than they would have been if college and law school costs stayed closer to the rate of inflation, that translates into an extra $1,000 per month they need to repay on a standard 10-year repayment plan. Yes, that is a lot of extra money to build into a budget. But if we assume the lawyer is like most billing by the hour (a much bigger affordability factor—see below) and assume conservatively they are billing and collecting on just 12 hours a week, that only adds about $20 an hour to the cost of the services. Again, not insignificant, but not the kind of money

14 November/December 2022