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Access To Justice: Spending Impact

Have you considered how few Americans can really afford a lawyer when they need one?

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I recently moderated a panel at Elevate by LegalShield where one of the speakers mentioned the statistic that the average American only has $500 in savings. This was not the first time that I have heard this figure and of course, it’s not enough to hire an attorney to do much. And, do not get me wrong, we do have an access to justice crisis with those below the poverty line and eligible for legal aid. However, this savings statistic includes the middle class. I was reminded of something that my husband once said about why some cannot make ends meet, “It’s not the people that make less; it’s the people that spend more.”

I did a little research into spending and debt in the United States and found that the average household credit card debt is about $16,000 and is paying $1,200 in interest per month. Coincidentally, I recently put a large purchase of about $14,500 on my credit card and received the following information on my statement:

If you make no additional charges and each month you pay only the minimum payment of $145, you will pay off the balance shown on this statement in about 27 years, and you will end up paying $34,825!

That means if you borrowed the money for a comparable legal bill, using your credit card, it will take you almost three decades to pay it off using the minimum payment approach. And $15,000 in legal fees does not buy you too much these days in many cases.

Further, the total debt per household, which includes mortgages plus student and auto loans, is about $132,529 with the median US income at $52,250. The cost of living has been outpacing the growth in the median income. Over the past 13 years, medical costs have increased by 57 percent and food and beverage by 36 percent yet earnings are only up 28 percent. Mortgage debt by itself has grown from an average of $159K per household to $172K over the same thirteen years.

These short-term and long-term debts are crippling the ability of citizens to save for emergencies, whether medical or legal. and also for retirement. According to Motley Fool, approximately 40 percent of Americans say that they do not make enough money to save for retirement; 10 percent don’t think they need it; and another 25 percent struggle to pay bills, while 10 percent used their retirement for an emergency. Again, it’s about not spending in order to save.

It is almost impossible to hire a lawyer with $500 in savings, it is possible to pay for legal insurance or a legal plan with less than $25 per month. Although, I do not truly believe that our society will just stop spending and start saving. However, lawyers are then left with downward pressure on rates and pricing, knowing that many cannot afford them or will go into severe debt funding their matter. Alternatively, we can design other legal services models and increase the use of paraprofessionals and legal plans. Every little bit helps. #onwards.

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Mary E. Juetten lives on the West Coast, runs Juetten Law, and is both an American and Canadian professional accountant. Mary is passionate about metrics that matter and access to justice. She founded Traklight and Evolve Law and consults as an Access Advocate for LegalShield. You can reach her by email at info@traklight.com or on Twitter: @maryjuetten.

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