It keeps growing and growing and growing. That’s our Country’s justice gap – now called a gulf by the Legal Services Corporation (LSC).^[1] The rich get richer, lawyers keep charging high billable hour rates, and the common man or woman is unable to find representation when it’s needed most.

The LSC justice gap report captures the difficult time legal aid agencies and pro bono attorneys have serving individuals making under 125% of the federal poverty line^[2] – over 50% of individuals seeking legal aid representation are rejected due to insufficient resources at these agencies. Private donors and government grants sustain legal aid service models for the lowest end of the market, but these agencies still fall far short of meeting the total demand. Additionally, requirements imposed by donors and grants limit the types of cases these agencies can accept.

What the LSC report doesn’t capture is the experience of individuals making over 125% of the federal poverty line, who don’t qualify for legal aid services and are unable to afford traditional law firm prices (i.e., the billable hour). Generally, these individuals fall between 125-400% of the federal poverty line. They have long existed in the void between free legal services and expensive private attorneys, with no law firm model focused specifically on serving them.

Where are all these individuals going and what representation, if any, are they finding? The vast majority are left unserved or underserved, leaving remarkable numbers of pro se (i.e., unrepresented) individuals in our courts. When these individuals do find legal representation, they often accrue extraordinary debts.

Efforts to Find New Business Models

There is an urgent need then to find new law firm business models that serve this unserved market with affordable, quality legal representation. Attorneys intent on closing the justice gap need to consolidate their efforts behind law firm models with the capability of sustainably serving this market if they ever want to see a report on the entire justice gap with good news.

Luckily, initial efforts to do this are already underway within the many legal incubators that have formed around the United States. The American Bar Association defines legal incubators “as models that enable newly-admitted lawyers to acquire the range of skills necessary to launch successful practices that expand access to legal services for those of low and moderate incomes.”^[3] Some incubators operate much like law firms, as their incubator attorneys all operate under the same umbrella organization. Others are simply networks of start-up law firms that share office space, resources, and the mission of reducing the justice gap.

Chicago’s largest legal incubator, the Justice Entrepreneurs’ Project (JEP), received international recognition for its track record of success after adopting the latter of the two incubator models. It boasts of helping “more than 50 attorneys build sustainable businesses serving this market,” all of whom are tasked with “develop[ing] disruptive, market-based models to improve access to legal services.”^[4]

Disruptive Innovation and the Justice Gap

This gets us to the big question: Are the law firms created through legal incubators truly disruptive in ways that help solve the justice gap? According to Harvard Business School’s Clayton M. Christensen, the guru on disruptive business models, disruptive models start by gaining “new-market” footholds or “low-end” footholds. A New Market Disruptor emerges by serving previously unserved consumers (i.e., a new plane of competition against non-consumption).^[5] In our context, the individuals and families falling within the justice gap are the new market.

To serve this market, one path many incubator attorneys are going down is to simply reduce their billable hour rate for low-to-middle income clients. The value proposition of slightly greater affordability could make a dent in the upper echelon of the justice gap. But in the worst of cases, it can be exploitative, as a reduced retainer fee acts as a foot in the door to unassuming clients who aren’t good at budgeting. Once the hourly rate starts accumulating, these clients are met with an unaffordable attorney fee bill that could take years to pay off.

Incubator attorneys serving the new market learn quickly that using reduced traditional rates leads to delinquent accounts, stifling business growth and sustainability. These firms do not become New Market Disrupters, but instead function as reincarnations of traditional private law firms with less experienced attorneys.

To serve and grow in this new market, it’s not enough for incubator attorneys to offer a value proposition of lower prices. Incubator attorneys also need to evaluate how legal services are made available^[6] , how cases are selected, and what types of services can be efficiently offered to clients by newer attorneys. Many incubator attorneys go in well intentioned to disrupt the market. However, they often lack the experience and skill sets to learn how to be practicing attorneys while simultaneously implementing disruptive and sustainable business models.

Recommendations for Legal Incubators

1. 1. Legal incubators, especially those established with an access to justice mission, should only help firms that truly implement disruptive innovation. To do this, incubators should assure they select participants that believe in and understand not only the access to justice mission, but also the importance of creating a disruptive and sustainable law firm model.
   2. The support systems and trainings provided to incubator attorneys need to progress from day-to-day business formation and management to higher-level strategic thinking. Law school does not train lawyers on how to run a business, let alone a disruptive one, and the boot camp training courses provided by most legal incubators do not adequately address this knowledge gap. Legal incubators teach attorneys about some unique value propositions for customers, such as sliding-scale pricing and limited scope services, but they don’t train participants on how to implement them while creating a more efficient business model (i.e., one that mitigates threats to sustainability resulting from narrower profit margins and a lower-income clientele).

To address this, legal incubators should consider partnering with M.B.A. schools to provide mini-M.B.A. courses that train on the essential tools needed for disruptive innovation. Additionally, they should collaborate with M.B.A. schools and professors so M.B.A. students can gain field experience while advising incubator attorneys as they create and implement their business plans.

When legal incubators and incubator attorneys figure out how to implement disruptive innovation in the legal industry, we might finally begin to see the type of expansive growth in representation to the unserved needed to reduce the justice gap.

Notes:

[1] https://www.lsc.gov/media-center/publications/2017-justice-gap-report
[2] https://aspe.hhs.gov/poverty-guidelines
[3]https://www.americanbar.org/groups/delivery_legal_services/initiatives_awards/program_main/
[4] https://chicagobarfoundation.org/jep/
[5] https://www.hbs.edu/forum-for-growth-and-innovation/blog/post/confronting-a-new-market-disruption-disruptor.
[6] https://stephenmayson.files.wordpress.com/2014/08/mayson-2010-business-models-in-legal-services.pdf