Outside Investment in Law Firms Will Do More than Incubators to Bridge the Justice Gap
Written by Tom Gordon
Ilene Seidman of Suffolk University Law School recently wrote a column about a paradox of supply and demand in the legal field: lots of people who can’t afford legal help and lots of recent law grads working as baristas. Her column highlights the benefits of law-school based incubator programs teaching law students about the business end of law so that they can use technology to be on the cutting end of practice upon graduation. Suffolk University’s program teaches “innovative approaches” to students them to start their own firms or join small firms serving average-income people by teaching new technologies, marketing skills, process management and business through cross-training.
These incubators provide valuable opportunities for law students interested in opening their own firms, and are able to make some difference in bridging the access to justice gap. However, a more successful approach to closing the justice gap is to allow outside investment in law firms. Training law students as managers, business owners, and entrepreneurs, can be valuable, but allowing corporate-run law firms would allow people who have studied business disciplines to take on those roles and let the law students do what they went to law school for: serving clients through the practice of law. If lawyers are taking on the management side of the firm as well as working with clients, their skills are spread thin and they are unable to help as many consumers as they would be able to if they focused strictly on providing legal services. Outside investment would allow firms to offer law on a consumer scale that small and solo law firms are unable to offer.
Legal startups have been slow to develop because of the requirement that capital for innovation come only from lawyers. Allowing outside investment would allow a new model of legal services to arise: the mass-market consumer law-firm, which could allow millions of Americans to affordably and accessibly navigate the legal system. Mass-market consumer law would also help provide recent law school grads with training, employment, and opportunities for internal advancement. Startups bring innovation to markets. However, due to restrictions on non-lawyer investment, legal service startups that employ lawyers to provide services to the public cannot seek the investor funding that allows innovation in other fields to flourish. For these startups, it’s not enough to have a business model that could reshape the legal industry—they must also contort their financial structure to avoid non-lawyer investment and fee sharing.
If lawyers want to run a small firm, we should, of course, make that option available to them, and incubators do a wonderful job of enabling them to do so. However mass-market consumer law firms would do a far better job of making lawyers available to the masses, and they can only exist if outside investment is allowed.
Tom Gordon is Executive Director of Responsive Law.
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