Scaling back the ever-higher cost of justice

Access to the law has become simply unaffordable for too many and the growing trend of cheap online products are fraught with risk. It’s time the legal profession acted in the interests of justice, argues Morry Bailes.

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The increasing cost of litigation means that legal remedies and access to the justice system are becoming the preserve of the wealthy and those who have either insured against the risk, such as company directors, or who are members of collectives who will stump up for their legal representation, such as membership of a trade union. There is also the current fad of crowd funding.

Why has the use of our legal system gotten beyond the reach of so many Australians, and what does that mean to their ability to be treated equitably and justly in our country?

Many factors have driven up the cost of justice. First up is the changing nature of our courts and court processes. As a product of how long I have been practising law, I have seen how complicated our justice system has become – to a point where it can be unaffordable.

Trials that used to take days now take weeks, or more. Pseudo judicial bodies of inquiry now conduct the equivalent of a Royal Commission every time they sit, chasing evidence down every burrow that exists, often fruitlessly. And in case they be criticised for failing to prepare for these longer, far more detailed and complicated trials and hearings that leave no stone unturned, lawyers prepare scrupulously and at great cost. The idea that quick justice is good justice departed the room decades ago.

I have seen how complicated our justice system has become – to a point where it can be unaffordable

Second, the practise of the law has changed. We are a profession that looks to many more like an industry. Linklaters in London recently offered law graduates a starting salary of £107,000 just to sign on. That equates to some pretty big bickies they expect graduates to be billing only shortly after admission, and sounds more like a McKinsey salary than that of a law firm. Only big corporates, wealthy individuals and governments can afford that sort of legal service. Even running the average law firm is an expensive business, so to make a dollar lawyers’ charge out rates are only heading north.

Third is the growth of the independent Bar. This trend differs a bit between states, but in South Australia when I first started practising a great deal of the contested lower court counsel work was done by members of a firm. In this state we are all admitted as both solicitors and barristers. These days, although there remains no division in the profession, there may as well be. Solicitors seem terrified or unwilling to advocate, and barristers can’t accept direct briefs in all but a few examples. In what one may frankly regard as lazy, a great deal more of the advisory work is now performed by the barristers at the independent bar, but clients are paying both for solicitors and barristers. What some senior counsel are able to charge, particularly in commercial matters in the eastern states, is on any reckoning expensive.

As much as the reasons for the rising cost of using the justice system are multi factorial and complex, so are the remedies. Cutting lawyers out of it doesn’t work. Family law reforms tried that in New Zealand and it was an unmitigated disaster. The legislators reintroduced lawyers back into the family law arena in the end to save the day. It’s analogous to saying the health system is too expensive, so let’s get rid of the doctors!

It’s a free market, so market forces will dictate what a Sydney commercial silk can charge, and no person has the right to stop that. However the law of supply and demand does make such services unaffordable for most Australians.

The very poor at least have legal aid for some matters. Not enough and for not enough matters, I might add. It is what the Federal Productivity Commission referred to as ‘the missing middle’ one feels most sorry for. Working Australians, who do not have the wherewithal to spend the type of money it costs to litigate in our courts, even though they may have experienced an injustice. The gap between what it costs to litigate and what is recoverable from an opposing party often means even the winners are ultimately losing.

If you think pro bono is the answer, it never is. Rather, it is a figment of fevered commercial imagination that exists only amongst lawyers who need to assuage their conscience for earning too much, or to win the next government contract which demands that a firm offer some element of legal service for free; a Shakespearean pound of corporate flesh if you will. As an aside, it also excites millennial lawyers who need ‘meaning’, as if the practise of law is not meaning enough. Don’t get me wrong; anyone who is prepared to work for free, that’s great. If it injects meaning into what might otherwise be a hollow life, so much the better. But a silver bullet for unmet legal need it ain’t.

Indeed, the very expectation that lawyers should work pro bono is an admission that public and private policy has failed to adequately cater for legal need in this country, such as the introduction of effective legal expense insurance, so popular in parts of Europe. Using the analogy again, no one expects doctors to work for free, but that is because the medical profession is underpinned by public and private insurance. Litigation by comparison is like bungee jumping without the cord, unless your finances can stretch to accommodate it.

It is therefore an environment that is ripe for disruption. In the words of George Herbert, ‘to him that will, ways are not wanting’. Online products anticipated in Australia half a decade ago are now landing thick and fast. Typically they are digital legal documents prepared in some sort of standard format ,for which a consumer will pay a fraction of the cost of a properly prepared legal document. For example documents relating to property such as a lease, or other commercial transactional documents. Wills and associated testamentary documents are also an area fertile for this type of online product.

The gap between what it costs to litigate and what is recoverable from an opposing party often means even the winners are ultimately losing.

In the U.S., although not yet Australia, AI technology is also at play. Predictive AI can allow a consumer to enter details of the rudiments of a potential dispute and get some predictive indicator as to a likely outcome based on an algorithm. Consumers include sophisticated consumers such as insurance claims managers, who may be disinclined to instruct a lawyer until an algorithm has predicted the chances of success warrant obtaining formal legal advice.

The problems with these products are several. First, in a regulatory setting it is unlawful to practice law without admission by an admitting authority which in Australia are our superior courts, and without holding a current practising certificate. Some of these products cross the line into what is in fact a legal service and the practise of the law, and are thus unlawful.

Persuading Australian Attorneys-General to actually prosecute these people is seemingly a fairly forlorn hope, so the custom of unlawfully practising the law in Australia seems likely to continue for now. Prosecution of such providers is apparently not in the ‘public interest’. That is, one supposes, until a consumer screams to high heaven that they’ve been sold a pup and media pick up on the fact. After that it might miraculously graduate to being in the public interest.

The second problem is that with a current practising certificate comes professional indemnity insurance. In other words every lawfully practising lawyer in Australia must carry a minimum of $2m in professional indemnity insurance cover. Not so for online document providers or online providers of other legal product such as AI and machine based advice. They may be insured, but one wonders what insurer would underwrite a provider unlawfully practising law by the production of legal documents? More likely, they are uninsured or inadequately insured. So if it all goes wrong, unlike dealing with a lawyer, there may be little recourse for the consumer to recover losses.

Third and self evidently, what you will not receive with an online legal document is the accompanying legal advice. Often that, rather than the document itself, is the most critical aspect of what is derived from seeing a lawyer. But as already explored, cost can be prohibitive for many. Nonetheless at this level a properly prepared document versus the online equivalent may not break the bank and save a great deal of heartache. To express it another way, many a lawyer has dined out on the consequences of the DIY will when it all comes crashing down. A will after all is about the cheapest legal document you can have prepared, and everyone needs one. But they can be tricky to get right, so why would you do it yourself?

Anyway, returning to the dilemma of the cost of traditional law versus the attraction of disruptive and cheaper alt-legal services and it becomes increasingly obvious that we cannot resolve the clash without a good hard look at our regulatory regime.

Lawyers have traditionally been very careful to not mess with our regulations because they have worked well so far, they protect the rule of law, they protect the public, and they provide for judicial independence. But something has to give.

On the one hand, a highly regulated legal profession – either due to its own regulatory environment or restrictions imposed by its professional indemnity insurance – cannot offer services that might be regarded as outside ‘traditional’ legal services. In essence we have hamstrung ourselves, to the potential detriment of the public and the consumer.

On the other, we have unregulated and potentially uninsured providers unlawfully purveying an online version of legal services which has superficial attraction but which also has inherent problems; first and foremost, the fact that they are entirely unregulated.

The whole conundrum calls for a regulatory response in essentially two ways. We need to free up lawyers to compete on an equal footing with unregulated providers, and we need some level of regulation on non-lawyer providers for the protection of the public. It is unlikely that turning to governments is the answer. Government regulation is too often drafted by public sector employees not rooted in the real world. No, this one is down to the legal profession itself, to recognise that for many we have become unaffordable, yet we have nonetheless sworn to uphold the administration of justice and defend the rule of law, which means we need to be creative.

What is required is some deftness in imagining how we deliver affordable legal services through the use of  technology, amending our rules, regulations and insurance to permit it, and additionally oversee the introduction of sensible protections to control what will inevitably become an avalanche of unregulated online alt-legal offerings that may ultimately hurt, and not always help, consumers.

‘All disruption starts with introspection’ said former Vice Chairman of Deloitte, Jay Samit. The legal profession is overdue some introspection or our society will be weakened by our failure to make justice accessible to all Australians.

Morry Bailes is Senior Lawyer and Business Advisor to Tindall Gask Bentley Lawyers, past president of the Law Council of Australia and a past president of the Law Society of South Australia.

Originally published InDaily.