Bridging the Justice GapHow Legal Insurance Is the Future of Accessible and Affordable Legal Services

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for overall accessibility and affordability of civil justice in 2014.4

Other countries that tied for 64th: Kyrgyzstan, Mongolia and Uganda.

Countries in the top 10 included Norway, the Netherlands, Spain, Sweden, Portugal and Germany: all countries where legal insurance is considered routine coverage.

A vast divide exists in the United States today between the large number of attorneys looking for clients and the number of people with unmet legal needs. In 2014, there were nearly 1.3 million licensed attorneys in the United States,1 yet experts estimate that only 20 percent of the legal needs of low-income people2 and 40 percent of the legal needs of middle-income people3 are being met.

How do we bridge this gap between attorneys who want to provide legal services and the millions of people who need them? One solution that provides legal services for everyone, regardless of income, is legal insurance. Currently, ARAG® provides legal insurance to more than one million individuals in the United States.

Who Is ARAG? ARAG, an international leader in legal insurance, has been helping people assert their legal rights for more than 75 years. In 1935, attorney recognized that legal costs often discouraged people from asserting their legal rights. He believed equality under the law meant nothing if people couldn’t afford to use legal services and founded ARAG to make these services affordable for everyone. Today ARAG serves millions of people in 14 European countries and the United States.

In the United States, ARAG connects people who need legal assistance to attorneys who are experts in that type of law. Plan members have access to a national network of more than 10,000 individually credentialed attorneys. They have the option to contact a network attorney in-person or over the phone. They also have access to online resources and legal documents. And if they aren’t sure where to turn, they can contact an ARAG Customer Care Specialist, who will help them find an attorney.

The United States ranked 64 out of 99 countries

What Is Legal Insurance?

Legal insurance pays for legal fees. For planned legal events, like adopting a child, and unplanned events, like settling a dispute with a landlord, legal insurance makes it easy for clients to find and work with attorneys. It also removes attorney and client concerns about the bill. Legal insurers pay attorneys directly for an agreed-upon sum and the client pays a monthly fee between $20 and $30.

Imagine how much someone without health insurance would pay for preventative care and medical expenses. But with health insurance, the amount paid in premiums and deductibles is a small percentage of the total cost. Legal insurance works the same way. It is the conduit for access to justice, helping the legal profession better serve existing and potential clients.

Better Service For Existing ClientsIn this digital age, people want information to be accessible and services to be flexible. Clients expect attorneys to contact them using their preferred methods of communication (including text, email or even video chat). People want to be able to go online and search for the documents they need. They expect quick turnaround times and favorable outcomes.

Many attorneys struggle to provide stellar customer service while resolving matters at the speed clients expect. Legal insurers expedite the process by preparing clients and attorneys for their first meeting. Clients learn what to expect, in addition to gaining a better understanding of the value attorneys provide. Attorneys are given background information about clients’ legal events and know that clients will have realistic expectations from the start.

Legal insurers offer attorneys ongoing education and training on topics like incorporating technology into their business. In addition, they bridge the gap between clients and attorneys by surveying all plan members about their service experiences. This helps ensure that evolving client expectations of service are addressed and gives attorneys valuable and honest feedback.

Finally, legal insurance removes the billing issues that can result in fee disputes and write-offs, common causes of contention between clients and attorneys. A clear and fair fee structure is set between the legal insurer and attorney. The attorney bills legal insurers directly and is guaranteed payment. Clients handle no paperwork and never see a bill for covered attorney time.

95%

97%

88%

For Attorneys:

For Companies:

For Clients:

Retention rate for ARAG’s more than 10,000 active network attorneys is 95 percent.

Retention rate for the more than 450 ARAG corporate plan sponsors is 97 percent.

Retention rate for the more than one million individuals covered by an ARAG plan is 88 percent.5

Legal Insurance Works

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For Potential Clients The American Bar Foundation published a study in 2014 that found only 24 percent of people with civil justice problems used an attorney.6 The chart at the bottom of the page shows the reasons people did not seek assistance.

70 percent said they didn’t see a need for help or it wouldn’t make a difference. Legal insurance increases awareness of how many life events are also legal events. Until potential clients realize this, they are not going to reach out to an attorney, even if they can afford it. Legal insurers educate people on the value of seeking legal counsel for everyday matters. Much like having health insurance allows people to seek out doctors’ expertise more frequently, having legal insurance allows people to become more comfortable consulting with attorneys. It encourages people to, as Tomorrow’s Lawyers author Richard Susskind says, view attorneys as a “fence at the top of the cliff rather than an ambulance at the bottom.” 7

17 percent didn’t seek assistance because of the perceived cost. Cost is no longer a barrier to those with legal insurance. Their minimal monthly fee means they will not have to worry about paying a $5,000 retainer or going in for a $350 hour-long consultation. Those with legal insurance are free and in control: free to meet with a credentialed attorney whenever they need to and in control knowing they can afford the quality legal services they need.

9 percent didn’t seek assistance because they didn’t know who to ask. Legal insurance offers individuals recommendations on attorneys that can help. Plan members experiencing a legal event can call a customer care specialist or go online to be connected with a credentialed attorney who specializes in that area of law. They have immediate access to attorneys on the phone who can give them advice, and they can access basic legal documents created by professional attorneys.

4 percent said seeking assistance is too stressful. Stress can be an obstacle to seeking legal services, particularly when combined with financial issues and time concerns. A study by Russell Research found that 87 percent of people with legal insurance feel it reduces their stress.8 Plan members worry less because they know who to turn to for help, they understand their options and they are clear on the best course of action.

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87 percent of people with legal insurance feel it reduces their stress.8

Reasons for Not Seeking Assistance with

Civil Justice Matter6

No need for advice 46%

Wouldn’t make any difference 24%

Costs too much 17%

Don’t know who to ask 9%

Too stressful 4%

Better access to legal services also means connecting with people where they are most comfortable:

Legal insurance provides all these service options for plan members.

Online

On the phone

In-person

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Underserved CommunitiesThe Working ClassIn the context of providing legal services to the underserved, many people may think of legal aid as the first and best response to this issue. While one in five Americans is eligible for legal aid,9 50 percent of those who are eligible are turned away due to lack of program funding.10

Along with this underserved community, there are many living above the poverty line who don’t have enough disposable income to pay for an attorney. Professor Sheldon Krantz, author of The Legal Profession: What Is Wrong and How to Fix It, states that it is not only the poor left behind: “We are talking about blue collar workers, small business owners, the elderly, returning veterans…who cannot afford the rates that we charge.” 11

In 2010, the State of New York found that 97 percent of parents were unrepresented in child support matters in New York City. 99 percent of borrowers were unrepresented in consumer credit cases. 12

The issue wasn’t that there weren’t enough attorneys to represent everyone – there are hundreds of thousands of attorneys in New York – but that the people experiencing these legal events couldn’t afford an attorney – or didn’t know that their issues would benefit from legal advice. Language barriers may also make it difficult for people who need legal help to find an attorney who speaks the same language.

Legal insurance is an existing model that has proven successful in improving access to legal services. Beyond making legal services more affordable, legal insurers educate underserved communities on what a legal event is, and how often everyone experiences them. Buying a used car? Struggling with debt collectors? Dealing with landlord problems? These are all legal events, and people with legal insurance benefit from the expertise and wisdom of credentialed attorneys without having to worry about big out-of-pocket expenses.

For those who don’t speak English, legal insurers have multilingual attorneys and can pair them with plan members. Legal insurers also offer translation services that help eliminate language barriers between clients and attorneys.

For every one person legal aid is able to serve, they have to turn another person away.10

Percentage of ARAG Members in 2013

9%

16%

11%

Percentage of American Workforce

4%

14%

11%

Recruiting and retaining a diverse and inclusive group of practicing attorneys in the United States is crucial if the legal profession wants to serve all those who need legal services.

Legal insurers study the characteristics of plan members and make network attorneys available to serve members’ diverse needs (including specific areas of law, foreign language needs and geographic accessibility). ARAG has multilingual attorneys and uses interpreting services for a wide variety of languages, including Spanish, Mandarin, French, Portuguese and Vietnamese.

Diversity and Inclusion

Small Law Firms and Solo PractitionersThere are many solo and small practice attorneys, particularly young attorneys, who struggle to find jobs and clients. Legal industry analyst Jordan Furlong commented, “We frequently make reference to access to justice…. But what about lawyers access to the market? How can lawyers change…their accessibility and their affordability and their delivery mechanisms in order to open up relationships?” 14

For attorneys, being part of a legal insurance network is the most powerful marketing tool to help them build qualified referrals because insurers help match clients with attorneys based on expertise and location. At no cost to the attorney, legal insurance bridges the gap between these attorneys searching for clients and the clients searching for attorneys. In fact, in rural communities, legal insurance will often pay for the network attorney to travel in order to meet with and represent a client.

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A 2013 ARAG study found that the make-up of its plan members included a greater percentage of diversity than the American workforce.15

Asian

Hispanic

African American

A 2014 report by the ABA Task Force on the Future of Legal Education found that:

“The legal profession increasingly began to assign, or try to assign, more responsibility to law schools for the practical and business aspects of the education of lawyers….The result has been increased pressures on law school curricula. Such pressures have surely contributed to increasing costs and increasing tuition, as law schools have had to take on these additional, sometimes expensive, forms of education no longer provided elsewhere.”

The task force recommended that additional resources and organizations should contribute to legal education. ARAG already does this by partnering with law schools to help attorneys understand how legal insurance can grow their practices. In addition, ARAG offers free continued education opportunities for attorneys that focus on skills needed to run a successful law practice. Training covers topics such as how to manage client expectations, how to recruit and maintain clients, and how to incorporate the latest technology into their businesses.

ARAG also provides mentoring programs for young attorneys through the ABA Young Lawyers Division. Through sponsorships and educational opportunities, ARAG helps new attorneys hone their skills. Plan member surveys give young attorneys valuable feedback that they can apply to future client interactions. And customer service representatives are there to help network attorneys at any time with questions. This type of support ensures that new attorneys will successfully build their practices. And the guaranteed paycheck for helping plan members allows attorneys to focus on what they went to law school to do: help people.

Legal insurance has greatly improved access to legal services for millions of Americans, but there is potential to expand access even more. Beginning to think about legal insurance the same way society thinks about medical insurance is a start: These are services everyone should have access to, regardless of income, education, language or location.

For more information about ARAG, and how legal insurance can help provide all people access to legal services, visit www.ARAGlegal.com.

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Legal Education and Training

[My legal insurance plan] was my lifeline to independence. I needed to take matters into my own hands for my two toddlers and myself to get away from an abusive marriage -- and my legal plan gave me that security to be able to do that. With that, it created a ripple affect [sic] for me to be able to sell my home and purchase another one for my two children. Because of my new life, I was also able to put together a will to provide for my children if something should happen to me. So many women stay in an abusive relationship because they cannot afford to get away, so I consider myself...my life...happy and secure again.” 13

Legal Insurance: A Lifeline to Independence

1 American Bar Association. “Lawyer Demographics.” 2014. <http://www.americanbar.org/content/dam/aba/administrative/market_research/lawyer-demographics-tables-2014.authcheckdam.pdf>

2 Legal Services Corporation. Documenting the Justice Gap in America: The Current Unmet Civil Legal Needs of Low Income Americans. Washington, D.C.: Legal Services Corporation, December 2009.

3 Rhode, Deborah. “Access to Justice: Connecting Principles to Practice.” Georgetown Journal of Legal Ethics 17 (2004): 369-422. 4 Agrast, Mark David, Juan Carlos Botero, Joel Martinez, Alejandro Ponce, & Christine S. Pratt. The World Justice Project Rule of Law Index 2014. Washington, D.C.: The

World Justice Project, 2014. 5 2014 ARAG Underwriting and Client Management Department Statistics. 6 Sandefur, Rebecca. Accessing Justice in the Contemporary USA: Findings from the Community Needs and Services Study. University of Illinois at Urbana-Champaign:

American Bar Foundation, August 8, 2014. 7 Susskind, Richard. Transforming the Law: Essays on Technology, Justice and the Legal Marketplace. Oxford University Press, 2000. 8 ARAG. The De-Stress Zone: How a Legal Plan Can Ease Stress, Boost Wellness. Des Moines: ARAG, April 2013. 9 Legal Services Corporation. 2013 Legal Services Corporation By the Numbers: The Data Underlying Legal Aid Problems. Washington, D.C.: Legal Services Corporation,

July 2014.10 Legal Services Corporation. Documenting the Justice Gap in America: The Current Unmet Civil Legal Needs of Low Income Americans. Washington, D.C.: Legal

Services Corporation, 2009.11 Krantz, Sheldon. “Imbalanced Scales: Why There Is an Access-to-Justice Crisis in a Nation With Too Many Lawyers.” The Aspen Institute, January 29, 2014.<

http://www.aspeninstitute.org/video/imbalanced-scales-why-there-access-justice-crisis-nation-too-many-lawyers>12 Krantz, Sheldon. The Legal Profession: What Is Wrong and How to Fix It. Dayton, Ohio: LexisNexis, 2013.13 Kimberly C. Testimonial from ARAG Customer Service Survey. Hopatcong, New Jersey. October 2014.14 Furlong, Jordan. “Strategies for Adapting to the Changing Legal Market.” State Bar of Wisconsin PINNACLE Litigation, Dispute Resolution and Appellate

Practice Institute. May 22, 2014. <https://www.youtube.com/watch?v=Mw9NAQfOoKA> 15 ARAG. ARAG’s View on Current and Prospective Customer Demographics. Des Moines: ARAG, March 2013. 16 American Bar Association. The ABA Task Force on the Future of Legal Education Report. Chicago: American Bar Association, January 2014.

Limitations and exclusions apply. Insurance products are underwritten by ARAG Insurance Company of Des Moines, Iowa, GuideOne® Mutual Insurance Company of West Des Moines, Iowa or GuideOne Specialty Mutual Insurance Company of West Des Moines, Iowa. Service products are provided by ARAG Services, LLC. This material is for illustrative purposes only and is not a contract. For terms, benefits or exclusions, call 800-888-4184.

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