Director XS2Justice Network
Redesigning the process of legal advice, negotiation and litigation means that costs can be controlled. A three step system for financing legal costs has the potential to greatly increase access to justice.
The high costs of legal representation are a problem in many legal systems around the world. People with little money to spend are suffering from this. They lack barganing power and access to justice, because they cannot afford to let a court decide. XS2Justice Network has developed a sustainable business model to combat this inequality. It redesigned the process of legal advice, negotiation and litigation in such a way, that it is possible to control, reduce and finance the costs of legal services.
The three step process
The redesigned process consists of three major steps.
- The complainant can seek free legal advice via the telephone. This service can be provided by organizations with broad client bases, such as banks or mobile phone providers.
- A paralegal will attempt to find an resolution to the dispute outside of the courtroom, while, simultaneously, building the client's case file. The client can finance this process by taking out a loan from the XS2Justice Foundation, set up to facilitate this step.
- If the parties are unable to resolve the dispute, then the final step is litigation in a court of law. At this stage, the case file, which was built during the second step, will be put up for auction. The client can choose the lowest offer. In general this will come from the lawyer most specialized and effective in the particular field. Specialized practitioners need less time to study and prepare the case, as they can call on their vast experience and knowledge base. This final litigation stage will be financed by an online justice community charity.
The benefits for clients and lawyers
Developing the framework necessary to implement these working methods will take time, especially in this conservative market, but there is much to be gained. For example, in the Netherlands, the highest bid for a case file will usually be less than half the normal attorney's costs. This gives people access to legal services that would otherwise be unaffordable.
So far, over 4000 clients have benefited from this business model with good and fair solutions for their problems. More than 400 litigation cases have been auctioned, which gives future clients more barganing power. Our vision is to implement this model on a larger scale in the Netherlands and to launch it internationally, in at least ten countries simultaneously, on the basis of license fees.
The legal profession can make good profits in this model as well. By specializing and by being effective in their handling of cases. So both clients and lawyers can go back to basics: equal and affordable access to justice for all.
1. Can you briefly describe the innovation, the problem it tries to solve and why it is necessary?
Problem is access to justice. The bottleneck of costs. Financial power rules. Het recht van de sterkste geldt. If there is a difference in financial power, the law doesn’t function properly. The innovation is financing access to justice to fight injustice in a sustainable and profitable way. Legal costs are often unpredictable and difficult to control. To be able to finance the cost for legal support, we need to rationalizing the costs of the working process. So we redesigned the working process for legal work to lower the costs and know ahead how much it will cost in total. By doing this, it becomes possible to finance the process. It will not be an open end financing.
The innovation is redesigning the work process. We distinguish first line advice telephone, solving the problem out of court while building the case at the same time, and litigation. Advice is costless. The process of solving the problem is done on a fixed fee. Maximum 10 hours of work, if you spend more, it is unlikely that it can be solved amicably. Step 2a is analyzing the conflict, about one third of the costs. Step 2b is two thirds, solving amicably. Step 3 if it is not possible to solve it, the file is organized in step 2 in such a way that lawyers can quote fixed prices. The file is than auctioned. The lowest bid comes usually from the most specialized lawyer. The more specific relevant experience the bidding laywer has, the less study and working time he needs. It also means less uncertainty and a bigger chance to win.
2. What makes your innovation unique?
All components are available. First line advice. Adr. Litigation. The combination, and for each component there is a financing instrument. First line advice is an extra service for organizations with many customers, such as mobile phones or banks. Second part is financed by loans the client takes from the paralegal, the paralegal takes it from the foundation. Paralegals learn whether a case if feasible. Paralegal guarantees $500 loan for the client. Third element: cheap litigation, as a threat in the negotiations. Third line is litigation, financed by charity from an online worldwide justice community that follow, support and finance each case separately on a website.
3. What triggered the development of the innovation?
Motivation to contribute to society. Live, love learn and leave a legacy. Dissatisfaction with the way the law works in practice. Seeing that there is no equality in the justice system as long as the costs of legal support are too high. The Rule of Law only seems to work for the rich people or big companies that can afford it. By accident, I know a lot about marketing, legal expenses insurance and business models.
4. Which persons and organisations were involved in the development and what role did they play?
IRI. Reflection on why the business did not make enough progress. Not doing everything yourself. Interaction with others is important. Setting of other innovators. Martin Smith, CSR side of the story. It was a lonely job.
5. What kind of resistance have you encountered and how have you overcome it?
Development takes a long time. Five years are necessary in such a conservative market to develop solutions and prove that they work. Venture capitalists cannot wait so long. For profit model for a social benefit such as access to justice is not done. My expectation was that there would be more lawyers who would support it because it is important that this happens.
6. How did you make the goals realistic and attainable, and at what time will which quick wins be available?
Long term version. Goals on the short term. No employees, but managing partners who share the vision and have a share. How to get more lawyers. Developing more contacts. Course businessplan writing. 10 times a year, 10 participants. For all bottlenecks, create solutions. This leads to other products. Easylawyer. Screening lawyers bills (fee litigation). Focus on the role of innovator and product/business development. Now learned that there need to be managing partners who makes money from it.
7. Will the innovation have an effect on other organisations in the chain and if that is the case, how will it affect them?
States can learn that they can avoid subsidies. Stimulate legal services markets.
The potential for a rule of law market is very high, world wide. Many problems are unsolved, or take too much time to solve. I think that lawyers will see their role in society much clearer. Lawyering has become too much a way to make money, without the added value it may have.
8. How was the development funded and what were reasons for the financing organisation?
Informal investors. 1.5 million Euro in 6 years. No salary in these years, in order to prevent the share in the company from watering down. My wife started working to keep the family alive. Informal investor had just spent 800.000 on a court case. Personal conviction and enthusiasm. Taking risks myself with a loan of € 100.000.
9. Can you name 3 to 5 characteristics of the innovation that are most essential to make it work?
Scalability. Scientific prove of the business case. Earning model, in world where subsidies are the usual approach. Timing given the report on Legal Empowerment and the success of Micro Finance organizations. Weak point is that it is too far away from present reality, so I have to link with the present reality. Here to start?
10. How do you measure whether it is a successful innovation?
Positive cash flow. Finding legal entrepreneurs to buy a license that gives them the right to implement the formula in their country. Parallel scalability in more than one country.
11. How many people or organisations benefit from this innovation now?
4000 clients have profited from it until now over 6 years. 20 paralegals. 400 cases have been auctioned.
12. How many people or organisations could potentially benefit from it now or in the future? (scaling-up)
We need one entrepreneur per country, funding per country and for the preparation of the roll-out, and one company with many clients that will use our service as an added value to their core business. Many paralegals will receive training and can make a decent living as a one man company.
13. Can you quantify the financial benefits? (Cost savings, additional income or otherwise)
For a non-subsidized clients, we make unaffordable legal services affordable. The working process reduces costs throughout the process. Legal advice on the hone for free in connection with some other service or product like mobile phones. Affordable loans to build a case and try to solve it out of court. Fighting injustice in courts with the help of charity per case. In the Netherlands the lowest offer for a court case is on average ¼ of the highest bid. The highest bid may be half of what an average client pays on an hourly fee.
14. Is the innovation financially viable and sustainable and if yes, how?
Yes, if we can do it on a bigger scale in The Netherlands and find the financial means to prepare the international roll-out on the basis of license fees in minimal 10 countries.
15. Can or will the innovation be used internationally and how do you overcome cultural differences?
Local entrepreneurs. Looking for them. Let them pay, instead of pay them. Stay out of bicultural relationships, go to multicultural relationships with many cultures.
16. What lessons did you learn along the way that could be useful to others?
No quick wins. Lots of dirty ground work. No short cuts.
Look for interaction. Create long term vision, which takes you through the hard times. First things first is important. Take it step by step. Link cash to the next step, not to the realization of the whole dream at once. Stay in touch with reality but don’t let go of your dreams.
Lack of cash is stressful and slows down the process. Good funding is essential.