Return on Investment
What if the programs that deliver the most value aren't the ones with the newest, shiniest technology?
What if I told you that in 2023 a website helped people complete over one million legal forms, completely for free? The number 1 million is actual forms completed start-to-finish. Not 1 million users or site visits, but 1 million legal forms that are ready to file with a court, in cases like divorces, evictions, etc. Maybe you’d want to know more about this website and how awesome it is, but first I want to talk about how big a deal this is in terms of the total economic value.
Before we get into this, I’ll add a disclaimer: I work for the non-profit that runs this website, and these are my personal views, not the views of my employer.
Legal fees:
Let’s try and put a dollar figure on what 1 million forms means in terms of legal fees. Lawyers value their services by how long it took to do a thing, like copy and paste in Microsoft Word and change the party names, so essentially hours worked x hourly rate = total legal fees.
Hours worked:
Say that each form, on average, would take an attorney 2 hours to go through with their client. This is pared down, since in reality for an attorney to go through the hassle of signing up a client, running a conflict check, mucking about in Clio or RocketMatter or whatever, they’d want a good bit more revenue than what 2 hours brings in. But in our imaginary world we get to break things out as we want to. So let’s say that the total “attorney time” for 1 million legal forms is 2 million hours.
Hourly rate:
According to the Clio Legal Trends Report for 2023, the average hourly rate for attorneys in the U.S., when adjusted for inflation, was $256. The “actual amount” that attorneys charged was $327. Let’s low-ball it, however, and just say that the average hourly rate we’re going to use in our little exercise is $250.
So how much?
2 million hours x $250 per hour = $500,000,000.00.
For those keeping track at home, that’s five-hundred million dollars in legal fees that people saved.1
But I don’t think we should stop there.
Spitballing the total economic value:
One idea in trying to value stuff like this is that we shouldn’t just look at the immediate savings to the people using it, we should also try and factor in the down-stream costs and long-term savings as well. To put it another way, spending 2 hours of attorney time ($500) helping someone avoid an eviction shouldn’t be valued at just $500, since if that person was evicted they could / would have:
lost their job,
had a hard time finding another place to live,
faced increased borrowing and renting costs later due to the impact on their credit score,
had a higher chance of ending up living in their car,
and so forth.
Those are what some people call the “potential downstream costs” of a person losing a legal case. They can also include things that don’t just affect the person losing the case, but their community as well. A person who has been evicted and is living in their car, for example, is more likely to get very sick and go to the E.R. without the money to pay for it, whereas a person with a steady job and health insurance is not.
Some people have tried to quantify this kind of stuff (in terms of return on investment) for money spent on legal aid, and come up with things like a seven-fold multiplier, or an eight-fold multiplier, or even a nine-fold multiplier. The idea is essentially that for every $1 spent on legal aid programs, there’s about $7 - $9 in increased economic activity and societal benefit.
I think those figures are too high for our particular experiment, since they’re assuming direct service in most cases (legal aid attorney talking to client one-on-one and handling their case), so let’s just fudge it a bit and say that the economic multiplier should be 2x. So because this is our imaginary exercise, we can say that we’ll multiply our total by 2, and see where that takes us.
That’s a total (potential and still kinda arbitrary) economic value of a billion dollars.
Ah, you might say, but you’re not an economist! You’re just conjecturing! And you’d be right! But this is pretty simply math backed up by real averages and real economic studies! And yes I’m using my phone calculator.
To emphasize: This is a lot of conjecture and what lawyers would call inference-chaining. We’re assuming that each form is worth $500.00, and prognosticating that keeping that money in someone’s pocket and helping them with their legal problem for free doubles the value of that $500.00. Like I said above, even if we stopped at $500.00 per form, that’s still a hell of a lot of money.
More about this website:
So what is this magical website? Surely it must be some generative AI-driven blockchain metaverse serverless technological marvel!
Nope. Sorry / not sorry to disappoint. This website is LawHelp Interactive2. And while it’s not a “generative AI-driven blockchain metaverse serverless technological marvel,” it gets the job done.
Return on Investment
What if there was a magic money multiplying machine that let you insert a dollar bill, vending-machine style, and then instead of dispensing a bag of chips, spat out 500 dollar bills? What if that magic machine spat out 1,000?
Let’s assume that LawHelp Interactive gets the job done with a total yearly budget of $ X. The return on investment on LawHelp Interactive, according to our improvisational math, would then be 500,000,000 / X, if we’re just doing legal fees, or 1,000,000,000 / X if we’re using our entirely speculative quick-and-dirty economic impact analysis.
If you had a program with a yearly budget of 1 million dollars, and it generated $500,000,000.00 in economic benefit every year, that’s a return on investment of 500-to-1. For every dollar that goes in, five-hundred come out. That’s a damn good ROI.
While people run around chasing the next generative AI-driven blockchain metaverse serverless technological marvel to solve the justice gap, I wonder if we’re missing the glaringly obvious. There are successful programs that offer a huge return on investment - they may not be cool or sexy or whatever, but the return on investment is there.
You could say that it’s $500,000,00.00 in legal fees that lawyers missed out on, if you want to be that way.
Big disclaimer here: I work for the company that runs LawHelp Interactive, so I’m not impartial, and yes I’m bragging on them.