In late 2013, Vicky, a single mother of two, was driving her then-boyfriend to an acquaintance's house in a small town north of Salt Lake City. Vicky (whose name has been changed to protect her privacy) thought her boyfriend was going to ask about some money owed to her, but, as she waited in the car, things went off the rails: The boyfriend entered the house without permission, tore the place up, and threatened its owner.
“Two minutes later,” as her attorney, Shantelle Argyle tells it, “the police pulled up behind her, ordered her out of the car—guns drawn—and took her to jail, where they interrogated her for about six hours about what they thought was this master drug cartel activity that was going on.” Vicky, who had no criminal record, knew nothing other than that she was soon charged as an accomplice with felony burglary, as well as simple assault. "She still didn’t even know what had occurred inside the house,” Argyle says.
Normally, Vicky’s legal options would have been pretty limited: She might have qualified for an already overburdened public defender, or she could have paid hundreds of dollars an hour—thousands in total—to a defense attorney. Instead, she paid $40 an hour—$678 in total—to a nearby firm in Salt Lake City, Open Legal Services, launched by Argyle and Daniel Spencer, two University of Utah law graduates, a few weeks earlier. After significant negotiation and fact-finding, Argyle got prosecutors to agree to a fair deal: They dismissed the felony charge outright, and Vicky pled to the misdemeanor assault charge because she knew that her boyfriend had a temper. She’s complied with probation since, and will be eligible to have the misdemeanor expunged in a few years.
Like more and more new lawyers, Argyle and Spencer graduated into a demoralizing job market, especially for jobs in public-interest law. So they decided to start a small nonprofit firm of their own, with four full-time equivalents and two part-time volunteers, catering to local, middle-class clients in a creative way. Instead of providing representation for free and surviving on grants, they decided to charge for their services.
But instead of charging a flat fee, they index their hourly rates to each client’s income on a simple sliding scale that's published on their website. As their pricing table shows, a client's rate is determined only by family size and family income. At the low end, for example, a family of four earning $30,000 per year now pays $50 per hour for OLS’s services; at the high end, the rate for a family of four making $95,000 per year is $135. As OLS’s average hourly fee to date—$55—shows, their client base thus far has skewed toward the lower side of the matrix. (OLS will only take clients whose household income is between 1.25 and 4.25 times the poverty line. In Utah, half the state's population falls in that range.)
OLS is an intriguing response to two related problems: the feasibility of legal guidance for everyone but the rich, and the current glut of lawyers. That second problem should solve the first, but—for reasons I discussed recently in a longer piece—it hasn’t. In short, that's the case because expanding legal complexity and the bar’s “restrictive guild-like ownership structure of the business" have given American lawyers immense pricing leverage.
As a result, self-representation rates are high (in domestic violence cases, they often exceed 90 percent), while many Americans, as law professor Gillian Hadfield has illuminated, simply give up on claiming their legal rights because they can’t afford a champion. This is discouraging: “A growing body of research indicates that outcomes for unrepresented litigants are often less favorable than those for represented litigants,” notes one federal study.
Argyle, Spencer, and David McNeill—a recent Utah M.B.A. who oversees the firm’s business strategy—believe that OLS’s nonprofit status and its unusual pricing approach combine to make the firm a successful answer to those problems.
As a nonprofit, OLS is, of course, exempt from many taxes. Its lawyers also are eligible for the government’s Public Service Loan Forgiveness Program, which wipes out the balance of their federal student loans after 10 years of monthly payments—an important subsidy. “The check you get from Uncle Sam in ten years is well worth what you paid in a lower salary equivalent,” Argyle says.
OLS's nonprofit status also allows it to get referrals from a number of sources, including courts, other nonprofits, and the state Bar. And it encourages businesses to help them out: not only are they a good cause, but contributions are tax-deductible. A private investigator, Argyle mentioned, offers the firm heavily discounted rates; other supporters have upgraded OLS’s databases and worked on the firm’s website for free.
The firm’s unusual pricing system provides a further edge. By indexing its hourly rate to clients’ incomes, OLS is doing something similar to what economists call “price discrimination”—charging different prices to different groups based on their willingness to pay. But customers’ ability to pay rarely figures in directly when firms price discriminate: A restaurant may offer a price for seniors based on the assumption that seniors have less disposable income, but you’re out of luck if you’re a middle-aged person on a senior citizen's budget. OLS’s model is more finely tuned, and more responsive to people’s needs. Each step up the income ladder, people who can pay more subsidize those who can’t.