The Bottom Line—Legal Services is a Good Investment

By Mary Irvine

Public support of civil legal services for the poor is money well spent. A recent report found that advocacy boosted the state’s economy by nearly $49 million in a single year. The study, conducted by the UNC Center on Poverty, Work, and Opportunity in partnership with the North Carolina Equal Access to Justice Commission, used data from Legal Aid of North Carolina, Legal Services of Southern Piedmont, and Pisgah Legal Services from cases closed in 2012 to analyze the organizations’ collective economic impact. The bottom line is quite simple—investment in

Despite an increasing need for free civil legal services, legal services providers have experienced cuts to every traditional funding source, both private and public. Since 2008, state funding has decreased by 40% in North Carolina, and United Way and IOLTA grants have dropped by 32% and 30%, respectively. Further, increased scrutiny facing non-profits across the country is putting pressure on all to demonstrate the value of their work, putting more emphasis on measuring outcomes and requiring frequent reporting on progress.

As a result, legal services providers nationwide have turned to economic impact studies to build the case for investment in their programs. Economic impact research provides insight into the specific impact on a particular geographic area due to a change in the economy. In the legal services industry, this research measures the value of advocacy that brings new direct benefits into the state—usually federal dollars—which then stimulate the economy, resulting in additional indirect economic impacts.

The findings? Civil legal service providers undoubtedly spur local economic growth and save the state money. For every dollar spent by the state on legal aid, nearly $10 flows into the economy for the residents of North Carolina—a 108% return on the state’s investment in legal services.

The need for legal services far surpasses available resources of legal services providers to represent all eligible clients. “While resources to support legal services have decreased, the need for legal assistance is greater than ever,” said George Hausen, executive director of Legal Aid of North Carolina, “and our goal is to ensure the basic needs of people are met, including access to food, shelter, safety, and healthcare.” Further investment will result in justice for those in need of legal assistance and economic benefit for all North Carolinians.

The North Carolina Economic Impact Study
Released in January, the study “A 108% Return on Investment: The Economic Impact to the State of North Carolina of Civil Legal Services in 2012” found that legal representation helped North Carolinians gain access to $9.2 million dollars in new federal benefits, including food stamps, disability, other cash assistance programs for low-income families, and federal tax refunds. Without the help of a free attorney, the benefits likely would not have been secured by clients working on their own. The study also found an additional $8.8 million was awarded to low-income clients in child support and housing cases. This includes awards of monthly child support payments and past due support for struggling single-parent families. Housing awards include protection of housing benefits, rent abatements due to problems with the condition of the housing unit, return of a client’s security deposit, or avoidance of unreasonable charges by the landlord.

“This report quantifies what we knew anecdotally,” said Jennifer Lechner, executive director of the North Carolina Equal Access to Justice Commission. “Legal aid is good for North Carolina—not just for their provision of legal services to those who would otherwise be unable to access the justice system, but also through the economic benefit these services bring to the state as individuals spend money at businesses in their communities.”

Flowing from the direct economic benefits, the study also found an indirect impact of nearly $13.9 million. The indirect impact provides an estimate of the changes in the local and state economies when new federal revenue enters the market and additional spending occurs. The estimate includes increases in employment, wages, and business outputs. While only an estimate of increased economic activity, the number captures the benefit to the community as a whole of providing legal services to those who could not otherwise afford an attorney.

The report also found that the efforts of legal services providers to prevent domestic violence, eviction, and foreclosure generate cost savings for the state of $17.1 million. Cost savings represent the amount saved by the state and local communities in emergency medical services, mental health treatment, public health, court costs, unpaid property taxes, police and fire services, social services, and other public services. For example, by preventing 488 foreclosures, legal services kept many families who were the victims of mortgage scams in their homes and reduced local government expenditures to secure vacant, foreclosed properties.

“Poverty is the greatest challenge facing the people of North Carolina,” said Gene Nichol, director of the Poverty Center. “By advocating for the rights of the poor, the work of legal services lawyers brings us closer to equal justice under the law. It also generates an economic benefit to the state worth millions.”

Access to Justice Makes Dollars and Sense
In addition to depriving North Carolina families of much needed access to the justice system, lack of civil legal representation leaves money on the table that could have boosted the overall economic outlook of the state. This study, not unlike scores of others done in states across the country, suggests further economic gains with increased funding for legal services given the inadequate capacity of providers to serve all those who are eligible.

The primary focus of civil legal service providers is to ensure access to the civil legal system for all, regardless of ability to pay. “The financial benefits do not begin to measure the full value of this work,” said Ken Schorr, executive director of Legal Services of Southern Piedmont and member of the NC Equal Access to Justice Commission. “Protecting women and children from violence, keeping families from being separated or homeless, helping elderly and disabled people stay in control of their lives, and other life-changing benefits cannot be measured in terms of dollars.”

However, in working to meet clients’ legal needs, legal services organizations gain immense benefits for the state, reaching far beyond the individual clients and families served.

To read the study, visit the North Carolina Equal Access to Justice Commission, ncequalaccesstojustice.org.

Mary Irvine is IOLTA’s access to justice coordinator.