Are 80% of legal problems in Canada really going unmet?

We often say that 80% of legal problems are not being addressed in the legal system, but how closely does that figure match measured reality, and how could we approach quantifying it? Statistics Canada released a publicly assessable data file from the Canadian Legal Problems Survey in 2022 to help answer the question.

The survey found that 5.4 million people, or 18% of Canadians, have serious legal problems in a year. Among people who disclose how they addressed their problems, 29% contact a lawyer, which on a simple analysis, implies that 71% of people with legal problems are not getting professional legal assistance from lawyers. Further examination shows that in 24% of cases where people contact lawyers, the lawyers did not end up helping them. This brings the total of people with legal problems who are unassisted by lawyers to 78%. There are also the 41% of people who contact lawyers who only help with part of their problems.

This superficial review indicates that the 80% figure is defensible as a ballpark number, at least for rhetorical purposes, if hiring a lawyer to act for a person is understood as a proxy for having legal problems addressed. However, this is an overly simplistic way of measuring need, as every legal problem doesn't require a lawyer to be resolved appropriately.

The survey found that 42% of people believe they can achieve a fair resolution to their problems without a lawyer's assistance. However, the 1.5 million people who contact lawyers are 28% more likely to believe in fair resolution than those who don’t. Bridging the gap between the two groups could help address the needs of 1.1M more Canadians annually.

Counting every person with a legal problem in Canada is not necessarily a useful metric to determine what the potential market is for legal services. People have their reasons for not contacting a lawyer even when services are accessible and they can afford it. Others choose not to pursue action to resolve their legal problems at all.

A more useful metric for potential growth in legal services is the one million people who express the wish for more legal help, four out of five of whom didn't contact a lawyer (the reasons people gave will be discussed in a future article in this series).

The revenue of law firms in Canada in 2021 is estimated at $15.7 billion, but 41% of that value derived from commercial law services, which we should remove from our assessment in this exercise. Assuming those law firms could render services as profitably, expanding them to assist one million people who wish they had more help would be the equivalent of increasing the potential revenue for law firms in Canada to $22.1 billion per year.

When measuring costs associated with legal problems, the survey reports that for 55% of respondents that amount is under $5,000. The other 45% of people have costs over that amount. Using a reasonable median value of $5,000 , we calculate a potential increase in projected potential law firm revenue of $21.1 billion per year.

This is not to say the value of the market for legal services in Canada will grow by 30-40% by accommodating the people now underserved in the legal system. But that doesn’t mean that there aren’t opportunities for substantial growth if services and pricing structures can be matched with people’s needs.

We also need to remember that people experience financial hardships on a number of fronts because of their legal problems. The cost most frequently associated with financial hardship is lost wages, not legal fees. Transportation, healthcare and childcare costs also figure into the mix.

Estimating the sizes of the existing and potential legal markets shows that a large number of Canadians are not getting the help they need to resolve their legal problems. Many of these people will continue to approach their problems in their own ways, stakeholders in the legal system need to provide them with better choices. There are opportunities there for lawyers.