The Consumer Indebtedness Crisis: Law School Clinics As Laboratories For Generating Effective Legal Responses

For the legal system to operate effectively, it must address problems arising from the absence of needed laws, or, if enacted, of laws that have been drafted poorly or are not being implemented in a fair and just manner. Since law schools are generally part of a larger university community, they are uniquely placed to serve as laboratories to find solutions to such problems, perhaps nowhere more so than in their legal clinics. The latter have in fact often played the role of legal innovators, but their contributions to the law and therefore to society at large have been little documented or appreciated. This article begins to rectify that situation by using examples of how law clinics have been creatively addressing many of the problems that have arisen as a result of the current consumer indebtedness crisis. We then indicate that what is needed now is strenuous evaluation and analysis of these efforts so that they can be widely distributed and publicized. By so doing, we believe other institutions will be motivated to adapt and develop strategies and methodologies to address critical legal needs both nationally and in their local communities. The ultimate result will be a win-win for all parties involved: society will benefit from having important needs addressed, clinic students will gain important skills and knowledge that will help them in their work after graduation, and law schools will achieve enhanced standing in their communities by making a difference in people\u27s lives. Thus the goal of this article is to document how law school clinics have already demonstrated their ability to be legal problem solvers and, just as importantly, to stimulate other institutions to adapt strategies and methodologies that are already developed to address critical needs in their local communities. To demonstrate the creativity and effectiveness of law school clinics, this article will focus on their response to the current crisis in consumer indebtedness that forms part of the broad economic downturn in the United States over the past four years. The impetus for this study was an international conference on over-indebtedness and credit regulation organized in August, 2010 by the University of Pretoria Law Clinic in South Africa. The conference\u27s goal was to look at the role of education and research in addressing problems of credit regulation, prevention, and relief of over-indebtedness. This article began as a presentation at that conference and was undertaken to present ideas on what U.S. law schools are doing to educate their students while also addressing the U.S. mortgage foreclosure and consumer indebtedness crisis. The first section presents evidence of the crisis in the U.S. where American families are experiencing high rates of mortgage foreclosures resulting from defaults on subprime loans as well as the increased use of bankruptcy to gain relief from burdensome consumer debt. Since banks and other creditors primarily use the legal system to enforce their claims and most consumers by virtue of their economic plight cannot afford legal representation, the latter are at a serious disadvantage. Reversal of this trend requires that the limited resources available to the vast number of people who cannot afford a lawyer develop innovative solutions to address these clients\u27 problems. One such resource is the law school clinic. The second and third sections, which constitute the heart of the article, describe and evaluate some of the different ways law school clinics have already responded to this crisis’s. The second section discusses these responses and includes a description of programs focusing on foreclosure defense, post-foreclosure assistance, and bankruptcy, as well as those that focus strictly on consumer law and related issues. This section concludes with a description of how a law school clinic in South Africa has approached these same problems, providing a perspective on what is being done internationally in this area. The third section is an analysis of the different clinical models, which includes the economic benefits to consumers, the pedagogical benefits to students and the reputational benefits to law schools that can result from the different models. The information uncovered demonstrates how law school clinics are fulfilling their role as laboratories by generating new strategies and approaches to protect the rights of those least likely to be represented. Given this, the article concludes with a discussion of how the strategies and models that have been developed can be adapted for clinical programs in other practice areas, not just those focused on consumer issues