00:00Hi everybody, I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now is Matt
00:08Leighton, Senior Vice President of Consumer Analytics at LegalShield. Matt, thank you so
00:12much for joining me. Thank you for having me today. The economy continues to be a top issue
00:18facing Americans and this concern has really been compounded by the tariff whiplash we've seen in
00:24recent months. LegalShield found bankruptcy inquiries climbed to pandemic-era levels in Q1
00:30this year. So to start the conversation, can you break down exactly what you found? Sure, and what
00:36our index is, is the Consumer Stress Legal Index and we've really been running this since January of
00:422002. On average, we failed 150,000 requests for legal services per month. That's over 35 million
00:51inquiries since 2002. And what's interesting is that this isn't a survey or a sentiment analysis,
00:58this is hard data. We're measuring the volume and frequency of folks requesting legal services for
01:04issues they're experiencing every single day, right? I like to say folks don't call a lawyer for a good
01:09time, they call because they have an issue or they're concerned about a potential issue. And this is what
01:14makes this data so powerful. And you're 100% right, what we've seen really over the course of Q1,
01:212025 is an increase in requests for legal services for bankruptcy related issues. The highest since
01:29we've seen pre-pandemic that Q1 of 2020. When you see people calling regarding bankruptcy related issues
01:38and you're seeing that rise, what is that usually a harbinger to?
01:41So really what our data says, you know, bankruptcy is normally kind of an end game in a process. Our
01:50data is also showing increased requests for legal services for items like billing disputes and
01:57collections. We kind of say that's a leading indicator of maybe a future call on bank bankruptcies. And
02:05really what's extremely important about our bankruptcy index and our data throughout the entire history,
02:11it's been a two quarter leading indicator of bankruptcy filings as reported by the US government.
02:19That's why not only is it kind of a warning sign now that those bankruptcy requests for services are
02:26increasing, we believe that, you know, they are going to continue increasing for the foreseeable future.
02:31And you mentioned before that you believe that a summer surge is next. Can you talk to us a little
02:38bit about that?
02:38Sure. And that's that two quarter leading indicator that we're that we're talking about that our data
02:45has been predictive of future bankruptcy filings. And again, we're measuring
02:52everyday people calling a lawyer asking about bankruptcy related issues, right? I'm having trouble
02:58paying my bills. Can I skip this payment? What's going going to happen? You know, there's not enough money
03:05at the end of the end of the month, right? So then they start beginning to get into these bankruptcy
03:11related questions when you know, all other options have been exhausted. So you're seeing bankruptcy
03:17related questions rise. And this comes at the same time that legal shield found three consecutive
03:22quarters of elevated consumer stress. Talk to us about that as well. Sure. So our consumer stress
03:28index is really the the headline index and it's composed of three different sub indices, the bankruptcy
03:34index foreclosure index and a consumer finance index that then all roll up into the overall
03:41consumer stress index. And we've seen, you know, sustained small increases over the last several
03:48quarters increases in each of those which continues to continues to increase in the stress levels.
03:55So you've been gathering this data legal shield has since 2002. Historically, how do you see these
04:02types of levels go down? What needs to happen? There needs to be relief at the, you know, American
04:08household level, right? Again, we've been looking at this since January 2002, over 35 million requests
04:16for legal assistance over that time has went into this to this index. And really what this says, I mean,
04:22when stress rises, it's because that, you know, household economic condition is deteriorating.
04:31Based on what you found then to that point, what is the state of the average American household finances?
04:37Really what we're seeing when we talk to our to our lawyers about what our members are asking about,
04:44it's that the American household, the financial condition, they're concerned right now, right?
04:50As prices continue to increase, interest rates stay high, the accumulation of inflation over the
04:57last several several years, it's taking a bite out of that household budget. And folks are asking the hard,
05:04the hard questions, you know, what can I afford to purchase? You know, what bills can I afford?
05:10Can I afford to pay? And kind of what are some of my options, if and when I'm not able to pay some of
05:16my some of my bills? So, you know, I, I would say the condition of the household today is, you know,
05:21it's stress isn't rising greatly, but it's not going, going, going down. Folks are concerned right now.
05:28Luckily, they're reaching out and asking questions and preparing for the future.
05:33This seems to that point like a canary in the coal mine moment of people are preparing, people are
05:38concerned, people are asking questions. What struck me about what you said earlier is that you've been
05:44collecting data since 2002. And as we know, we went through the Great Recession in 2008, 2009.
05:51Is what you're seeing right now is that anywhere pre 2008 levels? I mean, what does that look like?
05:58Yeah, no, we're certainly not up to the to the Great Recession or the housing crisis levels that
06:04we've that we've seen in those years. But what we are seeing is that we're at and rising now above
06:11what with the levels we saw pre pandemic. So during the pandemic, a lot of our stress levels lowered
06:17because of a lot of the the government intervention and, you know, bill paying and rent and stuff like
06:24that. But now each of our stress level indices are rising above where we were pre pandemic and again,
06:31continuing to rise. And what are you finding out about the housing market specifically? Because I
06:37know you have some data on that. Do Americans think that right now is a good time to buy? What does that look
06:42like? Sure. So our housing index, we have a housing sales index and a housing construction index,
06:48and both of both of those are slowly ticking down. As you can imagine, at the start of the increase in
06:55the interest rate, we saw precipitous drop in both of those the housing sales and housing construction
07:01index. And we're not seeing, you know, any any relief or any any change there. Both indices continue to
07:09slowly take down. And again, we believe that's because of that higher level economic stress that
07:15that overall index is showing, you know, folks are having a hard time making that decision on
07:20upgrading a house or, you know, looking to, you know, maybe I, I can't afford a higher house payment
07:27right now. So let's put off that house house purchase. This is all coming at a time as we set
07:33the top of the conversation that a tariff plan was rolled out. Tariffs are expected to raise price
07:39prices and inflation rates and shrink consumer spending and disposable income. Based on what
07:44you're seeing, do you think tariffs are really going to exacerbate these concerns?
07:49Well, and I think you just said it, if the increasing the tariffs continue to increase prices,
07:55you know, hold interest rates or even increase interest rates, anything that takes a bigger bite
08:01out of the average American's household budget is going to exacerbate the stress and increase the stress.
08:07So if tariffs do in fact increase prices, we're going to see a continued increase in the
08:13financial stress of the American household. The tariff plan was touted to help small businesses,
08:19help the everyday American. The Trump administration said Wall Street has had its turn. It is now
08:25Main Street's turn. Based on what LegalShield has found, do you think that's the case?
08:30Well, really, what our data shows is how the everyday American and how the small businesses are
08:36performing and faring in the economic conditions today. And I think even the Trump administration
08:42mentioned that there may be some upfront pain and all of the benefits are going to come later. Our
08:49index doesn't look far enough out to later to answer that question. All I can say is that if prices
08:56rise today due to tariffs, we will see an increase in the stress.
09:00Matt, it's clear based on these numbers here that Americans are continuing to be concerned about
09:08their finances and the economy at large. What specifically are you looking out for next?
09:12Well, again, we're just we're watching how the American consumers is reacting to the, you know,
09:21almost daily changes and fluctuations in the economic conditions at the micro level. Again,
09:27we're looking kind of at that micro level. What's happening at the macro level? Does that filter
09:31down to the to the individual? And how did they how did they respond? And again, as long as prices and
09:38interest rates continue to stay high, we expect that financial stress to continue to to rise, right?
09:45Because, you know, folks have been dealing with this for quite a while now. And there are a lot of
09:50people are coming. It's really at the end of their end of the rope. That's why we see some of these
09:55bankruptcy numbers going up. It's like this is my last this is my last option. Matt Layton, I really
10:02appreciate the conversation today. I appreciate the data. And when you have numbers for Q2, I would
10:07love to break them down and dissect them with you. Thanks for joining me today. Thank you for having me.
