Affordable justice that's also good for business.

In almost any profession, the urgency of the present moment often prevents perspective on larger issues.

Like many lawyers, I was surprised by the 2014 World Justice Project analysis that ranked Canada 8th out of 24 countries in terms of access to civil justice. There continues to be signs of ongoing quality issues in Canada’s legal system: longer delays in getting to court, differential access to non-criminal justice, fewer opportunities for middle-income Canadians to access legal aid, more Canadians going to court on their own, and even more people are simply giving up.

In 2012, The Canadian Bar Association reacted by striking an Access to Justice Committee, which released its seminal report, Reaching Equal Justice Report: An invitation to envision and act, in 2013.

The committee noted, “We first need to convey the abysmal state of access to justice in Canada today. We need to make visible the pain caused by inadequate access and the huge discrepancies between the promise of justice and the lived reality of barriers and impediments… We live in ‘a world thick in law but thin in legal resources.’ We need to radically redress this imbalance.”

One key equal justice strategy identified in the committee’s report was the greater provision and use of legal expense insurance (LEI).In simplest terms, LEI refers to any product that provides insurance coverage, upon payment of a premium, for specified legal services. Like other forms of insurance, LEI spreads risk among policyholders, reducing each holder’s costs.

Although relatively new to the Canadian market, legal expense insurance had its origins almost 100 years ago. The first legal expense insurer was founded in Le Mans, France in 1917, specifically to provide liability insurance for the 24-hour Le Mans auto race. Today, DAS operates in 18 countries and is the worldwide market leader in providing affordable justice for the middle class. DAS Canada was established in 2010 and became the first firm to market legal expense insurance outside Quebec. It offers a range of individual, business and group coverages.

The appeal of legal expense insurance is both logical and emotional. It allows individuals and business owners the ability to either pursue or defend their legal rights. It provides a greater level of certainty and protection from unexpected fees. As well, it offers the comfort of unlimited access to legal advice at any time. It is most beneficial to middle-income Canadians who earn too much to qualify for legal aid, but do not typically have sufficient resources to engage counsel.

Legal expense insurance is widespread in Europe, where it is commonly sold as an add-on to car and home insurance policies. About 98% of Swedes, 75% of German and French residents and 68% of the population of the U.K. are covered by some form of legal expense insurance.

Despite its appeal and high rate of acceptance in Europe, adoption in Canada has been slow, but we are working to change that.  Greatest acceptance has come in Quebec, where the legal community - through La Barreau du Quebec - has taken a very active role. It embraced the product early on, actively promoting it to the public and stressing its benefits to other law societies. Between 2003 and 2009, La Barreau du Quebec spent over $2 million to promote legal expense insurance, raising the number of insured Quebec families from 100,000 to 225,000. Adoption in other jurisdictions lags, although Professor Michael Trebilcock urged the Law Society of Upper Canada and Legal Aid Ontario in 2008 to “accord a high priority to promoting the role of legal insurance.”

A key proposal in the Canadian Bar Association’s Equal Justice report is that the vast majority (75%) of middle-income Canadians should have legal expense insurance by 2030. The CBA’s support of legal expense insurance will hopefully raise awareness and increase knowledge of its significant benefits.  

The legal community may also have imperfect knowledge of the LEI product and how it works. When I talk to fellow lawyers, some believe that legal expense insurance might be bad for business. Nothing could be further from the truth. DAS Canada, in fact, partners with both advice and panel firm lawyers.  It uses a panel consisting of over 2,000 Canadian lawyers, a number that ensures its commitment to quality and provides sufficient work for its partners.

To my mind, the greatest benefit of legal expense insurance is that it provides the means for Canadian consumers and business owners who would not normally be able to access the legal system to do so. Making the legal system more affordable for middle-income Canadians will support the Canadian Bar Association’s efforts, and grow the overall market for legal services. While some lawyers perceive LEI as a competitive threat, others have been quick to embrace its benefits. Jamie Bleay, a lawyer with Access Law Group in Vancouver, indicated recently that, “Legal expense insurance can give insured parties an opportunity to engage a lawyer when they would not necessarily have been able to afford one without the insurance.  In my view, the legal marketplace should benefit from more and more individuals having this type of insurance coverage…To date we have seen more exposure to clients in the…marketplace who might not otherwise feel like they could afford our legal services.”

Lawyers like Bleay recognize the legal expense insurance glass is half-full, not half-empty. Embracing legal expense insurance makes justice affordable for the middle class: it’s the right thing to do and it makes very good business sense.

About the Author

David Smagata is the vice president of claims and underwriting, chief legal officer and complaints officer at DAS Canada. DAS.ca