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Legal Insurance…A Good Idea?

Michael CarabashIn Kate Lunau’s most recent article in MacLean’s magazine (entitled “How to Pay for Some Justice – Special Report – Legal insurance could be just what Canadians need” on March 9, 2009), she discussed how legal insurance could benefit Canada’s middle class – who earn too much money to qualify for legal aid but who can’t afford high hourly rates of typical lawyers (as the rich upper class and large organizations can).

I’ve heard about pre-paid legal insurance before. The idea I believe is a good one. Having people spread and share the costs of legal services seems to make absolute sense. It’s already being done to a large extent in the U.S. and Europe. So why hasn’t it taken off here? Well, some could blame the Law Society of Upper Canada for not adocating for or otherwise actively promoting the public to buy into legal insurance. Perhaps, in the Law Society’s own defence, that it not its proper role. But perhaps it should be?

I tried looking into the advantages and disadvantages of pre-paid legal insurance and here are my thoughts:

Advantages

  • It offers members of the middle class the ability to pursue claims with merit by being able to afford legal counsel. Sometimes a plan will subsidize the hourly rate of a lawyer (e.g. to $100/hour or $195/hour). Sometimes a plan will cover up to a certain amount (e.g. $100,000 worth of legal fees) so long as you pay the monthly or annual premiums (at a cost, for example, of a few hundred dollars). Perhaps you’ll have to a pay a premium. This is all typical insurance stuff…

Disadvantages

  • I have yet to come across a theoretical argument for why pre-paid legal insurance, as a way of promoting access to justice, should not be pursued. I believe, at the moment, that the disadvantages to this service would arise more in the context of the practical execution of providing legal insurance. Such problems could, for example, arise in the way in which legal insurance is promoted, how claims are assessed by legal insurance companies when they arise, what the plans actually cover, and the services ultimately provided by lawyers. No doubt, there will be complainers and not everything will go smoothly. But these execution issues arise in the provision of most services and they can be worked out at the appropriate time.

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