With an international survey arguing that the affordability of legal counsel is a major impediment to accessing the Canadian justice system, our country has a long way to go to ensure that all Canadians can defend their legal rights. Fortunately, increasing availability of legal expense insurance improves access to justice in some of the most common and problematic areas of the law.
The high cost of legal counsel puts justice out of comfortable reach for most except the very wealthy, while government cuts have made legal aid inaccessible for almost all but society's most needy citizens. Middle-class Canadians and small and medium enterprises (SMEs) remain vulnerable to potential legal action in an increasingly litigious society.
Europeans have long embraced legal expense insurance; the concept originated there in 1920, and the majority of the population holds a policy. Globally, the legal expense insurance market accounts for more than $10 billion in written premiums.
In 2009, the DAS Group launched DAS Canada, the first coast-to-coast provider of legal expense insurance, offering a product suite that provides comprehensive legal cost coverage and advice to an extent only previously available in Europe.
Though Canada joined the party fairly recently, the concept of legal expense insurance appears to be gaining interest, as growth in written premiums makes clear that individuals, groups and businesses are all becoming more aware of the benefits offered by such policies.
It is not difficult to see the countless practical benefits of legal expense coverage. Take, for instance, the benefits for SMEs. Our economy needs entrepreneurs who are willing to take risks to create jobs, products and services. But very few SMEs have the capital to fund in-house legal counsel, forcing them into uncharted waters.
All businesses will inevitably encounter any number of legal issues - some predictable; others unimaginable.
Take, for example, the Toronto restaurant owner who was charged with assault earlier this year for throwing spices in the face of a would-be burglar. "Spice-gate" meant that the owner, who was simply trying to protect his property, will no doubt face significant legal fees defending himself regardless of the verdict.
More common scenarios involve employment disputes, statutory licence protection and tax protection, to name just a few. Should such issues arise, the costs of legal defence could cause some businesses significant financial strain.
On the flip side, many SMEs are also leaving a great deal of money on the table as a result of the cost of legal representation. As an example, because of the high cost of pursuing delinquent accounts, many would forfeit money owed to them rather than to spend thousands of dollars in legal fees to pursue them.
Unforeseen legal challenges are not unique to businesses; individuals engage in many day-to-day legal relationships that pose the risk of resulting in expensive actions. This is where an individual plan can be essential.
The employer-employee relationship, for example, is one of the most common sources of legal disputes for individuals. An employer wishing to dismiss
a staff member must act within the boundaries of employment law, but will more often than not act with its own interests in mind.
What happens if the employee believes he or she is being dismissed unfairly? While each case is different, that employee may be entitled to compensation well in excess of the statutory minimum severance.
However, without a job and income, many individuals in this situation would likely be deterred from taking legal action. A legal expense insurance policy would offload these risks and permit the beneficiary to pursue his or her own interests.
While individual legal issues are far too numerous to list, anyone who owns property or drives a car can benefit from legal expense insurance. An annual policy generally costs less than a couple of hours of a lawyer's time, but covers a wide variety of issues, including property disputes, tax issues and legal defence.
While policies cover costs related to going to court, even more valuable is the fact that many of the aforementioned situations could be minimized, defused or avoided altogether.
Just as medical doctors will encourage patients to eat well and exercise, a practice known as preventative medicine, similarly, DAS provides "preventative support" to its policyholders through free legal advice from lawyers who have expertise in a relevant field.
For the average individual or business, obtaining critical legal guidance would likely cost in excess of $360, the average hourly rate for a lawyer in Canada. And since most individuals and businesses do not have lawyers on retainer, the time spent researching and finding suitable counsel adds further to the costs.
Being able to speak with a lawyer at any time, DAS policyholders are better able to ensure they fully understand their legal rights and responsibilities. As such, they can deal with issues while these are in their infancy, rather than later when they turn into potentially costly litigation.
Canadians are beginning to understand the importance and benefit of such policies, and the concept is gaining growing interest in both the legal and insurance communities.
Intact Insurance now includes access to legal information as an automatic feature in small business policies.
The concept of full legal expense insurance also has the support of law societies and bar associations in Canada, with the Canadian Bar Association passing a resolution which states that "legal expense insurance has proven to be an innovation that significantly increases access to justice for the middle class."
Likewise, in Quebec, the Barreau du Quebec has long been an active supporter of legal expense insurance.
Taking the average spend in Europe of C15 per capita as a benchmark for a developed market, the legal expense insurance market potential in Canada could grow to be in the region of about $500 million as support and awareness continue to grow. This represents a sizeable revenue opportunity for brokers, and an invaluable way to fill critical gaps in current insurance products.