Legal-costs insurance needs official boost, says longtime provider

The Law Society of Upper Canada has welcomed a new legal expenses insurance scheme for individuals as a potential solution to access-to-justice problems in Ontario.

Earlier this month, DAS Canada received its insurance licence from the Financial Services Commission of Ontario, a move that paves the way for it to offer insurance policies covering legal actions arising from unforeseen events.

The company announced plans to extend its business into Canada last year from its European base, where the schemes are well-established.

“It’s good news for access to legal services, and we hope other companies are going to join the market,” says Malcolm Heins, CEO of the law society. “We’re pleased that this has finally happened, and it’s going to be interesting to see how the public reacts and whether they pick it up.”

For $360 per year in premiums, the company insures families and individuals for up to $100,000 in expenses for cases involving issues such as employment, personal injury, and property and contract disputes. That includes lawyers’ fees, disbursements, and adverse costs if the lawsuit is unsuccessful.

The service doesn’t cover family law matters. Policyholders can also phone a hotline for free legal advice.
The policies will particularly benefit middle-income Ontarians, according to Glenn Hainey, a partner with Gowling Lafleur Henderson LLP and also a law society bencher.

“When you see the extent to which people in that income range require legal assistance and don’t qualify for legal aid, and with the cost of legal services as it is, I think giving those people the ability to protect themselves is a very positive innovation,” he says.

Paul Schabas, co-chairman of Convocation’s access to justice committee, says he has watched the company’s regulatory progress carefully. “It’s a product that may provide an access-to-justice route for people who would otherwise be prohibited from ether taking or defending actions.”

Susan McGrath, another member of the committee who also runs her own family law practice, believes legal-expense insurance should be an option available to the public but has concerns about the limitations. “For the majority of people, if they’re going to have a problem, it’ll be a family law problem, and that’s excluded,” she says. “For that reason, I think it may be of limited value to some people.”

But Jas Basra, DAS Canada’s vice president and chief legal officer, says the legal helpline will fill some of the gaps by giving out advice on family law issues. “If there was a need for legal intervention, we could reroute the case to one of our panel firms on a preferred rate,” she says.

DAS refers clients with valid claims to a panel of law firms based on the type of matter at issue. The company selected its lawyers carefully, according to Basra. “It was not a shotgun approach. We spent a great deal of time meeting the firms before they joined the panel. We have enough to service the country but we didn’t want too many. It’s a limited panel.”

The panel model has raised concerns that consumers may have limited scope to choose their own lawyers, but Heins notes that with increased specialization in the legal profession, a panel could actually benefit policyholders. “At this juncture, we’re going to give the scheme the benefit of the doubt,” he says.

Kevin Le Messurier-Girling, who runs his own legal-expenses company, STERLON
Underwriting Managers Ltd., from Courtice, Ont., says his business employs a wider panel of lawyers to make sure the insurer’s interests do not supercede those of the clients. “Lawyers shouldn’t be concerned that they’ve got a huge account at risk if they don’t agree with the insurer’s philosophy,” he says.

Since the early 1990s, STERLON has struggled to make inroads in Ontario despite offering legal-expenses insurance to corporations and professionals. For his part, Le Messurier-Girling feels he has had no help from law societies across the country. “We refuse to attend any more meetings with the law societies in Canada,” he says. “They keep on talking about supporting something but they don’t do anything about it.”

Two years ago, in his review of legal aid in the province, University of Toronto professor Michael Trebilcock highlighted legal-expenses insurance as an idea with unfulfilled potential. “The Law Society of Upper Canada and [Legal Aid Ontario] should accord a high priority to promoting the role of legal insurance in Ontario,” he wrote, a recommendation Heins says the law society has followed.

“We’ve been on the bandwagon since 1993. Our problem has been that there was nobody to send people to. Now when someone calls us to ask about legal-expense insurance, we can point them in the direction of DAS. And we’ll also have something up on our web site soon.”

Le Messurier-Girling hopes the big marketing budget that comes with DAS Canada’s arrival will help the whole concept gain a foothold in the English Canadian market. The situation is different in Quebec, where legal-expenses insurance is firmly established. There, the Barreau du Québec has taken the lead in promoting the service, Le Messurier-Girling says.

“Once you get somebody who’s used it, they’re a solid convert and they shout it from the rooftops.”
Earlier this year, the report from the Civil Legal Needs Project, a collaboration between the law society, LAO, and Pro Bono Law Ontario, also recommended an increased focus on legal-expenses insurance.

It found that more than two-thirds of low- and middle-income Ontarians were uninterested in the idea because they didn’t think they would use it or believed it was too expensive.

“For such initiatives to succeed, however, they must be accompanied by public education as to the potential benefits and cost savings associated with these initiatives,” reads the report.

Lawyer Kenning Marchant believes recent changes to the civil litigation rules in Ontario may also give a boost to the industry. “

The courts have indicated that costs should be proportional to the amount in dispute; we’ve expanded the Small Claims Court jurisdiction; and we’ve introduced the simplified procedure for civil matters in lawsuits under $100,000,” he says, noting all of those changes could attract more competitors to the Ontario market.

“I think it’s a very positive development,” he says.

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