Access to justice plays a vital role in maintaining the rule of law and ensuring fairness and equality within our civil justice system. In a perfect world, justice could be done without regard to the high costs of litigation.
Regrettably, we live in a world that is far from perfect and litigants must be mindful of the high costs and risks of litigation. Despite the challenges, the introduction of the often-underexplored option of Legal Expense Insurance (LEI) in Ontario may provide injured claimants with a greater sense of security to pursue claims with less concern for the financial risks involved.
Legal Expense Insurance is popular in Europe and Quebec and has recently gained some recognition in Ontario.
The following discussion will address some of the difficulties with our civil justice system and the ways that Legal Expense Insurance helps address these problems, with a focus on injured claimants.
CHALLENGES WITH ACCESS TO JUSTICE IN THE CIVIL JUSTICE SYSTEM
The Supreme Court of Canada has recently recognized the problems in our legal system regarding access to justice. In its recent decision of Hryniak v. Mauldin, 2014 SCC 7,  1 S.C.R. 87, Justice Karakatsanis speaking for the Supreme Court stated at the outset:
“[e]nsuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial.”
Injured claimants, even those with competent lawyers acting on a contingency fee basis (sometimes referred to as a “no win no fee” arrangement) may still face great financial risks associated with litigation against the deep pocketed insurance companies. For example, in the event a claim proceeds to trial and is unsuccessful, the injured claimant may end up being responsible for paying the disbursements incurred from both sides and may also be liable to pay the insurance company’s legal bill, which could be very significant. For example, the cost of civil matters can vary but according to an October 2013 report published by the Action Committee on Access to Justice in Civil and Family Matters, national ranges of legal fees may vary from “$13,561 – $37,229 for a civil action up to trial (2 days), $23,083 – $79,750 for a civil action up to trial (5 days), $38,296 – $124,574 for a civil action up to trial (7 days)”
The modernization and expansion of legal services to better promote access to justice is an ongoing challenge. According to the Action Committee on Access to Justice in Civil and Family Matters’ 2013 Report,
“Innovations are needed in the way we provide essential legal services in order to make them available to everyone. The profession — including the Canadian Bar Association, the Federation of Law Societies of Canada, law societies, regional and other lawyer associations — will, together with the national and local access to justice organizations … take a leadership role in this important innovation process.”
One such innovation to reduce the financial risk of litigation is through Legal Expense Insurance.
HOW LEGAL EXPENSE INSURANCE BENEFITS INJURED CLAIMANTS:
This type of insurance can protect those pursuing personal injury claims by providing coverage for expenses and any legal costs that a claimant might otherwise have to pay out of their own pocket in the event that the claim is unsuccessful or abandoned.
For personal injury claims, the premiums for LEI would be deferred until the conclusion of the claim only if the claim is successful. If the claim is unsuccessful, no premium is payable and the policy would still provide coverage to the injured claimant against adverse legal costs and disbursements that they may otherwise be responsible for paying after losing their case.
The Law Society of Upper Canada has referred to Legal Expense Insurance as a “useful insurance product, with the potential to make legal services more accessible and affordable”.
Given the benefits of this innovative option, the insurance industry and its regulators should be encouraged to support greater distribution and sale of LEI as part of more standard insurance products.
In the field of personal injury litigation, the often-cited “David and Goliath” comparison between accident victims and defending insurers creates a financial power imbalance. However, LEI may serve as one such innovative development to level the playing field and reduce the financial power imbalance at play. Although not the cure to the access to justice problem, LEI may be part of the solution. After all, what good are legal rights if you can’t enforce them?
This blog post was contributed by Lawson Hennick, associate lawyer with Yermus & Associates and the creator of Lawbubble.com