How to pay for some justice

Karen Fallis works on the assembly line at the Chrysler plant in Brampton, Ont., bolting on seat belts and “doing the same thing 500 times a day.” A single mother with two kids, her free time—not to mention disposable income—is in short supply. So when Fallis found herself embroiled in a legal dispute with her ex over child support payments, she was relieved that she belonged to the Canadian Auto Workers Union: CAW members have had access to a legal services plan for over 20 years. Just as health insurance covers medical bills, this type of coverage pays for lawyers.

Fallis called up the CAW Legal Services Plan, a law firm where lawyers work directly for individual members, not for the car companies or the union itself, and handle everything from property deals to litigation. (For family law cases like Fallis’s, the plan covers 12 hours of a lawyer’s time; after that, members pay a reduced rate of $110 an hour, about half what the average lawyer charges.) After a legal battle that lasted over a year and eventually went to trial, Fallis came away with a result she was happy with. It wouldn’t have happened, she says, without the coverage. “I just wouldn’t have been able to do it financially. I would have bowed down, and regretted it,” Fallis says. “Money is a huge issue when you’re talking about lawyers.”

It’s a sentiment shared by a lot of middle-class Canadians who find themselves too wealthy to qualify for legal aid, but not wealthy enough to afford a lawyer. As Fallis knows, though, there’s a third way that’s scarcely been tapped in this country. Legal services plans, which protect against the cost of future legal action, range from union-based plans like the CAW’s to policies issued by private insurers. They’ve never caught on in Canada, though that may be about to change. DAS Legal Expenses Insurance Company, which is part of DAS Group, the largest legal expenses insurer in the world, is set to expand into Canada; it should be selling policies here by the end of the year. If successful, it will change how we access the justice system, hopefully for the better—as long as Canada’s provincial law societies, the legal profession’s self-regulating bodies, don’t stand in the way.

Legal expenses insurance (also known as LEI) has been popular in Europe for decades. In Germany, where DAS is based, 42 per cent of households have a policy. The United Kingdom is the fastest-growing market at the moment, and Paul Asplin, chief executive officer of DAS UK Group, sees Canada as the same kind of opportunity—our legal system is similar to England’s, he points out, and has the same problem of middle-class accessibility. “Our Canadian research showed that many families cannot afford the cost of taking legal action to protect their rights,” Asplin says.

In April, DAS UK Group will be opening an office on Toronto’s Bay Street, with plans to expand to Calgary and Vancouver soon after (the Canadian company will be a subsidiary of the U.K. group). DAS hopes to begin issuing policies as early as July, ranging from family legal protection—insurance against future disputes with an employer or neighbour, for example—to a motor policy, which covers anything from contract arguments over a vehicle, to lawyers’ fees in the event of a driving-related lawsuit. The family product should cost about $300 per year. “Legal fees are paid, and if you lose, any costs you might have to pay as a result,” Asplin says, noting that DAS does cap payments at certain limits. Each subscriber will also have access to basic legal advice over the phone. It’s not cheap, but it’s a bargain compared to the cost of hiring a lawyer.

DAS’s entry is sure to shine a spotlight on legal services plans, but they aren’t entirely unknown here. Many Canadians might belong to one without even knowing it, although most are less extensive than the CAW’s, which is an employer-paid, taxable benefit. In a 2006 survey, Stephen Ginsberg, executive director of the CAW Legal Services Plan, found that roughly 5.5 million Canadians subscribe to some type of legal services plan, most of which offer little more than access to advice over the phone. (These are often add-ons to employee assistance programs, credit cards or other insurance policies, he says.) Pre-Paid Legal Services, which is not a licensed insurance provider, operates in four provinces. Its family plan, which costs $26 per month, provides members with limited access to some services, but doesn’t cover the costs of litigation.

European-style legal expenses insurance, meanwhile, remains relatively rare in Canada, yet it’s been shown to help members of the middle class access the justice system when they might otherwise avoid it. A German study, for example, found this type of insurance encouraged people to fight cases with merit that would otherwise have been dropped. After interviewing a sample of U.K. residents with LEI, Richard Moorhead, deputy head of Cardiff University’s law school, found those who received funding for their claims were generally satisfied. Based on Germany’s experience, “there can be little doubt that a well-developed LEI market can improve access to justice,” according to Matthias Kilian, an academic lawyer at the University of Cologne.

A number of Canadian experts think we could benefit from it, too. In his recent report on Ontario’s legal aid system, University of Toronto law professor Michael Trebilcock concluded that legal insurance is an “underexplored” means of promoting access to justice, and urged the Law Society of Upper Canada and Legal Aid Ontario to take note. “We haven’t made as much progress in this area as we might have,” he says. Ontario Chief Justice Warren Winkler, who chaired a task force in the 1970s looking at legal services plans, calls them “meaningful and workable.” But they never took off on a large scale.