Whatever happened to Legal Expense Insurance? Recent successes and failures of legal insurance schemes in Australia and overseas

Abstract

Legal Expense Insurance (LEI) is one of the ‘access to justice’ mechanisms that was considered in many societies in the 1980s and 1990s. Governments, legal professions and legal reformers in rich western societies highlighted the potential of mechanisms such as LEI, contingency fees and class actions to improve citizens’ access to justice by controlling the cost of legal services. By controlling these costs, LEI and the other mechanisms promised to improve citizens’ access to legal services and the courts. LEI was particularly popular because it promised to improve access to legal services for the ‘in betweens’ of middle income groups. That is to say, it promised to improve access to legal services for the income groups that were not poor enough to qualify for legal aid but not rich enough to easily afford the costs of legal services. The evidence from the last two decades suggests, however, that LEI has been a qualified success in improving citizens’ access to justice. In general, it seems that the reformers had unrealistic expectations about the ease of developing LEI. The result is that while LEI is successful in some societies, the cost of legal services continues to be a problem for the ‘in between’ in many others.

This article takes stock of LEI developments in a number of societies in the last two decades and considers its prospects for the future. First, it describes the development of LEI in a group of common and civil law societies. It demonstrates that LEI has fared best in the societies with civil law traditions but that the picture is more ambiguous in the common law societies. It concludes by highlighting some lessons to be learnt from these developments.