The Lawyers Weekly - June 10, 2011

Insurance
Continued From Page 5

for most consumers. Legal expenses insurance (LEI) is becoming more widely available, but in practice consumers are poor judges of whether we will need to hire a lawyer at some point in the future. A public insurance program would overcome each of these hurdles by channelling consumer demand through a single purchaser of legal services, LAO, which could use its leverage as a “bulk buyer” to drive down the costs of legal services while enforcing service standards.

The program should be designed with three key features in mind.

First, taxpayers should be
enrolled by default, but free to “opt
out.” As long as the government
educates taxpayers about the
benefits of LEI, enrolling everyone
by default would help to overcome
consumer bias against LEI. At the
same time, this would ensure that
coverage could be provided on an
actuarial basis, at low cost, because
the province would be insuring a
large and well-diversified risk
pool. Conversely, lawyers should
be able to “opt in” to the program,
on a case-by-case basis, at pre-
determined rates, as they currently
do in the LAO certificate program.
This would ensure that they are
able to accept LEI mandates as
well as private retainers.

“We expect that a
public insurance
program would
actually spur the
development of
market alternatives…
premiums (seed financing would
be required to get the program off
the ground). Controls on costs
would be built into the program’s
design. For example, LAO would
use its purchasing power to keep
costs down, as we have already
stressed, but LAO could also
innovate in delivering low-cost
legal services in its own right, for
example by increasing use of staff
lawyers, helplines and the like.
LAO would also take advantage of
economies of scale in administer-
ing the program, because it is
already designed to work with
lawyers and their clients to
approve and monitor legal aid
funding. The simple fact that tax-
payers would be allowed to opt out
of the program would exert com-
petitive pressure on LAO to keep
costs down. We expect that a pub-
lic insurance program would
actually spur the development of
market alternatives, by increasing
awareness of the benefits of LEI.

Sujit Choudhry is Scholl Chair
and associate dean at the Univer-
sity of Toronto Faculty of Law, and
sat on the board of directors of
Legal Aid Ontario from 2006 to
2010. Michael Trebilcock is a pro-
fessor at the University of Toronto
Faculty of Law and recently con-
ducted a comprehensive review of
Legal Aid Ontario for the Attorney
General of Ontario.
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