An Insurable Risk?
At the IBA 2019 Seoul Conference the IBA Access to Justice Committee issued its report on ‘Legal Expenses Insurance and Access to Justice.’ A copy of the report can be found here.
The report comes to interesting conclusions. It seems that other countries have similar issues to Scotland. That is, while legal aid cover may be available for the less affluent to vindicate their legal rights, and the affluent may be well able to afford it, there is a ‘forgotten middle.’
That is our experience in Scottish Litigation. Most private individuals cannot afford to litigate cases the whole way before the courts. Many of them do not qualify for legal aid even if they could find a lawyer to take the work on a legal aid basis. They therefore are denied justice or have to make huge sacrifices to try to obtain it.
The IBA suggest that Legal Expenses Insurance where, before the event, individuals are insured against legal risk, is a partial solution. It seems to be used much more extensively in other jurisdictions, such as Germany, than in Scotland.
In Scotland there are awareness issues. Often clients are not even aware that they have legal expenses insurance. Sometimes they even pay fees when they are insured.
The IBA report that identifies this is an issue more generally because legal expenses insurance is often bundled with house insurance or car insurance. There are, however, other issues: For example, there are usually exclusions to such policies and therefore certain types of cases will not be covered such as divorces and some types of criminal investigations.
There are also issues about whether insurer panel Solicitors are acting primarily with the insurer in mind or the insured. In Scotland, the client will generally have the option to instruct their own solicitor, providing that solicitor agrees reasonable terms with the insurer. That right is enshrined in law. In terms of the Insurance Companies (Legal Expenses Insurance) Regulations 1990, Regulation 6:
‘Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).’
Insurers are sometimes not good at signposting this! However, BBM certainly find that when confronted with the law insurers will generally agree to the insured’s own choice of solicitor being used.
There are other funding options, including third party litigation funding for bigger claims, contingent retainers for some personal injury work, but the report points out that there will need to be imagination to come up with other funding solutions if Access to Justice for ‘the forgotten middle’ is to be improved. It will be interesting to see how policy makers and government move this issue forward in Scotland. The Scottish government continues to formulate its view on the Taylor Review of Litigation Funding in Scotland. More changes may be on the way.