The government should run “awareness programmes” to educate the public about the benefits of legal expenses insurance (LEI), the Association of Consumer Support Organisations (ACSO) has argued.
Matthew Maxwell Scott, executive director of ACSO, said the government had promised that LEI would provide citizens with a “safety net” to bring claims, but had “done nothing to promote the product”.
In the report Legal expenses insurance – A force for social good, ACSO said LEI provided “more people with affordable access to justice than any other mechanism in our society”.
The wide take-up of LEI helped “democratise legal services” and keep power in check.
“Larger companies are less likely to ignore their contractual obligations and unscrupulous employers are less likely to abuse workers’ rights, knowing that many will have access to legal advice and support.”
The report, sponsored by insurer ARAG and law firm Lyons Davidson, noted that, following the LASPO legal aid cuts, the UK had “slipped down the rankings” in the global rule of law index published by the US-based World Justice Project.
The category in which the UK scored lowest last year, falling in the rankings from 13th to 20th, was for the ‘accessibility and affordability of civil justice’.
ACSO said LEI operated “in the same imperfect world” as other mechanisms that provided people and small businesses with affordable access to justice, but “unlike most others, its use is increasing”.
LEI policies did not cover everything, but they did provide extensive cover on issues that were “fundamental” to the average UK household.
“This has been highlighted during the pandemic, when LEI providers saw increases in employment law enquiries, landlord and tenant issues, property and contract disputes…
“While the insurance model will never serve all of the legal needs of all of the people, it provides much more affordable access to justice to a much wider portion of the population than any other mechanism, both here in the UK and in many other countries.”
ACSO said almost all LEI policies included a ‘prospects of success’ clause that required a case to “maintain reasonable prospects of succeeding in court for the costs to be indemnified under the policy”.
This could “sometimes be contentious” but it was “fundamental to LEI”, both in helping the courts ensure their time was spent on cases with merit and by saving costs for cases with realistic chances of success, keeping premiums at an affordable level.
ACSO said the use of panel law firms by LEI insurers was “often misunderstood and occasionally misrepresented”.
Using panel firms enabled “providers to exercise careful control over both quality and costs and is little different, in principle, to the way in which legal aid still works”.
Mr Maxwell Scott said that when the Civil Liability Act became law in 2018, the government promised LEI would provide citizens with “the safety net” they needed to cover them for the cost of making a claim, yet it had “done nothing” to promote the product.
“People are in the dark about the benefits LEI brings, both to their individual rights and the civil justice as a whole.”
He added: “This is undoubtedly a product whose time has come. Providers have re-booted LEI cover for the post-reform world, and we urge the industry and the government to get behind it and make sure that people understand the value LEI can bring if they find themselves needing to make a claim.”
Its 10-year strategy for the legal sector, published in 2021, the Legal Services Board said one ambition for 2031 was that “most households have an LEI policy or other mechanisms enabling them to access a wide range of legal services free at the point of need”.
A study published by the board later in the year also called for LEI to be promoted more broadly.