Canadian Lawyer

Regional wrap-up Central QUEBEC LOOKS TO EXTEND LEGAL FEE INSURANCE Q uebec's Justice department is looking into concrete steps to extend legal expense insurance to a wider segment of the province's middle class as a way to boost access to justice. Justice Minister Bertrand St-Arnaud said he has mandated members of the justice department and the Autorité des marchés financiers (AMF), the provincial financial and insurance industry regulator, to report back on the logistical and current budgetary impact of implementing the recommendations of a major report on the state of legal expense insurance in Quebec. The 118-page report was tabled in Quebec's National Assembly and made public at the end of November following a year-long process of consultation, research, and analysis by a seven-member committee of experts including an economic consultant and members of the legal community and the insurance industry. Right now about 225,000 Quebec households have legal insurance, about 11 per cent of the 25 per cent of Quebec households deemed to be middle class with an average annual income of $75,000, the report found. Quebec has the highest number of people covered by some form of legal expense insurance in Canada, with an estimated 90 per cent of the national total residing in the province. Almost all of those who benefit from legal expense insurance do so through a $50 add-on to their home or automobile insurance policies. Most typical plans offer unlimited legal advice on any subject by telephone, and reimbursement for lawyers' fees and court costs, usually with an annual maximum claim of $15,000, including a limit of $5,000 per case. There are restrictions on the types of law eligible for coverage — no family or criminal law, for example. Until recently it has not been possible to buy stand alone legal fee insurance in Quebec, though DAS Canada, a specialty legal expense insurer that is part of Germany's giant DAS Group, in November launched operations in Quebec after obtaining a provincial permit — two years after its initial Canadian début in Ontario. Pierre Gagnon, former bâtonnier of the Barreau du Québec and head of its legal expense insurance committee, was co-president of the committee of experts along with Stéphanie Poulin, until recently chief legal counsel of Option consommateurs, a non-profit association that promotes and defends the rights of Quebec consumers. Gagnon says minor changes to Quebec's regulatory framework for insurers and a sales tax deduction credit for legal expense insurance could significantly boost legal fee insurance coverage for Quebeckers. If the regulatory framework of the AMF were changed to allow legal expense insurance to be distributed by life insurers, it could be included in group insurance, potentially adding thousands of households especially if the government took the lead by offering it 8 F e b r uary 2013 www.CANADIAN L a w ye r m a g . c o m to its employees and encouraging other employers to do the same. That is not the case now since legal fee insurance is categorized under damage insurance, says Gagnon, whose committee consulted with the AMF on the issue as part of its work. The committee also recommends the government give a tax credit for people with legal expense insurance, given that under the current Quebec tax regime businesses can deduct legal expenses but citizens cannot. It suggests a provincial sales tax credit of 50 per cent of the premium for legal fee insurance. An additional 75,000 households could thus be covered in addition to the existing base of 225,000 at a cost of about $7.5 million, or about 95 cents on a per capital basis, Gagnon says, citing his committee's report. Put another way, it is estimated taxpayers each now pay about $18 a year to subsidize the legal aid system for which they are not eligible because of its low income threshold. "We are talking about justice equity for the middle class," says Gagnon. "Maybe the government can leave the equivalent of almost $1 in their pockets to help them take care of their own legal needs." Such measures would also favour the insurance industry and economic development by creating more volume, especially if there was the creation of packages of legal services that could be more attractive and useful for consumers and give more incentives to brokers. For example, says Gagnon, many of the people polled in a May survey by the Barreau du Québec as part of the legal insurance report said they would like to see legal fee coverage for identity theft, now offered separately by some insurers, or for family legal matters, such as wills and estates and incapacity mandates. Gagnon's committee said family law could be covered, not by offering reimbursement for fees related to divorce or child care cases, but to cover legal advice for mediation sessions or court costs for the approval of settlements. Foremost among the recommendations is an advertising campaign promoting legal fee insurance and information about the justice system with sponsorship by the government, the insurance industry, and professional associations for Quebec lawyers and notaries. The Barreau poll that asked Quebeckers what would entice them to buy legal fee insurance found many of them had limited understanding of the justice system and there was general confusion about the difference between legal information provided by telephone and legal insurance to cover lawyer and court costs. "Each person I speak to is interested in signing up for legal fee insurance after 10 minutes," says Gagnon, offering a personal example that saw him receive reimbursement for $650, his share of a group's legal fees for a co-ownership property, or 13 years worth of legal fee insurance coverage. — Kathryn Leger kathryn.leger@videotron.ca

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