Legal Costs Insurance (LCI) – an Attempt at Comparative Analysis

Legal aid systems are best conceptualised as complex entities, comprising different institutional and non-institutional mechanisms enabling the individual to obtain legal advice. In this perspective, commercial, public-subsidized, pro bono or prepaid legal services are all one method of providing access to legal advice, just capitalising on different resources. The same can be said about private/informal mechanisms of dispute resolution, self-help, and unbundled legal services. Yet another widely-recognized mechanism for providing legal aid is legal costs insurance (LCI). Despite relative prevalence of this channel of access to legal advice in some countries (such as Germany, Netherlands or Austria), legal aid literature (with some notable exceptions) does not devote much attention to LCI. In particular, it by and large neglects the interactions between the LCI as a channel of access to legal aid and other types of provisioning such services. Not much is also known about the institutional and cultural conditions of establishment of LCI systems.

The paper aims to contribute to filling this gap. It undertakes an attempt to answer the question of the factors driving emergence, prevalence and stability of legal costs insurance and the interaction it enters with other channels of provisioning of legal aid. To this end, the paper does two things. First, it analyses the hitherto literature in the search for theoretical explanations of said phenomena. Second, it juxtaposes theoretical explanations with the outcomes of an comparative study of LCI in Europe, utilising existing data on LCI, legal systems, disputing behaviour as well as values and culture.