Bridging the funding gap - The economics of cost shifting, fee arrangements and legal expenses insurance and their prospects for improving the access to civil justice

The right of access to civil justice is a cornerstone of the Belgian legal order. At present time, however, financial barriers prevent about three quarters of the Belgian population from fully asserting their subjective rights. As traditionally, apart from legal aid, private funding is the dominant method of funding a civil claim in Belgium, alternative funding options in between private and public funding might hold some prospects for improving the access to civil ustice. Therefore this paper aims to provide an in-depth economic analysis of the effects of cost shifting, client-lawyer fee arrangements and legal expenses insurance on the various dimensions of the access to civil justice. In summary, the main results from the analysis are that theoretically all three alternative funding methods may hold certain prospects for improving the accessibility of civil justice. But, as far as empirical data are available, cost shifting fits least the requirements for solving the policy issue addressed in this paper. However, the validity of this empirical observation is subject to certain limitations. Both contingency fees and legal expenses insurance hold clear prospects for overcoming risk aversion and liquidity constraints. Also, relative to hourly fees, the incentive scheme inherent to contingency fees appears most appropriate to curb lawyer opportunism. The involvement of a legal expenses insurer may lead lawyers to behave less opportunistically too. Finally, within the current legal framework, insurers' control of costs and quality requires their direct or indirect involvement in the civil justice administration system. This may pose some challenging policy issues as the market for legal expenses insurance further develops in the future.

A law and economics approach to cost shifting, fee arrangements and legal expense insurance

Introduction. In this chapter, we will provide an overview of the economic literature regarding cost shifting, fee arrangements and legal expense insurance. In the economic analysis of law, legal rules are regarded as instruments which can provide actors with behavioural incentives. In essence, private law (torts, contracts, property, etc.) allocates the costs which arise out of different activities. Those costs may only be borne by the party causing them if the party initially suff ering from them brings suit. Problems in fi nancing civil litigation may eff ectively hinder such lawsuits, so that the behavioural incentives which the law intends to provide do not reach the party causing the harm. ... etc

Weergave van Cass. 22 november 2007, F.06.0028.N

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