Rethinking the Welfare State: The prospects for ... - e-Library

Rethinking the selfare state 90
a form of indirect demand-side subsidy, since the consumer, after receiving an LEI
“payout,” chooses which legal services provider he or she will contract with. The
mandatory nature of LEI subscription obviates the adverse selection problems mentioned
earlier in the case of optional private insurance, through pooling of diverse risks, while
also guaranteeing a demand-side market large enough to stimulate a supply-side response
favouring competition and innovation.
In Sweden, which has experienced considerable success with LEI programs, LEI is
“built in” to the standard universal household insurance policy issued by the government.
Under the Swedish LEI scheme, the state directly insures its citizens against the cost of
legal proceedings. The LEI coverage scheme, introduced in the 1970s, was specifically
designed to “fill the gaps in the legal aid scheme rather than to compete with it […] LEI
covered legal problems that legal aid did not; protected the groups who were excluded by
legal aid […]; and included legal costs ignored by legal aid, particularly the costs
awarded by the courts in unsuccessful civil cases.” 73 Since extensive legal aid cutbacks in
1997, however, LEI has come to replace many of the services formerly provided through
judicare, and is now the primary mode of assistance for plaintiffs and respondents in most
civil litigation.
LEI as a mode of demand-side subsidy shows considerable promise, in that most of
the objections raised against it by its critics have to do with the extent of its coverage
rather than with its basic modus operandi. 74 These criticisms can likely be met by
expanding coverage to include a wider range of claims. Another concern is that there are
no special waivers for low-income earners who cannot afford the deductibles on LEI, and
that the lack of coverage for basic, non-trial legal advice creates an incentive to litigate
matters which might not otherwise go to court. 75 These drawbacks, however, represent
specific design challenges as opposed to fundamental critiques of the structure of LEI as
a viable demand-side subsidy scheme for the provision of essential legal services. More
research is necessary on the viability of private markets for the provision of LEI in other
jurisdictions, since the adoption of LEI would represent a major policy change from the
norm in ·most English-speaking nations, where conventional judicare and clinic systems
still preponderate. It is worth noting, however, that the United States did experiment with
a similar policy in the 1960s and 1970s, and at least one major Canadian trade union, the
Canadian Auto Workers (CAW), 76 provides LEI to its members. One major question in
such states, however, is likely to be whether or not LEI should be mandatory for all
citizens and subvented in the case of low-income persons or an optional market good, for
which vouchers can be issued to those who cannot afford it. These questions are complex,
and require a more comprehensive analysis of private insurance markets than is feasible
here. Notwithstanding such issues, however, the limited experiments with LEI suggest
that LEI is at least a feasible, if unorthodox, solution.
Tax-and-transfer policies
As Griffiths observes, the use of legal services correlates closely with wealth. 77 The
question, then, naturally presents itself: “Why not intervene to redistribute wealth and the
distribution of legal services will take care [of] itself?” 78 As Goriely and Paterson
observe, “[G]iven that in 1994–5 the English legal aid scheme cost around £130 a year
for every household eligible for help […] [i]f people were allowed to choose for