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The case for government or donor-funded legalinsurance is powerful in the presence of the marketfailures described above, but it is important torecognise that such insurance is very expensive.It also involves significant redistribution of socialresources — not only from the well-off to thepoor, but among different sub-groups of the poor.Subsidised legal insurance does nothing to mitigatethe moral hazard problem, and it may erodeindividual’s incentives to take precautions to avoidbeing subject to legal action. Subsidised insurancealso reduces the incentives of marginally indigentindividuals to self-insure even when they coulddo so (cf. Hoffman, Rubin and Shepherd 2005).Moreover, although there is no adverse selectionproblem under a universal insurance scheme— because opting out is impossible — the schemetransfers resources from people who rarely makeuse of emergency legal services to those who usethese services more frequently. Often this resourcetransfer takes the near-invisible form of the opportunitycosts of the resources spent on emergencylegal services for high-risk individuals and groups.Those resources might otherwise have been spenton other legal or non-legal services that would benefitdifferent populations of poor individuals.This is not to say that state or donor provisionof emergency legal insurance is a bad idea.Indeed, in some cases — such as the provisionof competent criminal defence counsel free ofcharge to indigent defendants — state-fundedlegal insurance may be a moral and legal obligation.But because the operation of a universallegal insurance scheme is so costly, it is worthconsidering other techniques that reformersmight employ to redress the failures in the marketfor emergency legal insurance. One such approachis to expand the use of local communitybasedorganisations that allow individuals to pooltheir risk. For example, labour unions can — andoften do — provide legal services on behalf oftheir members, especially to contest terminationdecisions and adverse employment conditions.Tenants’ associations can provide emergencylegal assistance to contest evictions; similarly,while landlords’ associations can offer emergencylegal assistance to take action against unruly ordestructive tenants. The advantage of relying onsmall community-based representative groups toprovide emergency legal insurance is that thesegroups may be better able to monitor and policetheir members and to apportion insurance costsin rough proportion to risk.The financing problem typically involves poorindividuals who have some legal claim — eithera positive legal entitlement or an injury to a legallyprotected interest — that has a positivemonetisable value that is greater than the cost ofthe legal services necessary to pursue the claim.In an efficient market, because this claim has apositive net expected value, the individual shouldbe able to retain representation and receive anaward (perhaps through litigation, but more likelyin a settlement) that exceeds the cost of the legalservices. But in many cases poor individuals donot have the assets on-hand to pay the up-frontfees necessary to retain legal services in theprivate market (Yeazell 2006). Moreover, theirdisputes usually unfold with other poor peopleas defendants, and are mostly about division ofproperty rather than damages. It is unlikely thatthere is a ‘deep pocket’ around that can be thetarget of a claim. For these reasons, the solutionthat their claim is financed by others — by theirlawyer for instance — is usually not available.That being said, there may be situations wherefinancing of claims is an option, such as in thecase of personal injury arising from road trafficaccidents, and this will increasingly be the caseat higher stages of development. To that end gov-33