Legal Aid and Legal Expenses Insurance, Complements or Substitutes? The Case of the Netherlands

Abstract

The budget of the Dutch Ministry of Justice is under great strain. Quite recently, the budget for legal aid (some € 450 million in total) has been critically reviewed in order to save € 50 million in the next few years. One of the main savings proposed was to discontinue subsidized legal aid for non-criminal cases for all but the lowest income groups and to refer the citizens involved to private legal expenses insurance (LEI). This proposal did not receive much public support and has been put aside for the time being. But on the next occasion it is quite likely to reappear on the political agenda. Given the present state of affairs, it seems wise to study the interrelationship between legal aid and LEI. Is LEI a system that is only relevant to the high income groups which are not eligible for subsidized legal aid? Is it therefore a complement to legal aid? Or is LEI also of interest to lower income groups, and can it serve as a substitute? Our paper provides an empirical study of the interrelationship between legal aid and LEI in the Netherlands at present. It uses the results of the second wave of the Dutch Paths to Justice survey held in the first quarter of 2009. We first analyze how the holdership of LEI policies is distributed among the population in general and among income classes in particular. We then discuss how the incidence of justiciable problems interrelates with the possession of LEI. Next, we study how the possession of LEI affects the responses to justiciable problems. Do people take action? Do they seek legal advice? And from which sources? Finally, we take a look at the results. Comparing the respondents with and without LEI in various income classes, we try to answer the central question: complement or substitute? We conclude that a shift from legal aid to LEI has some clear disadvantages for low income citizens, but these may well be compensated for by some important advantages, brought to the fore by our empirical data.