Barbara Haynes
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Sponsored Content: Legal Expense Insurance in Action | Canadian Insurance
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Sponsored Content: Legal Expense Insurance in Action

Some examples of how LEI completes a commercial insurance portfolio

To be successful, business owners need to be able to handle a host of responsibilities. However, given their entrepreneurial instincts, owners generally have more experience recognizing revenue opportunities than they do identifying and managing business risk. That’s why most work with knowledgeable insurance professionals to identify and find appropriate coverage for risks such as property, general liability, or directors and officers liability to name a few.

Business people understand the implications of commonly insured events such as fire and theft. However, they often have a harder time identifying another very common and insurable event.  That is the potential cost of a legal dispute, which is often unexpected, unbudgeted for, and substantial. A two-day civil action in Canada can cost up to $37,000, and a seven-day civil action up to $124,000. The average hourly rate for an experienced lawyer is $379 (1).  Fortunately, this cost can be controlled and planned for through legal expense insurance (LEI).

To better understand the potential impact a legal dispute can have on a business’ bottom line, consider some actual examples from DAS Canada, the leading provider of legal expense insurance.

One DAS customer, a small business owner, was sued by a former employee for wrongful dismissal, outstanding benefits, and breach of human rights legislation. The amount claimed was greater than $100,000.  DAS appointed a lawyer who is now defending the claim and countersuing for losses resulting from the customer having to hire a last minute replacement– at much higher cost– to finish an important job for their client. This ongoing employment dispute has already taken 23 hours of legal time, which could have cost the client $8,717.

Another DAS customer operates a boat repair business. He recently completed insurance-authorized repairs to a boat. The boat owner was not satisfied and demanded further repairs, seeking to enhance, rather than merely repair, his boat. When the insurance company declined this request, the boat owner refused to collect his vessel, forcing the business owner to store it at his own expense. DAS provided legal advice to assist in recovering the additional storage costs and having the owner collect his boat. Failing a satisfactory response, DAS had a lawyer explore other legal remedies, including a forced sale of the boat. This has so far generated17 hours of work, which is a cost savings of $6,443 for the client.

Debt recovery disputes are particularly common in certain industries, such as construction. With huge contracts in play and multiple projects at different stages of development, the high cost of legal action often deters construction companies and trades from pursuing monies owed. DAS’s customer provided approximately $25,000 in upgrades to a client who refused to pay, despite efforts to collect the debt. DAS provided a lawyer and the company was able to recoup $21,000 of the $25,000 debt. DAS paid all the legal expenses, which could have cost the company $3,752.

Another DAS customer, a dentist, was having trouble with a patient who refused to pay a $2,500 bill or respond to the dentist’s attempts to contact her. DAS referred the matter to a panel lawyer who sent a demand letter, indicating the dentist would bring legal proceedings if the patient did not pay. This achieved the desired results; the patient agreed to pay in full. It only took 1.5 hours, but the dentist received their $2,500 without having to pay $569 in legal fees or a percentage to a collection agency, thanks to LEI.

As compelling as the cost savings are, they don’t tell the whole story. Pursuing or defending a legal action is inconvenient and enormously stressful because emotions are involved when business people have to worry about loss of business or reputational risk. LEI alleviates these concerns and provides your clients with peace of mind at a time they need it most.

Glenn, a customer from Ohsweken, told DAS, “Our policy provided some reassurance and comfort during a chaotic time. Trust me, there was enough on my plate that having the response and assistance I received from your side of things made a huge difference.”

Similarly, Gary, a DAS customer in Calgary wrote, “The people I have talked with [at DAS] so far have listened. No, really listened. Their empathy helped me to feel that they were there to help me through, and I appreciate that immensely. I didn’t feel like a legal issue. I felt like a person with a legal issue. Thank you for that!”

Legal expense insurance makes very good business sense. It protects your clients from unexpected legal costs, allows them to defend or pursue legal action, and provides unlimited access to legal advice at any time. You can use DAS legal expense insurance to strengthen your offering, differentiate your practice, increase client satisfaction, and generate an additional source of revenue.

(1) Charlotte Santry, “The Going Rate: The 2013 Canadian Lawyer Legal Fees Survey,” Canadian Lawyer, June 2013.

Barbara Haynes is CEO of DAS Canada. To learn more please contact your DAS Broker Consultant or visit www.das.ca/broker