Study Of The Cost Of Litigation Insurance System

As an important part of civil procedure system, legal expenses insurance (LEI) is directly related to how much degree that a party can fulfill his right to take lawsuit. In order to reduce legal costs and make people access to justice better, countries worldwide have been taking massive legal reforms. In China, people's right to take legal action has been badly restricted by problems such as high legal costs and defective management exist in domestic legal costs system. Legal aid system, as one of the methods to solve these problems, cannot be widely spread due to limited finance and aiding range. So, it is time to research LEI and introduce it into our country at a proper time.LEI means the insured buys specific policies and pays the premium first, and when legal procedure is involved, that means if there is a claim, the insurer pays legal costs instead by settling the claim, including court fees and lawyer fees. The insured chooses policies by accessing his risks of being involved in a lawsuit, and the insurer offers legal opinions to access success possibilities based on lawyers' reviews. Modern LEI was born in France, and after continuing development for a long time, it finally spread widely in Europe and Japan, becoming an effective way for these countries to decrease legal expenses. Conditions to establish LEI successfully can be concluded from running experiences that last for decades in those countries and areas: firstly, the insurer is able to forecast the forthcoming legal expenses of the policies; secondly, there are plenty of market demands and enough insurance companies that hold LEI; last but not the least, the insurer needs to provide legal experts helping the insured predict probabilities of success.The rationale of LEI is the theory of social shift of legal expenses, that is, the third person or the society shares the private legal costs which should have been undertaken by a party. It is commonly divided into three categories: losers burden, legal aid and LEI. The theory decentralizes legal risks and fees originally beard by a party, relieves the contradiction between increasing lawsuits and limited legal resources, ensures the fulfillment of the right to take lawsuit, and allocates the legal resources reasonably.