It is said that almost everyone, at some point in their lives, will need the services of a lawyer. Unfortunately, legal counsel does not come cheap in this country or any other for that matter. As the educated entrepreneurial community would put it, there is a market gap here. Seemingly exploiting this gap, starting around a decade ago Zimbabwe saw a steady increase in the number of companies calling themselves legal aid societies. On the surface, there appeared to be providers of what most of the world calls legal protection insurance (or just legal insurance). From the name chosen by these companies to refer to themselves, it is obvious that the intention was that their services be compared to those offered by medical aid societies—the local term for health insurers.
For many Zimbabweans, both individuals and companies, these offered an opportunity to access the services of lawyers for cheaper. Just like medical aid, this service was availed to those who paid monthly premiums. On the surface, most of these schemes appeared to be great deals and people signed up en masse. Eventually, some of those policyholders started getting in legal troubles and went calling to their legal aid societies only to be disappointed.
It appears that a disturbingly large number of these companies which had been accepting their clients’ monies without fail for months were ill-prepared to provide the promised services. Needless to say, many of these clients had insult added to their legal troubles when these companies failed to come through. Since these companies had specifically targeted a demographic that could not afford its lawyers they were able to shrug off the complaints and were able to carry on with their shady business until authorities started taking notice.
The legality of legal aid societies
The medical aid societies which these companies had tried to model their operations after operate in a tightly regulated industry. This is because they are just specialized insurance providers. Legal aid societies should arguably also be insurers; the ones who ran into trouble probably did because they preferred to operate like subscription services. Since the industry/service was so new in the country these companies were eager to find an authoritative body to lend them validity. Many chose to claim that they were accredited by the Law Society of Zimbabwe, a claim which the latter almost always denied. Before IPEC stepped in, these societies were regarded as unregulated at best and illegal at worst.
In recent years the authorities have taken full notice of the small industry and decided that it should be just as regulated as the one it seems to envy. The requirement that these societies register with IPEC—the Insurance and Pensions Commissions—saw several of them disappear overnight. IPEC has stringent conditions and requirements for the companies and industry that it oversees and many of these erstwhile legal aid societies were far from able to meet these.
Interestingly Champions Insurance, an established reputable company, used to flight a legal package on their site. This has since been taken down and is supposedly no longer part of their offerings.
Insurance vs. Subscriptions
Now let us examine if there was any real need to force these companies to operate under the same umbrella as insurers. Granted, the scores of duped members of the public made intervention necessary; however (from my humble and lay point of view) I do not believe that any of these companies were using business models which would get them labelled as insurers, to begin with. Of course, there is uncertainty associated with the possibility of a customer needing legal counsel at any given time. However, you would notice that many of these companies also placed limits (and still do) on how many times in a given year one can use their services. This would do away with most of the behind the scenes work which sets insurance companies apart: the painstaking process of trying to predict how frequently any of the occurrences that they insure their clients against are likely to occur.
As an example, if a company only pays for a client’s legal counsel a maximum of two times a year, they can easily calculate how much that would cost and charge as appropriate. Such a company could then argue that it is not offering insurance but a subscription service instead (granted the relative seriousness of the legal profession severely undermines this argument). Failure to deliver on the promise to fund a client’s legal expenses then becomes a completely different crime. On the other hand, these companies have not helped their case by choosing a name similar to that of the highly regulated medical aid societies. Also, many overpromise and never provide their clients with clear enough terms and conditions. These clients instead get blindsided when they are in trouble.
So you may ask yourself if joining one of these “legal aid societies” is even worth the cost and effort. The answer ultimately depends on how careful you are in choosing a service provider. If you search online you will discover that many of these companies appear to be small and sketchy. Do not be lured in by cheap premiums if you think you genuinely need to sign up with one of these. Take full advantage of the IPEC directive—ask them to produce evidence that they are registered. Do your research and be alert for any complaints against the company by former customers.