Information for investors


Background

In 2009, the United Nations established a program for accelerating access to justice. Here is the summary as it appears in the latest progress report on this initiative:

In recognition of the importance of rule of law and access to justice for enhancing human development, UNDP’s Bureau for Development Policy established the Accelerating Access to Justice for Human Development Global Program – A UNDP Rule of Law Initiative (RoL-A2J GP2010-2012) in 2009... The RoL-A2J GP works to realize UNDP’s strategic objective for “effective, responsive, accessible and fair justice systems promoting the rule of law, including both formal and informal processes, with due consideration to the rights of the poor, women and vulnerable groups."

This statement contains many of the seeds of our initiative, the Access to Justice Foundation or “XS2Justice Foundation.”

Empowering individuals who, due to the economic situation and inequality in their countries, have a limited access to justice is one of our prime goals. Of course, this is not accomplished in an instant, and therefore we must grow our XS2Justice Fund to expand access to justice continually—while earning a reasonable return for ethical investors. We believe that only a “for-profit” model will actually achieve lasting change.

The UN initiative, among others claims some recent progress, specifically in Africa in the recent Report entitled “Rule of Law and Access to Justice in Eastern and Southern Africa:”

The rule of law and access to justice are fundamental to ensuring sustainable change and development and should be seen, not as ends in themselves...

In this regard, UNDP has undertaken numerous interventions within the Eastern and Southern Africa (ESA) region. Progress has been made on many fronts, from successful referendum elections conducted in Sudan and Kenya and general elections held in Rwanda, Tanzania, Zambia and other countries in the region, to constitutions and laws enacted in Kenya, Zambia and Mozambique; justice institutions rebuilt in several countries; access to legal aid enhanced in Rwanda; and progress achieved in women’s rights particularly in increased representation in political office across the region.

Tangible results have been attained in many crucial areas. For instance, the recently released United Nations MDG Progress Report, July 2011 reports gains in the reduction of global poverty which is estimated will sink below 15% in 2015; increased education enrollment with 18% gains in Sub-Saharan Africa alone between 1999 and 2009; reductions in deaths due to Malaria; a decline in the number of deaths of children under the age of five from 12.4 million in 1990 to 8.1 million in 2009; increased access to water with an estimated 1.1 billion people in urban areas and 723 million people in rural areas gaining access to an improved drinking water source between 1990 and 2008. In many cases, this progress has been reinforced by strong legal and justice systems and credible reforms in the rule of law and access to justice.

http://www.undp.org/content/dam/undp/library/Democratic%20Governance/Access%20to%20Justice%20and%20Rule%20of%20Law/Rule%20of%20Law%20 and%20Access%20to%20Justice%20in%20Eastern%20and%20Southern%20Africa%202013_EN.PDF

However, there is still much to do. The Report cites numerous issues and programs to address them across Africa, but then turns to the subject of empowering those seeking redress and offers this partial list of achievements as indicative of recent progress:

...in the last decade, the provision of legal aid has expanded and the awareness of rights holders has been enhanced while working with and capacitating informal justice systems to deliver justice that resonates with legal principles.

Selected examples of specific programs that have been implemented or facilitated by UNDP in the region include: • Supporting governments to formulate national justice reform strategies... • Enhancing legal awareness and legal aid through supporting awareness-raising activities... capacity-building paralegal associations in several countries and strengthening legal aid service providers.

The Report goes on to cite numerous barriers preventing a uniform access to justice across the region, including: • Enormous implementation gaps prevailing between the existing laws and their application in practice • Institutional and capacity shortages including those of skills, tools and manpower • Institutionalized corruption, poor governance and lack of political will and commitment to carry through reforms • Weak institutional reforms that fail to address barriers in the justice system • Little public awareness of human rights and the mechanisms to claim them • Lack of public trust and confidence in the governance and justice systems • Financial and budgetary constraints • Poor coordination between and among national and community justice agencies

The Report also cites innovations which seem to facilitate access to justice, among others: Support legal empowerment of poor and vulnerable groups including the use of legal aid, paralegals and community based advisors...

This is one of the principle mechanisms we see as key to progress—making legal access more affordable by utilizing paralegals and local advisors—and therefore XS2Justice will focus on market-driven approaches which facilitate this empowerment.

Finally, the Report underlines the relatively poor internet access across Africa which, compounded by illiteracy, adds to the already significant barriers.

Mobile telephones, on the other hand, are quickly becoming ubiquitous and may in the short term provide the best immediate communication alternative.


Purpose

To summarize from the UN reports and other sources, there are circa 4 billion people without access to justice worldwide. Access to justice is a necessary condition to develop a middle class and a sustainable economy. The costs of legal services are too high for the majority of these people. While in many cases laws and judiciary are often in place and functioning, the right of the strongest often prevails. Subsidizing legal aid leads to a bottomless pit without ameliorating the conditions.
Our purpose is to facilitate access to justice for all in a sustainable way by creating a viable for-profit model with clear incentives for all participants.

Along the way, we will help to enforce laws and protect people against injustice by empowering them, educating them, and making legal services affordable.

The XS2Justice Foundation will change people’s lives for the better, create jobs, stimulate entrepreneurship and boost economic growth where it is most needed.

Our franchise-based growth model will allow us to spread the service quickly all over the world once we get started.


Executive Summary

XS2Justice Network has operated for ten years in the Dutch market, growing into a network of 30 legal professionals and learning many lessons in the process. Based on this experience, the XS2Justice Foundation was founded in 2006 to develop a special business model for third world countries and an instrument to finance legal services for the poor. For the proposed expansion, the XS2Justice Foundation will license out the model to an international arm (XS2Justice Network International) which will serve as the franchisor, providing the necessary support and training services, and licensing qualified Master Franchisees in selected developing markets—in particular Africa. The Unit Franchisees in this model will generally be paralegals at the local level.

The XS2Justice Foundation has stipulated that 10% of all Master Franchise income will be donated to the Foundation’s Fund as part of the license agreement. The aim is to let the Fund and the number of countries grow so more people can profit from the service. The money in the Fund will be used to back up loans from MFI’s to franchisees and clients and to back up bank loans for further expansion. As means permit, the Fund will also be used to support NGO’s in the local justice sector and to fund research.

Mobile telephones are becoming ubiquitous in Africa, though they are typically run with pre-paid cards which can be purchased from various mobile network operators. These operators therefore seek incentives to drive traffic to their products, in particular, value-adding services.

The XS2Justice Foundation has held exploratory discussions with two such operators and found a high interest in promoting XS2Justice Network services to would-be mobile phone card subscribers. Subscribers will receive a limited access (one legal question per card) free with the purchase of a pre-paid card for mobile telephone service.

The local XS2Justice Network Unit Franchisees (paralegals) will field these calls, as they do today in our Dutch operation, answering simple questions immediately and identifying potentially legitimate cases. In these instances, the consumer will be invited to take out a small loan offered through a local micro-finance institution (MFI) against the proceeds of an eventual out of court settlement. This helps to insure that the XS2Justice Network concerns itself only with serious as opposed to spurious cases.

The paralegals then enter into a short fact finding period, potentially involving local universities and law faculties, followed by an attempt to reach an out of court settlement. XS2Justice Network’s worldwide lawyer contacts can be seen in this context as a heavy inducement for the defendant to settle out of court. In the event of an out of court settlement, then the proceeds pay the local legal counsel’s fees, provide revenue to the Master and Unit Franchisees, cover royalties to the XS2Justice Network International and XS2Justice Foundation, and, of course, repay the outstanding consumer loan balance. It is certainly envisioned that most cases will be settled out of court. In the Dutch pilot, more than 95% are settled out of court.

In the event of a court case, XS2Justice Network utilizes its tendering capabilities to find the least expensive and therefore most experienced local lawyer to represent the plaintiff.

The court case is funded via a crowd funding mechanism run by XS2Justice Network International which utilizes lawyers in the developed world who contribute a nominal sum each and are then promoted by XS2Justice Network International to their own customers as having made a socially responsible contribution to promoting access to justice—public relations on the one hand, but also good advertising to stay ‘top of mind’ on the other.

In this way, justice is served, consumers, employees and small entrepreneurs are empowered, local law firms grow their competencies in defending consumers, micro-finance services expand local credit facilities, developed world law firms can promote their good works modestly while funding legitimate court cases, and the XS2Justice Foundation receives further funding to grow and expand the model