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The increasing benefit of Legal Expense Insurance

In recent years there has been a huge challenge on how the average person can afford legal services.

Legal aid has been eradicated from most areas of law. Success fees and insurance premiums are no longer recoverable from the opponent and so makes it more difficult for firms to offer No Win No Fee arrangements.

Third party funders are likely to require a cut of the client’s damages and only willing to consider substantial cases.

The average person is highly unlikely to be able to privately fund a case all the way to a final hearing where costs can escalate into tens of thousands of pounds.

I have certainly seem a rise in the number of cases which are funded by way of a Legal Expense Insurance policy. This is usually a bolt on addition to a client’s home, contents or motor insurance for a fairly modest premium.

It will usually have a cap on fees (both your own and the opponent’s) typically set at around £50,000 – £100,000.

The type of cases which are covered under such a policy will vary but generally included property disputes, contract claims (including professional negligence), employment, personal injury and even criminal cases.

Some policies will allow you to nominate your own solicitor from the start providing the solicitor accepts their terms and conditions.

Other policies will dictate that you accept a solicitor from their panel; at least until such time that court proceedings need to be issued, in which case you will have freedom to choose your own solicitor at that stage.

However, if you are keen on using your own chosen solicitor from the start regardless of the policy restrictions, you should be mindful that European law makes it express that a person has the right to choose their own lawyer (see Insurance Directive 2009/108/EEC).

The Insurance Companies (Legal Expenses Insurance) Regulations 1990 provides a policyholder with the authority to choose who it wishes to instruct as its lawyer. Regulation 6 states that:

  • Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person)
  • The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interest arises
  • The above rights shall be expressly recognised in the policy

The Court of Appeal in England has, in the case of Brown Quinn & Another v Equity Syndicate Management Limited & Another (2012), held that policy terms interfering with the insured’s right to select the solicitor of their choice “must be either deleted or comprehensively re-drafted”.

If faced with resistance then I would suggest an internal complaint before referring the same to the Financial Ombudsman.

In requesting your own solicitor you should outline any exceptional circumstances to support your choice, such as complexity, expertise/knowledge or even previous involvement of the solicitor/firm, and location

The benefits of having funding via Legal Expense Insurance clearly outweigh the costs and so when it’s time to renew your home, contents, or motor insurance, then you should always opt to have the additional legal cover as you never know when you might need it.

A word of warning though – a policy will only cover if the event complained off happened during the period of the policy – you cannot usually buy a policy hoping it will cover a pre-existing event.