Is it fair for Legal Expense Insurers to dictate who represents their customers?

Linda Lee of the Law Society commented today that “current legislation provides that where an individual becomes engaged in litigation, they are entitled to a free choice of lawyer”.

She also stated that “it is our belief that insurance companies have wrongly interpreted the law as allowing them to impose restrictions for initial advice and assistance”.

The full article can be read here.

I agree with the comments by Linda Lee about the practises of Legal Expense Insurers. However, to be fair, in my experience this is not across the board. There are certain Insurers who do not seek to stick to the letter of the law in The Insurance Companies (Legal Expense Insurance) Regulations 1990 and they allow their customers to choose their Solicitor regardless of whether the proceedings or the inquiry have commenced.

Now ignoring the point that arguably the pre-action stages are part of the proceedings, it seems to me that the whole purpose of the EU Directive was to allow Insured Clients the freedom to choose their own solicitor. Whilst I appreciate the Insurers are not charities and are seeking to make a profit like any other business, surely it is neither good service nor complying with the duty of utmost good faith to insist on the Client using a Panel Firm when the driving factor is referral fees and/or reduced hourly rates.

I can relate to Linda when she says; ‘Those solicitors who seek to instruct the solicitor of their choice often have a long and difficult journey to exercise their right.’  I have experienced such difficulty on behalf of Clients. Thankfully my Clients have been very understanding and patient with me although annoyed that they are being preventing from using the product they have paid for which in turn is holding up their Claim. We have seen in the department that a particular Insurer, who shall remain nameless, has clearly set a company policy that their primary position is pre-issue the Client has to use a Panel Solicitor. I recall for one Client who wanted to bring a Professional Negligence Claim we spend many months arguing the toss with the Insurer to the point where we had to make a formal complaint. We eventually worn them down but it was a total waste of everybody’s time and seriously held up brining the Claim.

Should Lord Justice Jackson’s reforms be implemented it is paramount that this issue is addressed once and for all if it is intended that Clients will need to be more reliant on Legal Expense Insurance.