You’re the one that I want! The right to choose your lawyer under insurance policies
Thursday 9th June 2016
When a civil dispute arises, a party to that dispute must usually notify its insurers at the earliest opportunity to receive the benefit of any insurance policy they have. The insurer is generally responsible for funding the insured’s legal fees and, often, any legal fees or compensation that they are ordered to pay arising out the dispute. There is a commercial incentive for the insurer to achieve a favourable financial outcome for the policyholder whilst at the same time incurring minimal legal fees in doing so. As such, insurers often ask a firm of solicitors on their approved panel, with whom they have an ongoing relationship and an agreed fee structure, to handle the dispute for them. Policyholders often feel uncomfortable with this and consider that an unavoidable conflict of interest can arise.
Policyholders do not have to accept this position.
The Insurance Companies (Legal Expenses Insurance) Regulations 1990 provide that where, under a legal expenses insurance contract, a lawyer needs to act on behalf of an insured in proceedings, the insured has the freedom to choose their own lawyer whether at the outset or when a conflict of interest arises. Furthermore, these rights must be expressly recognised in the insurance policy.
Issues often arise where insurers reject the insured’s choice of solicitor as they will not agree to payment in line with their panel solicitor’s rates. The decision in Brown-Quinn v Equity Syndicate Management Ltd (2012) supports the insured’s position and provides that an insurer cannot reject a policyholder’s choice of solicitor for this reason. The insurer can only rely upon any limitations imposed within the policy itself.