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cover would be available would be for
pursuing a claim against a third party for
the excess which is on most insurance
policies. Subject to the legal expenses
insurance company's consent, legal
expenses incurred in taking an appeal
will also be covered.
Cover will usually be provided on the
basis that the company will cover costs
if, in the company's opinion, there is a
reasonable prospect of success.
In all cases, it would be prudent for the
solicitor instructed to examine the policy
document itself to ensure that he
observes the conditions of the policy.
For instance, it may be necessary for the
solicitor to inform the company of any
settlement proposals.
The cover is not limited to motor legal
protection. Cover is also available in
respect of business-related litigation.
Advantages for the client
Some of the legal expenses insurance
companies have run advertising
campaigns which implied that it was not
possible to pursue a legal claim without
legal expenses insurance being in place.
Such an example from advertising
material has been: "She was in the right,
but it would have cost her a fortune in
legal fees to pursue her claim". This
does not, of course, reflect the true
position, which is that the norm is for
solicitors to fund claims, pending the
conclusion of the case.
However, it is undoubtedly true that the
receipt of party and party costs does not
usually cover the full legal expenses of a
case. The party and party costs will be
set off against the solicitor/client bill, but
there will usually be a shortfall to be
paid. This is generally deducted from the
amount of the settlement or award.
The legal expenses insurance company
may make it a condition of payment that
the amount paid by the company will
represent a full discharge of the
solicitor's account, with no further
monies to be sought by the solicitor
from the client.
Choice of solicitor required by EU
Directive
It appears that legal expenses insurance
companies had hoped to operate through
a network of panel solicitors. For those
solicitors who would have been appoint-
ed to the panel, this would have been a
popular way of proceeding. Other
solicitors would have been indignant that
their clients were not being permitted to
appoint their own solicitors. It is import-
ant that members are aware that the
matter is in fact governed by SI 197 of
the
1991 European Communities (Non-
life Insurance) (Legal Expenses)
Regulations 1991.
Clause 7 provides that:
"any contract of legal expenses insurance
shall expressly recognise that -
(a) where recourse is had to a lawyer or
other appropriately qualified person
to defend, represent or serve the
interests of the insured person in any
inquiry or proceedings, the insured
person shall be free to choose such
lawyer or other person."
The Department of Enterprise and
Employment regulates the matter.
The Professional Guidance Committee
takes the view that from the moment the
insured has a right to claim on his
policy, the insured has the right to a
choice of solicitor. The committee raised
this matter with one legal expenses
insurance company and disagrees with
the latter's interpretation that clause 7(a)
provides that a choice of solicitor must
be given only on the issue of
proceedings.
Cases settled prior to involvement of a
solicitor
It is reasonable that the legal expenses
insurance company, being the paying
party, would wish to limit legal expenses
without prejudice to its policyholders.
With this in mind, companies usually
use their own personnel from within the
company to seek to settle claims. To
allow the company an opportunity to do
this, the insurance policy will usually
provide that until a solicitor is formally
appointed, costs will not be covered.
Some of the publicity material states:
"Please do not ask for help from a
lawyer before we have agreed" or, more
trenchantly, "If you think you may have
a claim,
never ask a solicitor (or any
other person) to help you until we
have given our permission. If you do,
we will not pay the costs involved".
The companies encourage the insured to
come directly to them by providing
"first-aid" legal advice by way of a 24
hour, seven days a week, helpline.
Advice is given and the claim pursued
in-house, up to the issue of proceedings.
Mixed feedback from solicitors
The committee has been monitoring the
matter of the legal expenses insurance
for some time.
Quite a number of Irish solicitors have
now had experience of dealing with
legal expenses insurance companies.
The committee has received mixed
feedback from these solicitors. Some
have complained that the company
sought a continuous involvement in the
case, which the solicitors have seen as
an interference with the solicitor's
professional judgement in the conduct of
the case. Other solicitors report that
there was no interference and that their
costs and outlays were paid promptly
when the solicitor's bill was submitted.
Sometimes the company has required
the solicitor to submit a bill to taxation.
The committee welcomed hearing the
experiences of members. Some
difficulties which have arisen with
individual schemes have been resolved.
It is clear that for the product to be a
success for the companies, it will be
necessary for companies to develop a
good rapport with the solicitors who are
appointed by the insured. If this product
meets the needs of the consumer, it will
become popular. It remains to be seen
whether this will happen.
Niall Casey,
Professional Guidance Committee
SnEP
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