Following the High Court’s Judgment in the case of Brown-Quinn & Webster Dixon -v- Equity Syndicate Management, ARAG Legal Services has issued its reaction to the decision.
The Bristol-based legal expenses specialist warned that the court’s decision was not a positive one and, without any evidence to suggest that non-panel law firms offer higher standards of representation, the main beneficiary of the ruling would be the non-panel law firms themselves. The court’s decision could also result in higher legal expenses premiums.
ARAG’s Managing Director Tony Buss commented: “With no evidence to suggest non-panel firms deliver a heightened level of service to the policyholder, those firms may well be the only long-term beneficiaries from the Judgment. At a time when, the take-up of BTE is being encouraged, this cannot be a positive development overall.”
Many legal insurance providers will now consider their policy wordings and whether they are consistent with the judgment, especially where they have chosen to expressly limit the costs payable to those which their panel lawyers charge.
ARAG’s policies fully comply with the decision. In addition, legal insurance providers will need to be sure that their approach in practice complies with what their wordings actually say. It seems in this case that the defendants' approach was at odds with the policy wording and also perhaps the result of too ambitious an interpretation of The Insurance Companies (Legal Expenses Insurance) Regulations 1990.
Even with cases handled by its panel, ARAG does not take a "one size fits all" approach, and has arrangements for higher remuneration rates for more senior lawyers when circumstances demand it. This also extends to how we contract with non-panel solicitors, where again, we will, where appropriate, agree a higher rate, be that an aggregate hourly rate, or a variety of rates.
That is not to say that ARAG embrace the appointment of non-panel firms. Unless the complexities of the case warrant the appointment of a non-panel firm, we are confident that our policyholders receive at least as high a level of service from our panel firms as they would their chosen lawyer, but at a fraction of the cost. That cost, as the Judgment recognises, is reflected in the very modest premiums policyholders currently pay for before-the-event (BTE) legal insurance. The obvious danger therefore arising from this Judgment is that policyholders wanting to use their own solicitor will see their financial position strengthened when looking to insist on their own solicitor acting. The consequence of this is increased exposure to the insurer which is likely to be passed on to policyholders in the form of higher premiums.