Legal Expense Insurance

Can an individual, covered by a Before the Event Insurance policy, reject a panel solicitor and insist on his own choice of solicitor and payment of that solicitors' hourly rate?

Yes and no, says Burton J in Brown-Quinn v Equity Syndicate Management.

It is quite clear, and has been for some time, that legal expense insurers cannot restrict an insured's choice of solicitor. An individual has complete freedom to choose his own solicitor.

But that does not mean the firm – in this case, Webster Dixon LLP – can charge its normal hourly rate. Nor does it mean that the insurer can insist on only paying its panel (or slightly higher) rate, in this case, £139ph. Rather, and subject to assessment, the hourly rate payable by the insurer will be assessed as a reasonable hourly rate having regard to the insurer's standard panel rates. But in cases of particular complexity, substantive Defendants and claims requiring senior and specialist fee-earners, the panel rate becomes less important as a guide when assessing a 'reasonable' recoverable hourly rate from the insurers.

Burton J indicated that because these test cases were complex employment claims against banks and substantial public bodies, and because Webster Dixon LLP is a specialist firm of solicitors in London, recognised in Chambers & Partners for its employment law expertise, the rates charged by panel firms would be "of less weight" when determining a reasonable hourly rate.

The moral? It will still be difficult to negotiate hourly rates with BEI insurers if you are not a panel firm. But they are not entitled to refuse to instruct you if you will not agree their rates. You'll just have to fight about it after the case is finished.