ULR Additions to appeal legal expense insurance case

Legal expenses insurance (LEI) provider ULR Additions is to appeal a High Court ruling over whether LEI providers should pay the fees of off-panel solicitors who have been instructed by policyholders.

Last month Mr Justice Burton ruled that LEIs could not use cost as the sole basis for refusing to underwrite fees for LEI policyholders (3 November 2011). In his ruling, Burton J said: “The correct approach is […] to conclude that the choice of his own lawyer by an insured shall not of itself constitute the taking of an unreasonable step.”

The case will have implications for all lawyers who rely on payment via a legal expenses policy

The case was brought by three LEI policyholders who had instructed Webster Dixon with the agreement that their fees would be paid using the before-the-event (BTE) insurance they had in place. However, the underwriters of those policies refused to pay the rates because the policyholders had not used lawyers from the underwriters’ legal expense panels.

ULR Additions, which was named as a defendant in the High Court case, said it would go to the appeal court to argue that a principle established by the European Court of Justice in Stark v DAS Osterreichische Allgemeine Rechtsschutversicerung would have ramifications for its case.

In that case the ECJ found that an underwriter could assert a rate of remuneration “so long as such rate would not render de facto impossible a reasonable choice of representative by the insured”.

Horwich Cohen Coghlan instructed Kings Chambers’ Mark Friston for ULR Additions at the High Court. Friston will maintain a role on the case but the company said it would look to bring in a new barrister to lead the appeal.

The firm was represented by Colin Wynter QC of Devereux Chambers who was instructed directly to lead Thomas Cordrey of the same set for the claimants at the first instance hearing.

ULR Additions managing director Robert Kay said: “We’ve always been content to allow a client to choose their own solicitor, but in this instance the costs in question were those of a fee-earner who had left one firm within our panel of solicitors to join Webster Dixon and consequently transferring those claims to their new employer. The increased fees for that work, at £274 per hour were, we argued, unreasonable.”