In what Lord Irvine will take as a vote of confidence in his legal aid reforms, at least three leading legal expense insurers are to launch packages of conditional fee policies in the spring.
But leading insurers last Friday presented Lord Chancellor's Department (LCD) officials with a list of problems to be surmounted before Lord Irvine's plan to extend conditional fees can be implemented.
It is understood that a few of the insurers who already provide "after-the-event" insurance are concerned by a European Commission directive that says clients should have the freedom to choose their own solicitor for cases funded under legal expenses insurance. They say it could be a barrier to expanding the market because legal expenses insurers use panels of favoured law firms.
Last Friday's meeting, called by the LCD, was the first time bankers have joined insurers in discussing the introduction of conditional fees.
Representatives from major banks, and the British Bankers Association, were asked to suggest ways to fund law firms who under conditional fees would have to invest in cases in the hope of winning them several months later.
John Parker, head of general insurance at the Association of British Insurers, who chaired the meeting, said: "These were just exploratory talks. We shall be meeting again next month to discuss the business opportunities for banks and insurers in more detail."
Royal Sun Alliance, DAS and Cornhill - all members of the LCD insurance working party - are to follow the "after- the-event" legal insurers and launch a variety of conditional fee premiums in the next few months.
DAS said it would have a range of products to support conditional fees ready by the spring.
Royal Sun Alliance will launch a conditional fee product after the formal merger of its two legal expenses subsidiaries, Legal Protection Group and CareAssist, on 2 March. The two came under one roof after Sun Alliance merged with the Royal at the end of 1996.
Frank Nicolls, manager of Cornhills' LawClub Legal Protection arm, said: "We are talking to individual solicitors about schemes."