European Community Directive 87/344/EC on legal expenses insurance gives policyholders the right to a free choice of representative in legal proceedings. Notwithstanding this, private individuals of modest means who look to legal expenses insurance to fund litigation (and many household policies include some form of cover) find that they are offered in house representation or are directed to a solicitor from a panel maintained by their insurer, rather than their own choice of representative. In practice insurers try to keep costs down by inviting tenders from law firms willing to undertake work on cases on the basis of a low fixed fee. In my experience the value of such services ranges from poor to positively harmful but, of course, all that insurers are concerned about is discharging their contractual obligations for the minimum outlay. Ironically the type of restrictions that have applied are exactly the mischief that the Directive was designed to address. Unsurprisingly insurers and particularly DAS have fought tooth and nail to restrict access to legal representation.
In a victory for those seeking genuine access to justice the European Court in Jan Sneller v DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij has held that an insurer is not entitled to insist on using its own in-house lawyers. Mr Sneller’s insurers, DAS, refused to cover the costs of a lawyer he instructed in his unfair dismissal claim, on the basis of its policy terms which said that external lawyers could only be used if DAS had considered that external lawyers were necessary. This was unduly restrictive in the light of the right of insured individuals to have the choice of an appropriately qualified person to represent them in any proceedings.
It should be noted that the judgment will not necessarily entitle people to demand representation by their own choice of lawyer because Mr Sneller’s emtitlement was to representation by an approriately qualified person rather than his own choice of lawyer. It is also likely that insurers will try to restrict payments to the very low rates that they would have paid to panel lawyers. Another popular tactic is to assess the prospects of success as less than 50% since this excludes cover in almost all cases. Consequently, although the Sneller judgment appears to be a significant breakthrough, it should not be thought that this will open the way to full representation from the insured’s choice of lawyer, for example a trusted local lawyer. However it is a significant step in the right direction for those expecting that legal expenses insurance might cover the costs of a suitable qualified local lawyer.