In a guest blog, Robert Khan, head of law reform at the Law Society, responds to Litigation Futures‘ Editor Neil Rose’s recent blog questioning the survey of solicitors’ experience of LEI
Neil Rose is right in saying that legal expenses insurance (LEI) problems have been on the Law Society agenda for some time. It’s also true to say that progress has been frustratingly slow in getting insurers to acknowledge consumers’ rights.
Our recent survey was deliberately targeted at changes to the LEI landscape – in particular, the Webster Dixon judgment at the end of 2012. Sadly, many insurers are now quoting it when declaring that they are free to pay non-panel solicitors whatever fees they deem fit, regardless of the nature or complexity of a case. The result has been a notable increase in the number of complaints and instances of poor insurer behaviour reported to the Law Society.
There is a legitimate commercial argument for insurers to keep costs low – but not to the point that it undermines their customers’ legal rights. What Webster Dixon actually said was that insurers could control the rates payable under LEI, provided they were not set so low as to make freedom of choice impossible in practice.
The judgment made it clear that a comparison of the rates offered by insurers to guideline hourly rates would not be in of itself enough to show that they were too low – additional evidence would be needed.
Providing this is one of the main aims of the survey. It’s in the context of Webster Dixon that we understand the Financial Ombudsman Service (FOS) is reviewing its guidance on LEI. Anecdotally, we have heard that some members have had success in challenging rates via the FOS, in some cases using surveys of local firms to show that the low rates offered were denying their client’s de facto freedom of choice.
We hope our survey results can be used to assist solicitors in the same way.
Unfortunately, the issue of rates is not the only problem our members have been experiencing with LEI. The second aim of the survey is to explore the extent of poor insurer practices that our members have been reporting to us. If we’re going to challenge insurers about these, we need to have solid data backing our concerns up.
The reaction to the survey was phenomenal – we had almost 700 responses – and so we’re confident the results will help deliver some practical solutions in this area.