The Law Society could maintain a list of solicitors willing and able to act for legal expenses insurers and even negotiate fee levels, the International Bar Association has suggested.
This might improve public trust in legal expenses insurance (LEI) given the perception that insurers’ panel or in-house lawyers may not be independent.
The report said greater uptake of LEI by individuals could increase access to justice for the “forgotten middle”, which it defined as “individuals without disposable income to spend on private legal services, but whose earnings or assets prohibit qualification for legal aid or pro bono assistance”.
The report, Legal Expenses Insurance and Access to Justice, analysed nine jurisdictions where the LEI market is either widespread or limited – with England and Wales in the latter category – and identified three key barriers to increased implementation and uptake of LEI policies: lack of awareness among consumers, limits of indemnity and carve-outs for family and criminal law, and the perceptions of conflicting interests.
It follows a separate report last week that said expansion of the market for standalone said LEI was being held back by “lack of understanding” among consumers as to what it covers.
To improve awareness – given that LEI is usually bundled up with motor or home insurance in England and Wales – the report said insurers could include a separate document outlining the coverage and terms of the LEI policy, rather than wrapping it up in the main policy documents.
Further, it recommended that legal aid providers give clients who have been refused legal aid an “impartial fact sheet” about the existence of after-the-event insurance.
“Finally, the insurance industry regulator could introduce a separate indicator specifically for LEI in the annual reporting requirements to measure and track trends in the implementation, uptake and use of LEI in the jurisdiction.”
The IBA urged widening coverage in LEI policies to family and criminal law disputes, saying their absence “can act as a barrier to accessing justice for a significant proportion of the world’s population”.
The report said a panel lawyer, or in-house lawyer at the insurer, may not be able to act in the best interests of the policyholder and comply with their obligations owed to the insurer at the same time.
It acknowledged: “This would not create a legal conflict of interest unless there is a fiduciary relationship between the insurer and panel lawyer or in-house lawyer.
“However, a lay policyholder could perceive a panel lawyer or in-house lawyer’s impartiality to be tainted by their commercial or employment relationship with the insurer to whom they owe obligations.”
It said insurers could ditch such arrangements and give policyholders freedom of choice of lawyer, while maintaining “some reasonable administrative control”, such as capping hourly charge-out rates, or limiting years of post-qualification experience.
“The removal of the perception of a policyholder’s legal representation having conflicting interests may increase the uptake and use of LEI by individuals, thereby increasing access to justice more generally, and potentially increasing individuals’ confidence in the fairness and effectiveness of the legal justice system.
“The committee sees a role for bar associations and law societies in the establishment and maintenance of panels of legal practitioners who both meet the predetermined qualifications (eg, years of practice) and preparedness to act on the basis of a set scale of fees.
“Moreover, the committee can see a role for professional associations in negotiating those fees with insurance providers.”
Mark Woods, co-chair of the IBA’s access to justice and legal aid committee, said: “No one should be left behind in the fight for justice for all, including the ‘forgotten middle’, but there is no easy solution.
“However, that should not stop us from effecting change where we stand. We could begin with the report’s proposals.”
His co-chair, Andrew Mackenzie, added: “Access to justice is a pressing concern for all jurisdictions, regardless of legal system or socio-economic status. Justice simply cannot be served without timely, robust legal representation.
“It is our duty as a profession to ensure that all who need access have it. However, the legal community cannot achieve this in isolation. I urge others, including the insurance industry and policy-makers, to play their part.”