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Legal expenses insurers have good reason to avoid non-panel firms, leading provider claims

Nick Fluck [1]

Fluck: consumers must have choice

Law firms which are not members of legal expenses insurers’ (LEI) panels charge “significantly higher” fees which “dwarf” those of panel firms, a leading LEI provider claimed yesterday.

Richard Finan, director of Arc Legal Assistance, was responding to the launch last week of a Law Society survey of the LEI market.

Nicholas Fluck, president of the society, said insurers may be putting customers under pressure to accept their lawyer and “using financial barriers to inhibit freedom of choice”.

Mr Finan said: “The Law Society must accept that LEI insurers’ two priorities are delivering a high-quality claims service to the customer whilst controlling costs.

“In our experience, many non-LEI panel solicitors continue to charge significantly larger fees, dwarfing those charged by firms that have invested in efficiencies and technology to deliver customer-centric and cost-effective consumer legal services and are therefore placed on LEI insurer panels.

“Until non-LEI panel firms can compete on this basis, there will always be a driver for insurers to recommend a panel firm over another firm to their customer.”

Mr Finan agreed that where there were “unscrupulous practices that deliberately impede customers’ freedom to choose a solicitor”, they should be exposed.

However, he said non-panel solicitors should not confuse “sound commercial decisions and good customer service practice by a legal expenses insurer with dishonesty”.

Mr Finan said LEI insurers also had a “clear advantage in being able to actively monitor and control service levels” rather than “over reliance on counsel, incurring additional cost – which is a common occurrence.”

Launching the survey, Mr Fluck said it was “a legal right as well being vital for a consumer’s peace of mind” to be able to make their own choice, whether it was a local law firm or a solicitor they already knew.

“The Law Society is concerned that some insurers may be putting customers under pressure to accept legal representation chosen by the insurer, the industry may also be using financial barriers to inhibit freedom of choice,” he said. “The only option appears in many cases to use the lawyer provided by the insurer.

“Even at the point of issuing proceedings on a case, when insurers can no longer argue against you choosing your own solicitor, we have seen instances where  they’ll try to discourage you from changing over by introducing hidden costs and transfer fees.”

The survey is being distributed with the help of the Employment Lawyers’ Association, Association of Personal Injury Lawyers and Motor Accident Solicitors Society.

See blog: The LEI wild goose chase [2]