The relationship between insurers and panel solicitors

After-the-event (ATE) insurance has proved not to be a resounding success for the insurance market. In Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWHC 635 (Comm) ATE insurers sought to recover from solicitors entrusted with the selection, and then conduct, of claims protected by ATE insurance damages for negligence. The substantive issues were not, however, considered. The case was concerned only with the threshold preliminary issue of limitation, and proceeded on the basis of assumed facts.

The background

The withdrawal of legal aid from many personal injury cases in the 1990s was compensated for by two new funding mechanisms for the pursuit of proceedings by claimants who did not possess their own adequate resources. The first was s58 of the Courts and Legal Services Act 1990, under which it became lawful for the first time for lawyers to enter into conditional fee arrangements with clients, allowing for an uplift of fees in the event of success. The second was s29 of the Access to Justice Act 1999, whereby an insurance premium paid by the claimant to insurers for the purchase of cover to indemnify him for his own costs and the costs of the defendant in the event that his claim against the defendant was not successful, became recoverable by way of costs from the defendant if the case was won. There has been much litigation on the ability of the claimant to recover his premium by way of costs from the losing defendant, and it suffices to say that premium is recoverable insofar as it was reasonable in the circumstances.