The relationship between insurers and panel solicitors

In the August 2009 issue of Insurance Law Monthly, there was discussion of the decision of Flaux J in Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWHC 635 (Comm), in which the learned judge discussed the limitation period available to ATE insurers in a claim against solicitors who had been entrusted with the selection, and then conduct, of personal injury claims protected by ATE insurance. The Court of Appeal, in Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWCA Civ 1166 has, by a majority (with a seemingly reluctant dissent), upheld the ruling of Flaux J. The substantive issues were not considered and the case proceeded on assumed facts; the only matter under consideration was the preliminary issue of limitation. Given the sums at stake and the complexity of the issues, permission has been given for an appeal to the Supreme Court.

The background

The development of ATE insurance in England has been well documented. Legal aid was withdrawn from many personal injury cases in the 1990s, and was replaced by a private funding scheme designed to allow such claims to be brought without risk to the claimant. Under s58 of the Courts and Legal Services Act 1990 lawyers were for the first time permitted to enter into conditional fee arrangements with clients, allowing for an uplift of fees in the event of success. This was supplemented by 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. Section 29 has been litigated on a number of occasions, and there is now a body of authority on its operation: the general principle is that a premium is recoverable insofar as it was reasonable in the circumstances.