Clients before insurers


A significant number of complaints arise where solicitors provide information to after-the-event insurers or other legal costs-funding organisations without checking information with their clients. Clients must have an opportunity to make representations if they disagree with the solicitors' interpretation of the information. Often such matters arise where unhelpful medical or other expert evidence is produced, which may result in a decision as to whether or not an insurer is able to continue a costs indemnity, or whether specific conditions are to be applied.


Mr T had instructed a solicitor in a personal injury claim, under a conditional fee agreement. Mr T was unsuccessful and a costs order was made against him.


The solicitor wrote to the insurers saying, among other things, that in her view: 'The claimant had been evasive or lied about how the accident had occurred... how the injury had occurred... his evasiveness to his medical experts led the judge to doubt his credibility.'


As a result, the insurers sought to avoid payment under the terms of the policy and Mr T took separate proceedings against them. At the trial, and in giving judgment in Mr T's favour, the district judge said: 'The solicitor may have thought that the claimant had been evasive or lied, but in my judgment I did not find any cause to use those words.'



Mr T subsequently complained that the solicitor had acted in breach of principle 16.01 of the Guide to the Professional Conduct of Solicitors, 1999, eighth edition, as she had breached her duty of confidentiality. In the alternative, it was said that she had exceeded any express or implied authority to disclose confidential information. The county court found in Mr T's favour, notwithstanding that the information provided was made available after the conclusion of Mr T's original litigation.



The solicitor denied that she had breached her duty of confidentiality but admitted that she had breached a general duty to act in Mr T's best interest. The adjudicator found that the terms she had used were unnecessary and inappropriate, and constituted a failure to act in her client's best interest. She was warned as to her future conduct.


Solicitors should remember that their first duty is to their clients, irrespective of who is underwriting costs. Their additional duty to report to insurers in respect of all material facts is understood, but clients' instructions must always be sought and incorporated in any such report.


Frequently, clients will have a view to express particularly where a medical or other expert report appears unhelpful. To ignore such a view, or to withhold it from the insurer, will usually constitute a service inadequacy, and may amount to misconduct.



Every case before the adjudication panel is decided on its individual facts. This case study is for illustration only and should not be treated as a precedent