APIL defends freedom to instruct lawyer

The Association of Personal Injury Lawyers has called on the European Commission to ensure that the freedom to instruct a lawyer is 'not just a catchphrase'.

APIL is concerned before-the-event (BTE) insurers are ignoring the principle despite last year's European Court of Justice ruling in Eschig v UNIQUA Sachversicherung AG (Case C-199/08), which appeared to uphold it, though opinions are divided.

Muiris Lyons, president of APIL, said some believed it 'blew a hole' in the panel arrangements of BTE insurers, others that it made no difference.

Lyons said that the European Commission's internal market and services directorate had launched a review to try and clarify the situation, to which APIL had responded.

'The commission has recognised that this is not as clear as it should be and is considering whether changes should be made to the relevant directive,' he said.

'We would like the commission to recognise that freedom to instruct is not just a useful catchphrase but must mean something in reality.'

Ken Hogg, insurance director at the FSA, wrote to legal expenses insurers in July, warning them that policy terms which limited freedom to choose a lawyer were not compliant with European law (see Solicitors Journal 154/37, 5 October 2010).

The following month Hogg wrote to them again, including footnotes which suggested that freedom to instruct was limited to situations where there was a conflict of interest or when efforts to settle the claim by negotiation had failed.

Lyons said he thought the first letter was the right way forward and questioned whether, in any case, the FSA could regulate the market effectively, given its 'light touch' approach.

APIL said a further problem for claimant lawyers in England and Wales was the established practice that the insured person only had a right to choose his own lawyer under a legal expenses insurance contract once 'legal proceedings had commenced'.

In its response, APIL said this should mean freedom applied once a policyholder had recourse to a lawyer and not, as the BTE insurers wanted, once proceedings began in court.

'If you make enough noise, the BTE insurers will normally back down,' Lyons added. 'It costs them more to have an entire department telling lawyers they cannot act for clients.'