BTE Insurers' Panel Solicitors Claim for Costs Collapses

Why would a member of a certain BTE Insurer's panel accept £14,000 in full and final settlement of costs that had already been provisionally assessed at a total which, including costs of assessment, interest and part 36 penalty costs, exceeded £52k?

Perhaps the Order that the assessed sum was subject to production to the Court of their full panel terms had something to do with it!

In Daulat Singh -v- Smith in the Bradford County Court, Lyons Davidson on behalf of the successful Claimant, who was insured by a Tesco BTE policy, resisted disclosure of their retainer documentation throughout the assessment process for more than a year, asserting that there was no breach of the indemnity principle and that the request for disclosure was a fishing expedition. Upon production by them to the Court at the first hearing of the retainer documentation between Lyons Davidson and their client (which appeared to support a liability for the rates claimed in the bill) the Court assessed the costs, but made the Order subject to disclosure of the "terms as between the legal expense insurer and the solicitors governing the Claimant's liability to pay costs".

Lyons Davidson subsequently sought permission to rely on a 2 paragraph extract from the panel terms, which provided that -

• "At all times the Panel Solicitor shall seek to mitigate costs as the Insured Person is liable for any costs which the Panel Solicitor charges. However, the Legal Expenses Policy will cover them as long as the policy conditions apply", and
• "On all occasions the Panel Solicitor should try to recover all costs and disbursements from the Third Party"

It was submitted on behalf of the Claimant that disclosure of the Panel Terms in full was not appropriate, primarily on grounds that it was a "lengthy confidential and business commercial agreement" and that the extract above was sufficient to demonstrate that the indemnity principle remained intact in this case. The Claimant's Counsel submitted that the Panel Terms did not say anything else that was relevant to costs, and that there was no mention of any hourly rate payable by the insurers.

District Judge Cahill was not persuaded and expressed concern about the Claimant's solicitors' reluctance to disclose the panel terms, even to him. He said that he would be very surprised if the panel solicitors' agreement did not refer to hourly rates. He made an Order on 3rd November 2015 providing for production of the full panel terms (including the policy terms and conditions) to him within 14 days.

Rather than produce the panel terms Lyons Davidson on behalf of the Claimant invited proposals, and ultimately accepted in full and final settlement a total of £14,000 - roughly one quarter of the amount to which they were provisionally entitled, subject to satisfying the indemnity principle.

The irony of this outcome will not be lost on many Claimant personal injury solicitors, who are frequently subjected to indemnity principle challenges by panel solicitors on behalf of their insurer clients, and are expected to submit to scrutiny of every line of every privileged document that mentions costs.

Contact This email address is being protected from spambots. You need JavaScript enabled to view it. if you or your client are faced with a liability for costs incurred by a BTE panel firm.