What are the costs consequences when a solicitor fails to make reasonable enquiries of potential LEI insurers so that a claimant cannot avail himself of insurance he purchased before an accident? Jonathan Cosgrove looks at the question…
Mr Peter Evans v Fletchers Solicitors Limited [2026] EWHC 1523 (SCCO) Costs
Mr Evans was injured when out on his motorcycle. He instructed solicitors (the defendant) to act on his behalf, and he signed a Conditional Fee Agreement (‘CFA’). His claim settled in the sum of £250,000.00. The costs of the action were agreed. However, the defendant served Mr Evans with an invoice of its costs, which totalled £61,615.13 and included a success fee of £30,365.13.
Unhappy with the invoice, Mr Evans sought an assessment of his solicitors’ bill of costs pursuant to s70 Solicitors Act 1970. As the judgment of Senior Costs Judge Rowley makes clear, the ‘central argument between the parties’ related to the question of whether the claim should have been funded by legal expenses insurance (‘LEI’) rather than a CFA.
As part of the signing up process, Mr Evans confirmed that he had the benefit of family legal expense insurance that had been taken out as part of his home insurance with Zurich. The great benefit, of course, to claimants with a form of before the event insurance (‘BTE’) in place is that there will ordinarily be no need for a solicitor to charge a success fee or secure ATE insurance.
Two witness statements were relied upon by the defendant, neither of which Senior Costs Judge Rowley found assisted the court as to what enquiries were carried out in 2017 as to the existence of any BTE insurance. Drawing an inference from the absence of this evidence, the judge found that no such enquiries were made in 2017.
In 2019, the defendant, in contemplation of issuing proceedings, wrote to various potential LEI entities. A handful of responses were received, which included one from Zurich that purported to enclose a policy booklet for the policy in question and invited a telephone call to their customer services department if further assistance was required. These failed attempts resulted in the defendant concluding that it had been unable to establish the BTE policy covered Mr Evans’ claim. As a result, a policy of ATE insurance was incepted shortly thereafter.
After settlement of his claim, Mr Evans instructed another firm of solicitors in respect of the costs owed to the defendant. His new solicitors managed to confirm that he previously had the benefit of family legal expenses cover managed by DAS Legal Expenses Insurance Company Limited. The policy purported to cover specific or sudden accidents that resulted in death or bodily injury. DAS said it had no record of being contacted by the defendant.
Senior Costs Judge Rowley went on to consider the proper practice for a solicitor enquiring into the existence of potential BTE cover. In Sarwar v Alam [2001] EWCA Civ 1401, the Court of Appeal said that the solicitor in such circumstances was not obliged to embark on a ‘treasure hunt’. However, the proper ‘modern approach’ was said to be that a solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, household insurance policy, or any stand-alone BTE insurance policy belonging to the client or any spouse or partner living in the same household.
Moreover, in Garrett v Halton Borough Council [2006] EWCA Civ 1017, the Court of Appeal’s guidance was that the solicitors should generally make enquiries of potential BTE insurers, even where the client was unclear as to whether any such cover was available.
Against the backdrop of those two authorities, Senior Costs Judge Rowley found the enquiries by Mr Evans’ solicitors to be ‘lacking’. He highlighted the defendant’s failure to make any enquiries at all for more than two years after the accident. It was also implied by the judge that the defendant should have done more when it received Zurich’s letter dated 26 June 2019. Not only did the judge find that the defendant failed to make reasonable enquiries of Zurich but that the correspondence sent to potential providers was drafted in such a way so as to encourage a lacklustre response so that the existing CFA remained undisturbed.
Having decided in Mr Evans’ favour on the issue of whether the defendant’s enquiries into alternative funding were reasonable, the judge turned his attention to the issue of whether there would have been LEI for Mr Evans to use. The judge placed some weight on evidence from an individual at DAS (the LEI provider) who, even when pressed, maintained a rather nuanced position as to whether the cover in question had a blanket exclusion for claims involving motor accidents. On this issue, the judge made clear that he preferred the plain words of the potential policy (i.e. a specific or sudden accident that causes death or bodily injury).
He was not persuaded that the burden fell upon Mr Evans to prove that his case would have been taken on by the defendant without any irrecoverable deductions. It was suggested that the level of indemnity of £50,000 for the LEI with DAS was insufficient to take the case to trial and, therefore, could not have been utilised in the first place.
However, the judge was quick to observe that the ATE insurance actually taken out, with a limit of £100,000, was also insufficient to take the case to trial (Mr Evans’ disbursements and the other side’s budgeted costs combined exceeded £150,000). The answer was not to be found, the judge made clear, just by looking at the limit of the potential LEI cover. The use of so-called ‘top up’ ATE insurance was also highlighted. The fact that the LEI cover with DAS only had an indemnity of £50,000 was not a factor that militated against the use of the BTE cover if its availability had been established.
Before considering the consequences of the costs payable to the defendant, the judge considered whether the LEI would have been used if it were available. On this issue, he came down on the side of Mr Evans, relying to some extent on his written evidence that there was no doubt in his mind that he would have taken that course of action (i.e. utilised the LEI with the result that no or less money would have been deducted from his damages). The judge rejected the defendant’s contention that the claim was akin to one for loss of chance in a professional negligence context.
In the end, the judge determined that if Mr Evans had been able to use the LEI, then he would still have been liable for his solicitors’ base costs. He rejected any argument that the base costs were not recoverable in principle. In short, the cumulative effect of the judge determining the various issues in Mr Evans’ favour was to disallow the success fee in its entirety.
This decision reaffirms the proper practice for a solicitor enquiring into the existence of potential BTE cover. A solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, household insurance policy, or any stand-alone BTE insurance policy belonging to the client or any spouse or partner living in the same household. Solicitors should generally make enquiries of potential BTE insurers, even where the client was unclear as to whether any such cover was available. If not, costly consequences may lie ahead.
For more information on Jonathan Cosgrove and the PI, Clinical Negligence & Costs Department at 18 St John Street Chambers, please contact Senior Civil Clerk Katie Brown on 0161 278 1800 or contact the clerking team by email.