Callery v Gray

(i) Legal expense premiums. As anticipated the Court of Appeal has ruled that claimants are entitled to recover premium for legal expense cover on matter settled without litigation. The court has deferred the decision on the precise amount of the premium directing the matter to Master John O’Hare, the senior Cost Master. He is going to make a further submission to the Court of Appeal before they give a final opinion on the level of premium. However, in the meantime I would submit that the claimant is entitled to a reasonable amount of premium. Whilst it would be considered to be an onerous duty on the claimant’s solicitors to shop around for a premium, premiums in excess of £1000 for straightforward RTA, ELPL, personal injury claims would in my view be excessive. My own personal experience of purchasing legal expense cover leads me to conclude that one can purchase cover for most of the claims that Trenwick have to deal with for no more than £550 to £750.

(ii) Success fee. The court has determined that the claimant is entitled to a success fee as a matter of principle. It has not given a firm opinion about the level of success fee to be allowed. What it has said is that the claimant’s solicitors are entitled to charge a success fee of up to 100%. However where cases are settled within the pre-action protocol period of 3 months, the success fee should be reduced to no more than 5%. It also opined that a modest success fee of 20% should be allowed in straightforward RTA type cases. In the sort of cases that your team comes across this is the type of success fee that should be paid.

If in fact claims can be settled within the 3 month period then the insurer could make substantial savings as there would be a good argument to pay a success fee of no more than 5%.